Feb 15 2010

Penny Auctions – Huge Money Makers

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I love all things involving making money online.

When I see websites that are clearly successful in making money it always makes me excited. That’s why when I started to see those penny auction websites, I couldn’t help but smile.

If you don’t know what penny auction websites I am talking about, it’s websites that offer a really high demand item (electronics, etc) for just pennies! The way that works is you go and buy “pennies” or bids. Each bid costs anywhere from a buck to ten bucks. Everytime you pay one extra penny, the auction is extended 3 minutes.

So let’s say you have a Wii that’s going for 0.30 cents. You come in at the last minute of the auction and hopefully get the wii for $0.31 cents + the cost of the bid ($1 to $10 bucks depending on what site you’re using).

For all intents and purposes getting a Wii for $10.31 is a huge steal… and that’s the huge allure for these websites.

Now imagine doing something like that but with cold hard cash… up to $5,000. Imagine paying $100 to win $5,000! How crazy would that be?

Come to find out, there has been a site that just recently launched that does exactly that called BidOnCash.

What an epic idea.

So how do they make money if they give cash away for just pennies? Let’s take a look @ previous auctions:

Looking at one of the best auctions, a $500 auction went for $26.99. A steal right? Considering each bid cost $1 (bid = $0.01) this made the website $2,699. Wait… is that right? 26.99 * 100 = 2699 bids. 2699 bids * $1 = $2699.

Unbelievable. Looks like a few of the bidders got caught up in a bidding war… Assuming they’re not bots.

Granted not every auction ends up this way. You can see a few auctions that ended up going for $0.03 for $100. Clearly a loss for the website.

What a genius idea…

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