The number one reason penny auction sites get a bad rep is because people sign up, start bidding and they don’t win. So they go around shouting about how penny auction sites are scams. The truth is… they aren’t scams. But, there is a certain amount of luck involved no matter how good your strategy is. Having said that – a good strategy can greatly increase your chance of winning because most of the people you will be bidding against aren’t bidding with a plan, they are just bidding aimlessly. Which, works sometimes but that is generally down to just luck.
So here are some common penny auction bidding mistakes that you should try and avoid.
Do your research:
This is important and you are already on the right track because… well, you are reading this article here on penny decisions of course! but researching each penny auction site thoroughly before you even think of signing up is always going to be the right choice. You will often find reviews from bidders that have had first hand experience at the penny auction you are researching.
Researching the company is also a great idea, you don’t want to sign up to a site that is run by any shady characters, a good example is madbid.
Despite starting his company, MadBid.com, in 2008 during uncertain times Juha Koski has grown the business to a stage where it is posting a turnover of around £15 million.
What does the company do?
Online auctions have become a little boring, so we bring a concept that is more exciting allowing the user to engage in timed bids, no reserve prices and each bid increasing by just 1p. We offer brand new products ranging from iPods to TVs and even cars. Users pay a varying fee for each bid depending on the price of the product
How was it financed?
We bootstrapped in the beginning; my two business partners and I pooled our money. We sought equity financing in 2010 and raised £4 million from a prominent venture fund in order to roll out the service European-wide. We also had a smaller friends and family round in the summer of 2009 which helped fuel growth.
Madbid was backed by an Internet investment firm – Atomico which also helped set up skype. So with backing as strong as this, you know that Madbid is a company that isn’t going to mess around, especially when there is 4 million of someone else’s money at stake.
Don’t bid more then the buy it now price
This one is pretty obvious, but it amazes us how often we see people make a very basic mistake that could end up costing them much more then they intended. It can be easy to lose track of how much you are bidding on auctions, make sure you check the retail price of the product so that you don’t bid any more then is necessary.
Not taking the time to learn how the penny auction site works
There are more and more penny auction sites popping up these days and not all of them are the same, sure they share the same basic bidding model. But, some penny auction sites have different types of auctions such as Beezid’s balloon auctions -
Balloon Auctions start out with a certain product or Bid Pack, just like any other Beezid auction. The difference is, every bid placed brings the auction closer to changing, for the better! When a certain amount of bids are placed, the product will progressively change to something new and of a higher value. Turn a Bid Pack into Jewelry! Or an iPod into a iMac! How about a $200 Gift Card into a 55” TV!
You can find everything you need to know about penny auctions on this site, but sometimes it does pay off to watch the tutorials and guides that you will find on most penny auction sites. This will give you a basic idea of how penny auctions work, which would already put you ahead of your competitors because many people completely overlook this and jump straight into bidding.
It also pays off to find out any hidden costs, shipping fees, bid prices, potential free bids etc before signing up, all of which can be found on our reviews of each penny auction site.
Don’t let your emotions take over!
Ego ego ego, this even happens to the most experienced bidders, they let their ego take over. Sometimes you will find the same bidders bidding against each other on multiple different auctions.
These guys probably have history and it’s a rivalry that you want to avoid because these guys are more concerned about beating their competitors rather then saving money.
But it happens all the time, you end up spending a ton of bids on an auction and you just can’t seem to win. The most important thing to do is not to get upset and just keep bidding until your balance is empty. This is also why many people bid more then the buy it now retail price.
A classic example:
So I just went ahead and tried to bid for GHD midnight collection hair straighteners which was on offer in a live auction. I really wanted them, so for some reason I was quite hopeful. I mean, how many other people are going to be bidding for hair straighteners? Turns out, quite a lot actually.
In fact, before I knew it, I had used 25 credits and I was nowhere near getting those straighteners. I watched this particular auction for around an hour and grew more frustrated. The auction would get down to two seconds, I would bet and then bang the auction would be up to 20 seconds and someone else would bet. It’s also quite addictive. I really, really wanted those straighteners, but it was coming up for 5pm and I was leaving work, so that would be that then. I’d spent money on the credits, used them and walked away with nothing.
This is what 95% of most bidders do, they just bidding blindly and hope for the best with no real strategy, you have to look for bidding patterns or else it’s just purely luck based. As she uses more bids she gets even more frustrated… letting her emotions get the better.
Watch out for auto bidders
Sometimes you will find that on many auctions there are many users using auto bidding tools which are perfectly legit and you can use them yourself if you wanted to. The only downside is that they can burn through your bids very fast – although there is settings you can use to prevent this. See more at our bidding tools page.
If you notice that there are auto bidders then it’s best to avoid the auction entirely because you just won’t be able to beat these if their bid limit is set very high.
We don’t recommend using the autobid tools because in all honest we feel that the real winner is the penny auction site. The fact that you don’t really have much control over your bids aka your own money isn’t very wise.
Heres an example from Becky Worley:
I bought $60 in bids and got in on an iPad auction. I bid occasionally, trying to time it when the counter neared zero, but I quickly blew 40 bucks in bids. Someone always jumped in at the last second, usually someone using the automated bid setting. So I signed up for automated bids myself, and I was amazed. My $20-worth of remaining bids flew out in 24 seconds. And I didn’t win. My 60 bucks was goners! In fact, I watched the most aggressive bidder make 30 bids a minute for 2 more hours until the auction ended.
We have never had any success with autobidding tools, the penny auction sites will probably recommend them but only because it makes them more money so watch out.
Look who you are bidding against
Many penny auction sites will let you look at bidders history, how they bid, what they bid on etc. This information can be very useful for a number of reasons. You should ideally try and avoid any bidders that are very well known and have a history of winning multiple items. This is also why it’s a fantastic idea to build a reputation and always let people see your bidding history if you have won items before, because you stand a good chance of scaring bidders off.
Thinking you are going to get an Ipad for 30 bucks
This is a big mistake, and it is the reason why many people call penny auctions scam sites. Many penny auction sites will advertise that you can win items such as “Brand new Ipad sold for $24.99!” what that actually costs is far more then $24.99. That is actually 2499 bids, so in reality if each bid is 60 cents then that is over $1500.
This is what happens:
In other words, that $30 camera represents 3,000 bids. At a dollar a bid, the website could take in $3,000 on that auction item; not a bad haul for a $600 camera. However, even if you are the winner, you will likely end up paying more than the final sale price, depending on how many bids you submitted along the way. For example, if you placed 100 bids at a dollar each, your out-of-pocket will be $130. Still a good deal, but not as fantastic as it might appear at first.
So that sums up this post on the most common penny auction mistakes, read everything carefully because it will potentially save you a healthy amount of money in the long run.