We are all looking for good deals these days, but are penny auctions the answer? We are all familiar with getting good deals on auctions thanks to sites like eBay, but this new twist on that concept offers the chance of even more savings.

If you\’re anything like me you start to think how can something so expensive like a flat screen TV or a laptop go for such a low price? Wouldn\’t the auction company lose money on the deal? That\’s what we\’ll cover in this article.

I guess the main thing to keep in mind from the start is to participate in a penny auction we are paying per bid, even though we are only bidding the auction price up by one penny the bid could cost anywhere from $.50 to $1.00. To clarify this point I figured I\’d go straight to the source, this is what the Federal Trade Commission says about penny auctions:

\”The Federal Trade Commission (FTC), the nation\’s consumer protection agency, wants you to know how online penny auctions work and how to recognize some of their pitfalls before you get caught in a bidding frenzy. Penny auctions move fast. Before you know it, you could spend far more than you intended, with no guarantee that you\’ll get anything in return.

How does a penny auction work?

In a penny auction, items are posted by the site owner and you pay to bid for them. Unlike a traditional auction, where only the winning bidder pays anything, penny auctions require you to pay before – and as – you play, win or lose.

For openers, you may have to pay a fee just to register for the site. Sometimes, the fee is substantial. Then, you have to buy a \”bid package.\” For example, you may \”buy\” 100 bids for $50. Additional bids cost more money, often between 50 cents and a dollar per bid.

The price of auction items usually starts at zero, and each bid bumps the price of the item up a penny. Each bid also adds time – from 10 seconds to 2 minutes – to a countdown clock. The goal is to be the high bidder when the clock runs out. But because the clock resets with each bid, the auction process can be unpredictable and take time to complete.\”

As you can see just like anything else there is a new set of rules you need to be aware of to get the most out of this concept. If you check my resource below I provide a link for you to get some free penny auction bids to practice with, so you can get comfortable with this process. When done properly it is a very exciting way to save some money on big-ticket and medium-ticket items.

While researching this article I felt I needed to answer my own question: “How does the auction company make any money on these auctions?” A friend of mine referred me to someone who is an advertising affiliate for a penny auction site and I spent 20 minutes picking her brain about how the behind-the-scenes business side works. I was blown away by the success of this business model and I guess if I had just taken the time to do the math I could have figured this out for myself.

I\’ll give it a go and try to explain the process. Say there is a product and it\’s retail price is $100, and it goes up for auction, each bid increasing one penny at a time. The auction goes up to $50 and ends. The winning bidder now pays $50 plus shipping. The way I was thinking about it I thought the company just took a $50 loss. Really they just made a $4900 profit, assuming each bid cost $1 (because it makes the math easier). That means for every $1 the auction price goes up (100 bids) the company makes $100 it went up to $50, so 100 x 50 = 5000 – 100 (original price) = $4900.

Makes you wish you started a penny auction site doesn\’t it? The other thing she told me was the company she is an advertising affiliate for splits each days profits with her and other qualified affiliates for advertising the auction site on a daily basis. She said it\’s a mobile business she can do from practically anywhere with internet, and her commissions are substantial. I did not get into specifics on income, that might be a subject for another article.

So what have we learned about penny auctions? They are new, there seems to be a little skill involved to get used to the process, you can save a lot of money on big-ticket items, there is even an income opportunity with some of these companies and that some companies are willing to give you free bids to let you get used to the system. See my resource below for helpful links for both subjects covered above and I hope this helped to shed some light on penny auctions.

I hope this was informative, if you would like to experience how a penny auction works go to this site, http://www.penny-auction-free-bids.com and get some penny auction sites free bids, test it out with no risk and see if this new shopping experience is for you.
If you are interested in the penny auction business go to http://www.pennyauction-business.com

If you would like to experience how a penny auction works go to this site, http://www.penny-auction-free-bids.com and get some penny auction sites free bids, test it out with no risk and see if is for you. If you are interested in the business go to http://www.pennyauction-business.com

Author Bio: I hope this was informative, if you would like to experience how a penny auction works go to this site, http://www.penny-auction-free-bids.com and get some penny auction sites free bids, test it out with no risk and see if this new shopping experience is for you.
If you are interested in the penny auction business go to http://www.pennyauction-business.com

Category: Advice
Keywords: Best Penny Auction Sites 2011, How Do Penny Auctions Work, Free Penny Auctions, New Penny Auctions,