A penny auction is a type of auction where participants pay a non refundable fee to place a small incremental bid usually 1 cent. In a penny auction, bids represent the number of times a participant can make a price offer in an auction. They cost about 10 to 15 times less than the incremental bid.
Bidding on an item means spending the bid just like spending money.
Penny auctions have a clock that counts down the time remaining for the auction to end. Every time a participant places a bid, the price of the auction increases by 1 cent and a little more time is added to the clock. This allows other people who are interested in the auction to join.
An auction ends when the time on the clock hits zero and but since more time is added with each bid, there is no way of knowing how long an auction will last. An auction will go on until only one bidder remains who then wins the auction.
When you win an auction, you get to pay the final auction price and any shipping costs.
If you don’t win an auction, most sites have the option to ‘Buy Now’. This allows you to buy the item at any time during and after the auction. Some auctions site like Pricebenders give you points that can be redeemed for other products and services that are available on the site.
But you don’t get any of your bids back. The money spent on bids is what makes the penny auctions work by making the prices so low, usually just a fraction of the retail price. The bids pay for the products that are auctioned. A number of people don’t like this but it’s not like the auction sites give away brand new items for just a few dollars and pay the difference themselves. There may be huge profits but that is how penny auctions work.
If you are not comfortable with this type of auction, then don’t try it. Or at least use the ‘Buy Now’ option, or spend your bids on other products and services that some auction sites list for sale outside the auction.