Swoopo & Penny Auctions – Are They Legit?
What is a Penny Auction?
The Penny Auction business model has garnered a bit of buzz recently. Swoopo was featured in the New York Times, while Snaglo commercials have found their way into prime time television spots. The allure of purchasing items such as a Macbook for $20 can be too much to resist. However the high level of savings comes with a certain degree of skepticism. After further investigating penny auction websites, I can conclude that they are completely legit and worth a try.
How it Works
For those of you who do not know Penny Auctions work like this: Users purchase bids at roughly 60 cents each. When a user places a bid, the price of the product goes up 1 cent. Let’s assume an auction’s starting price is 0, and bidders bid on it until it eventually sells for $20. This means 2000 bids were placed at 60 cents each. Therefore $1200 of bids went into the auction allowing the owners to easily cover the cost of the $400 piece of equipment. The winning bidder ultimately spends the price the auction sells for, plus shipping, plus however many bids they used. Patient and intelligent bidders will benefit most from penny auctions.
How to Win
When bidding on these auctions I HIGHLY suggest finding a lesser known site with less users. Why? Well less users means less competition. And less competition means using less bids and saving more money. For example, try a brand new penny auction site such as Smart Bargain Hunters. The prices as well as the bid numbers here are significantly lower than the likes of a Swoopo or Snaglo. Also, try to use patience and not bid too early. Once the product gets up to it’s average sales price it is time to start a bidding marathon. If you place 200 bids on the auction at 60 cents each, then you spend $120 on bids for a product that cost $400. Not bad at all. In fact, some people make a living at home by purchasing items low, then selling at retail price on Ebay. I recommend giving penny auctions a shot. Remember to keep the techniques above in mind when bidding and you will be well on your way to turning large profits.
Michael is an Certified Public Accountant from Wilmington, DE. Over the years he has worked in tax preparation, corporate audits, and assisting the public in making signifigant financial decisions.
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