Are Penny Auctions Legit-

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					Many people are talking about the "penny auctions" that are dominating the online
auction arena. These auctions are so amazing in their ability to provide huge discounts
on lots of great items such as electronics, toys, gadgets and more. It is almost scary
the amount of goods these sites are practically "giving away." It is leading many to
wonder are these sites for real? What is the catch? Surely these have to be illegal

For those who haven't heard about penny auction sites or maybe aren't quite sure
about exactly what they do and how they operate; allow me to share just a brief
overview about penny auctions. The sites themselves are run by an owner or staff who
sells new electronics, toys and other consumer goods at highly discounted prices. The
items are listed on their site at different times throughout a day and users can bid on
the items. Each auction has a set time that it runs; however, when a user bids on the
item, the clock that is ticking down to zero jumps back up in time by a certain amount,
usually 5 to 10 seconds. Every time the bid button is clicked the price for the item
increases by a penny (one cent). Although, the cost for a user to click bid is usually
$0.50 to $1.00, each time it is clicked. Bids are generally purchased on the site before
a user begins bidding, however bids can be purchased during the bidding process as
well. When there is only one bidder left, that person wins.

So it sounds simple right? It sounds almost too simple doesn't it? That is what many
critics of penny auction sites have claimed too. Many people wonder how can a penny
auction owner sell an iPad for $1.67 and not lose money. Obviously, a quick math
procedure tells us that the cost of that iPad is $500 and it sells for $1.67 so they are
losing $498.33 right? Well, not so fast. The ability for both the seller and the buyer to
benefit is found in the amount of bids that are used to buy the item. For instance if an
iPad sells for $35 and each time a bid was placed the price goes up by $0.01 then that
means 3,500 bids were used on that item ($35/$0.01 = 3,500 bids). And if each bid
cost the users $0.80 roughly then the site actually made $2800 (3,500 X $0.80 =

So don't worry, the penny auction sites are legit and many are ready to provide great
items at great prices. Now it should be noted that there have been some sites which
have breached the code of conduct when it comes to honesty and integrity, but those
sites that do so will not last because of negative word of mouth and loss of customers.
If you are leery about a particular site you plan on using be sure to check out reviews
at one of two places, Penny Auction Watch or you can also browse over to and see their Penny Auction Directory.

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