Penny Auction Strategy Guide

Penny Auctions: A Complete Guide

A penny auction guide written for beginner, intermediate & advanced penny auction bidders.

The Penny Auction Guide is created and © by OnlineAuctionReviews.org. Page 1

Table of Contents
Table of Contents .......................................................................................................................................... 2
Introduction .................................................................................................................................................. 3
Getting Started – 5 Things to Consider BEFORE Signing Up ......................................................................... 4
How Auctions Work ...................................................................................................................................... 5
Auction Types................................................................................................................................................ 5
Penny Auction Tips........................................................................................................................................ 7
A Look at Bidding Strategies ......................................................................................................................... 8
Strategies that DON’T WORK .................................................................................................................... 8
Spread the Luck ..................................................................................................................................... 8
Emotional Bidding ................................................................................................................................. 8
Strategies for Success ............................................................................................................................... 9
Strike Early ............................................................................................................................................ 9
Master the Clock ................................................................................................................................... 9
The Sniper ............................................................................................................................................. 9
The Bully................................................................................................................................................ 9
The Power Bidder.................................................................................................................................. 9
The Spoiler .......................................................................................................................................... 10
Top Penny Auction Websites ...................................................................................................................... 11
Disclaimer.................................................................................................................................................... 12


Introduction
The guide is built to provide educational information about penny auctions. It’s dedicated to helping you
cut the clutter to determine which penny auctions are best (something you can also track at our
website, OnlineAuctionReviews.org), and which are a plain old waste of money. It’s also designed to
teach you about some strategic approaches that can help you make the most of your penny auction
experience.

There areincredible dealsthat can be made in these pay-to-play auctions that some people might call
good luck. The truth is, the best deals have very little to do with fortune, but rather come as a result of
organized strategy.

So, let’s get started.


Getting Started – 5 Things to Consider BEFORE Signing Up
What to Look For, What to Avoid, and How to Set Yourself Up for Success From the Start

1. COMPANY CREDIBILITY & LONGEVITY
Stick with long-standing penny auction companies. If they’ve not been around at least 1 year, be
weary. They may boast great deals and limited competition, but there are other headaches. New
sites frequently experience inventory issues, shipping dilemmas, and can have shoddy customer
service. What’s worse, some will simply go out of business without warning, not only wasting your
money, but leaving you without your product(s). Some of the recognizable names (Beezid,
HappyBidDay, DealDash, etc.) are recognizable for a reason – they’ve earned their legitimacy
through years of sound business practices and are much more trustworthy than a shiny new up-and-
comer.

2. REGISTRATION
Registration should always be FREE. If a penny auction site requires upfront payment for simply
registering, this should be a big red flag that something’s not right.

3. UNDERSTAND WHAT “FREE” MEANS
“Free auctions” don’t always translate to “no purchase necessary.” Some sites promote free
auctions, but actually require you make a bid pack purchase before you can participate. Penny
auction sites that offer true free-to-play auctions usually do so by giving you free/promo bids to
spend in the “free” auctions. This is obviously more favorable, especially for a new user.

4. BIDDING ISN’T WINNING
When you sign up with a penny auction site, the flashy registration pages and pretty bid pack
graphics can sometimes make you feel like you’re winning already. Plus you paid for those bids, so
you must win something right? Well, no. (Not yet, anyway.) As mentioned in the intro, it’s pay-to-
play, not pay-to-win. To win with any consistency, you’re going to need a strategy. Simply placing
bids does not (EVER) guarantee a win. But don’t worry, this guide’s full of insightful info for users.

5. WHERE TO START
The best penny auctions to start with are those that first meet the credibility standards, and
secondly offer something for you, the new user. Look for sites that offer beginner auctions, genuine
free-to-play options, and also auctions with bid packs (in many cases you can pay a lot less for bid
packs through an auction win). Another feature to look for is a winning guarantee. At registration
some sites offer this as a sign-on perk, and will replenish your bids on certain bid packs if you don’t
win. You want to start with sites that will not just give you the opportunity to win, but ones that
encourage winning strategies for new users and make it affordable to get started.


How Auctions Work
First things first, let’s take a look at how penny auctions work.

Once registered with a penny auction site, users must first buy bids to participate in the auctions. Bids
commonly cost anywhere from $0.50 to $0.90, and most penny auction sites offer bid packs in which
users can save money by purchasing larger quantities at one time.

Penny auction sites auction products ranging from electronics to kitchenware to jewelry and gift cards,
all set to end by a certain time on the auction clock. The starting “price” of these items starts at a very
low value (sometimes less than $1) and each bid typically increases this price by $0.01 – hence the name
penny auction. As participants bid, the auction clock winds its way towards 0:00.

As the auction timer approaches the final seconds of the auction (usually set for 00:10, 00:15, or 00:20)
the clock automatically resets with a few extra seconds after a bid is placed, allowing all participants
equal opportunity to bid. Think of the “going once, going twice…” call in traditional auctions.

Once there are no more bidders and the timer gets down to the 0:00 mark, the last person to place his
bid is the auction winner. The bidder then wins and buys the product for the closing price, plus any
shipping and handling.

Auction Types
Not all auctions are created equally

Penny Auctions: Penny auctions or 1-cent auctions work on the model explained in the How It Works
section. Users purchase bids and then bid on items they want, incrementally increasing the product
price by $0.01 with each bid placed. When the auction timer reaches 0:00 and there are no more
bidders, the last bidder to place his bid wins.*

Free Auctions: These auctions are offered by penny auction sites that promote sign-up bonus bids,
rewards programs, and other "free bid" incentives. Users can then use their free bids in the free
auctions. Typically, Free Auctions feature lower end retail items, gift cards, and bid packs.*

Newbie/Beginner Auctions: These auctions are promoted to users that are new to the penny auction
industry. They often have win limits attached and are designed to let new bidders participate in auctions
alongside others with similarly limited skill levels.*

Capped/Price Freeze Auctions: In this format, the penny auction site limits the auction close price. The
auction runs as a normal penny auction until it reaches the designated price cap (typically 10%-25% of
its retail value). Once there, bidders continue to place bids as usual, however, their bids do not


incrementally increase the price anymore - it stays fixed at the capped amount. This is the amount the
winning bidder pays for the item. These auctions are commonly identified by designated icons.*

Buy Now Auctions: This auction format allows non-winning bidders of a given auction the opportunity
to purchase the product they were bidding on at retail cost. The competition is stiff, but the format is
promoted as risk-free bidding. Penny auction sites will often let you apply your used bids towards the
purchase, however, only those bids that you paid full-price for will count. If you spent any promo/free
bids in the auction, those bids won’t count towards your buy-now purchase, so you may be on the hook
for more than you thought. Some sites offer a different format wherein they actually replenish all the
bids you spent and put them directly back into your account when you make your buy-now purchase.
This is a more preferable buy-now option as it’s a truer risk-free format.

No Jump Auctions: No “jump” or “jumper” auctions are a limited participation style built to protect the
invested bidders, cutting off those who may want to join in the final seconds for a stealthy win. At a
designated auction price (for example: $5) an auction is no longer open to new bidders – only those that
have placed bids can continue to participate. The theory is great, but easy to game. Savvy bidders who
use “jumping” tactics will often place a single bid as a placeholder, and then ultimately “jump” the
auction anyway.*

*In these kinds of auctions, the last bidder is still responsible for paying for the auction win at the closing
price.


Penny Auction Tips
A few key guidelines to keep in mind.

Read, Read, Read! Before signing up with any penny auction site, read their rules, learn their terms and
conditions, and understand their auction types. Education is a primary factor to penny auction success.

Watch to Learn.Watching auctions will not only help you understand the pace of online penny auctions,
but will also offer insight to other bidders’ behavior. This insight is a huge component to strategy
development.

Speaking of Strategy…Find one, and make it your own! It is not impossible to win without one, but it’s
far less likely. Having a strategy allows you to practice it, and you know what they say about practice.

Don’t Go For The Gusto (yet). When you’re first starting out, chances are you don’t have a strategy yet,
and even if you do it’s probably pretty green. Hone it in smaller auctions. Try your hand at gift cards and
smaller gadgets before trying to hang in the iPad or HDTV auctions.

Don’t Spread the Wealth. Bid on a single auction at a time. Trying to do too many things at once will
likely spread your resources thin and result in a loss.

Build a Budget and Stick to It. When you enter an auction, have a maximum number of bids in mind
that you’re willing to spend and DON’T surpass it. Ignoring your budget is an easy way to spend
unnecessary bids and get caught up in an emotional bidding process, which is always a bad idea.

Do the Math (and Your Homework).To effectively enforce your budget, it’s a good idea to know the
retail value of the product you’re bidding on, as well as the cost of your bids so you can accurately figure
out where your ceiling should be.

Know Your Neighbors. Knowing who you’re bidding against and around can make huge differences in
your strategy.

Stock Up. Having a supply of bids in your account is critical to success, regardless of your strategy. Trying
to operate with just a few is like running your car with 1 gallon of gasoline; it will work, but won’t get
you very far.

Use the Auto Bid Feature When It Makes Sense. If you’re in a tight auction and need to get up for a
breather, or if you’re trying your hand at intimidation and want to drive bidders away from an auction,
the auto bid feature is a great tool. It should be noted that auto bid is a tool and not a strategy.
Especially as a new bidder, employing the auto bid without discretion can backfire and cost you many
bids on an auction you may only be marginally interested in.


A Look at Bidding Strategies
Bidders take a few different approaches to penny auctions – some work, and some don’t. With a
little research and education, you can avoid common errors and set yourself up with a winning
strategy.

Strategies that DON’T WORK

Spread the Luck
Many new bidders arrive on the penny auction circuit mistakenly thinking that placing a handful of bids
on several different auctions increases their chances of winning something. Anything. But really, all
they’re doing is spreading themselves far too thin to have any real chance at winning.

Winningcomes down to a “last man standing” scenario. By sprinkling a few bids here and there, chances
are you won’t be the last bidder because you’re not even sticking around – you place a few, then move
on to another auction. This kind of strategy (or lack thereof, really) rarely works out and more
commonly leaves you empty-handed and frustrated.

Emotional Bidding
We are human and we are emotional, but feelings have no place in auctions. Remember, each bid you
use is a bid you’ve already paid for; with each one you place,you are spending money. There is nothing
wrong with this and the potential for savings is often well worth the investment, but it’s important to
keep a level head becausewith emotional bidding comes irrationality.

Rather suddenly you can disregard your bid budget, blowing 100s in just a few minutes. The only real
winner in this scenario is the penny auction site itself. While this approach does result in “wins,” the
closing price is rarely worth the investment which is why we recommend not bidding from emotion.


Strategies for Success
Strike Early
This strategy is a great one for getting the BEST deals out there. It plays on the notion that jumping into
an auction too early is a “waste.” It’s not. Here’s why: many bidders will pass on an auction while there
is a lot of time left, because traditional thinking says you’re more likely to win when you bid near the
end.But this is only one view. As everyone else thinks “oh it’s too early,” you place your bid and wait.
The auction quietly ends, and you prove not only that it’s never too soon to bid, but you walk away with
a STEAL because nobody else bothered to join! This strategy sees moderate to good success and results
in great deals with practice.

Master the Clock
This strategy takes into consideration the time of day you’re bidding. (For auction timer strategy, see:
The Sniper). It is a simple fact that some times are slower than others. It sounds easy enough – find the
least busy times, and shop ‘til you drop. But it’s not quite that straightforward. Aside from simply
understanding the high and low volumes of the penny auction sites, you must also take into
consideration who is bidding and when, whether auto-bid software is being used, and the products
being placed for auction. This research commitment is not always worth the time to some bidders. But
those who do feel it’s worth it can see moderate success with this strategy.

The Sniper
The Sniper strategy is highly analytical. The Sniper watches, waits, and at the perfect moment, pulls the
bid trigger for success. The Sniper understands momentum of auctions andevaluates the best times to
be aggressive. The idea here is to bid aggressively with perfect timing in a way that doesn’t give the
other bidders enough time to react. This strategy can work quite well but often requires a good deal of
penny auction experience, as well as a hefty stock of bids to execute effectively. The strategy sees good
success but is not recommended for new bidders.

The Bully
The Bully wants everyone to know who he is, what he does, and why you should avoid him. This strategy
depends on serious intimidation, expertise, and lots of bids. Itworks best on newer penny auction sites
where the Bully’s name is one of few instead of one of many. Ultimately, the idea is to limit competition
by what is sometimes calledwin-timidation, in essence sitting atop the penny auction food chain. This
strategy works but it’s worth noting that it is less effective on well-established sites.

The Power Bidder
The Power Bidder is an expert on penny auctions that has mastered several strategies. The Power Bidder
takes advantage of every promotional offer, often logging many hours and even using his strategies to
make a living reselling his wins. The characteristic Power Bidder is typically a very seasoned bidder that
has acquired many, many wins using a variety of strategies. Usually, Power Bidders are active on several
penny auction sites. This strategy takes a serious amount of time and dedication, but often results in
expert bidders that win with proficiency.


The Spoiler
When two bidders are left in a ‘bidding war’ scenario near an auction end, something interesting takes
place when a third bidder jumps in. The two sparring bidders notice the third has bid on the auction, and
now they’re faced with a dilemma: If I outbid the new guy, the other bidder is just going to outbid me
and I’ll lose. They each hesitate not wanting to waste their bid, and in their hesitation, both lose the
auction to the third bidder, a.k.a., The Spoiler! This is an excellent strategy, although it does rely on an
element of lucky timing. It can be fun, but should be part of a strategy repertoire, not your only
approach.

Gift Cards = $$
Product-specific bidding is rarely considered “good advice,” primarily because there are so many other
factors that are more important. But this is a unique approach that works and works well. By bidding
exclusively on gift cards, you are offering yourself a few advantages. Firstly, these auctions are seen as
lower-end, and inevitably have less competition. Second, gift cards (especially those in you-choose
formats) are some of the best returns on investment. They’re not simply worth retail value - they are
spent at that value. It’s kind of like winning money! Stock up and buy whatever you desire. And with the
competition limited, there is a lot to be won.

Combo Auctions for the Win
Some penny auction sitesincorporate bids in combination with other product auctions. The beauty of
these kinds of auctions is that they include a way to earn some of your spent bids back through your
win. The reason this is successful is because no win is going to break your bank; with combo auctions,
you’ll always have a chance to recoup some of the bids you spent.


Top Penny Auction Websites
The following penny auctions were rated as the best penny auctions websites on
OnlineAuctionReviews.org at the time of publishing this guide. These sites have all been in business 2+
years and rank consistently as the highest rated sites in the industry.

Remember, leading sites are continually upgrading their offerings, which is part of what makes them the
best. However, these kinds of changes can impact the ranks, so please visit our website for a more up-
to-date list.

Top 3 Penny Auction Sites:

HappyBidDay.com
Zbiddy.com
Beezid.com


Disclaimer
This content is copyrighted by OnlineAuctionReviews.org and may not be reproduced or retransmitted
in any form without explicit written permission from the publisher.

This guide is presented for informational purposes and is intended to be an educational tool. This guide
does not purport professional advice of any kind and should not be used as such. The included contents
are represented as opinions of the publisher and do not offer any guarantee of any kind.

Every effort has been made to maintain the accuracy of the information held within this guide, but due
to the changing landscape of industry dynamics and technological advancements, this guide may require
periodic updating. The author reserves the right to these updates and is not responsible for
discrepancies that occur as a result of these changes.

The guide, its author and its contributors accept no financial, legal, or other responsibility for any actions
taken as a result of reading this material. Readers are solely responsible for consulting professional
services before taking action.

Results for penny auction bidding are dependent on a number of contributing factors including skill level
and competition, and none of the material held within should be interpreted as guaranteed.


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