How Do Penny Auction Sites Afford to Sell Things So Cheaply?

by admin on February 13, 2011

Penny auctions sites are quickly becoming huge online because they allow people to invest little money in attempts to get a high dollar product. You can cover all of your holiday shopping and more if you understand the right shopping strategies for these sites, but the big question about using them is how they can afford to sell an item for $20 when it is retailed at $400. Are the products there real? Is it all just a scam? Let’s take a closer look at this process to determine exactly what you are getting into with penny sites.

A penny auction site is just like any other auction site, but the bids that you can put in only go up a penny at a time. You have to buy a certain number of bids to use for a product, and then you pay for each bid you place, as well as the final list item of the product. You have to pay for shipping and potentially some payment processing fees, but that will all depend on the site, the product, and the situation.

The fact that you pay for bids is what makes the site money. For instance, a $200 camera may only sell for $10.00 on the site, which will ensure that you are getting a great deal. To get to that $10.00 mark though, 1000 bids had to be put in place. If the bids each cost $.50, the site has made $500 from that one product. You get a good deal and they get great returns on their investments. Everyone wins.

The key behind the best penny auction sites online is that they make money from a lot of different users at the same time. Instead of taking $500 from one person in the example before, that money is taken from the pool of people that bid on the item. If that happened to be ten people, so be it. If it was 100 people, so be it. They make their money in the end, and you still get the product you wanted for a lot less than retail price.

For the most part, the products on these auction sites are in fact real. There are exceptions to that rule of course as internet scams flourish in just about every sector of the market. Nevertheless, you can be relatively confident whenever you make a purchase that you are in fact buying the real deal at the end of the day.

You should only buy a few bids from a single site initially, just so you can test the waters. The money for your bids is normally nonrefundable, which is why it is best to just get what you need. When you have a set of bids to work with, research different auctions that they have going on for the site and see which one you may be interested in. Then place your bets and see if you win the item. You may get lucky your very first time bidding.

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