Monday, January 17, 2011

How Does Quibids Work

This post is for the beginners who want to know how does Quibids work. For the people who are already members of the site and know your way around, you should look for my Quibids strategy series. For starters, you can look at the Best time to bid on Quibids, Quibids strategy of Waiting Game and Volunteer's Dilemma.

So for the newbies again, how does Quibids work? How are they able to give away Macbooks for a hundred bucks? Is Quibids legit? How can anyone offer 90% off?

So let's get the obvious out of the way - Quibids is legit and it is making loads of profit. It is not a charity that gives away brand new items for a few bucks. So how does Quibids work?
How Quibids WorksSimple - Quibids uses a Bidding fee auction model (link to Wikipedia page) which is usually called the penny auction on the internet.

There are 3 fundamental differences between penny auctions and ordinary auctions. If you understand these, you will know exactly how Quibids works and how they can offer up to 90% discounts and still turn a sizable profit.


Pay Per Bid: Bidding is NOT Free
This is the most fundamental difference between a penny auction like Quibids and a traditional auction site like eBay. Quibids makes it profit from the bids. Whenever anyone places a bid, she is charged $0.60 irrespective of whether it is a winning bid. As you can imagine, this adds up quick.

For example, a typical Macbook auction can attract more than 10,000 bids. This is a very conservative estimate. This translates to $6,000, which is a healthy profit margin for a Macbook selling at $100.

Do you see the point? Quibids doesn't make money from the price of the item they are selling. They can afford to give away the products for free! Their income stream is from the bids.

Simply put, Quibids is a win-lose type of situation. The winner can get a great deal on the purchase but everyone else loses. Contrast this with a traditional auction scenario which is a win-break even situation: If you win, you get a good deal and if you lose, you actually lose nothing. In Quibids, if you lose the auction, you will lose money.

Timer Increments
This can be a confusing aspect to beginners who ask how Quibids work because they do not understand how the timer is increment. In spite of what Quibids claims, the simple reason for this is they want to make more money.

A fixed timer can give rise to the auction strategy of sniping. Everyone will bid at the last moment. This will significantly reduce the total number of bids placed and as stated in the previous point, Quibids makes money off the number of bids placed.

So Quibids simply increments the timer by 10/15/20 seconds each and every time a bid is placed. This is also a reason why you will never know when an auction will end. It will always be 2 seconds away when someone bids and the timer increments. I have seen auctions go up to 12 hours for the big-ticket Quibids items.

Bid Value Incremental
In a traditional auction, you can bid any amount. However, at Quibids, you can only bid so that the price increments by 1 cent (sometimes 2/5/10 cents). Why is that?

As previously stated, the source of revenue for Quibids is not through the selling price of the item but through the bids placed. From their standpoint, they make a maximum profit only when the number of bids placed are high. So their aim as a business is to see to it that people bid a lot on a product.

The simplest way to accomplish this is by lowering a price. When someone sees a Quibids macbook selling for a couple of bucks, he is more tempted to bid than when the same product is bidding at a thousand dollars. Thus to maximize the number of bids placed, Quibids will not allow you to bid any amount but only an amount that increments the cost up 1 cent.

So now you know how Quibids works, you can start off your Quibids journey! Don't forget about Free Quibids Bids that you get on signing up. Also, before you start bidding, go through all the Quibids Strategies tutorial that you will find on this blog. This will greatly improve your chances of success and you can make some really good profits. Good luck!

6 comments:

  1. There are different business model even between the big penny auction sites such as Beezid and Quibids. In both you have to puchase bids ahead of time. On Quibids bids cost exactly 60 cents while on beezid it differs drastically depending on the promotion (anywhere from 10-60 cents. Then you can bid for the items. Major difference between two site is that on beezid, if you dont win the auciton best you can do is buy the item and get the bids back while on quibids, it is impossible to spend more than what the item is worth because you get credited for every single bid you spend in terms of credit towards the purchase of the product. So for example you are bidding on 10 dollar giftcard and you spent 10 bids and lost. 10 x 0.60 = $6. so you can always buy that $10 giftcard for $4! So if you play smart and at worst you are ready to buy the item, its a win-win situation.

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