Friday, April 13, 2012

Types of Penny Auctions

What are the different types of penny auctions? This might sound like a surprising question to a few bidders because when we say penny auctions, they assume the typical penny auction with a timer that goes to zero and increments each time a bid is placed. However, this is not the only type of penny auction in play today. In fact, another term for penny auctions is 'entertainment auctions' as was popularized by Quibids, the largest penny auction in the world. Once the entertainment part is present in the name, you know why they are popular and why that they serve the dual purpose of discounted shopping and entertainment.

All these classes of penny auctions fall under the ambit of 'pay-per-bid' auctions. As the name suggests, these auctions work off of paying per bid placed. This is true of all penny auctions, the traditional penny auctions and the newer versions and variations on it.

Let me broadly classify penny auctions in two different types, timer auctions and timerless auctions. Note that even under a given category, there could be several variations and different sites use different kinds of innovation for this model.

Timer Penny Auctions
These are the more traditional penny auctions that bidders have known. The most famous site in this category is Quibids, which is the biggest penny auction operating in North America. If you want to know more about this category, read how timer penny auctions work. In a nutshell, timer penny auctions work as follows -
1. You pay for a bid pack, which entitles you to place a certain number of bids that you purchased.
2. You select an auction and place a bid. There is a timer. The timer is reset each time a bid is placed by you or your competitors.
3. The auction is won when the timer becomes 00:00:00. The last bidder is the winner.
4. Item cost is increment in small quantities, almost always a cent, whenever a bid is placed. You don't pick a price to bid on.

Timerless Penny Auctions
Timerless penny auctions are actually becoming quite popular of late and more and more bidders are looking towards this model instead of timer penny auctions. There are many different models here and no universal rule. Well, the only rule is that there is no timer. The model is still pay per bid but the bidding goes on without a timer.

In the UK, there were many 'contests' for the lowest unique bid auction model - as the name suggests, you can bid any amount you want and the lowest unique bid wins. This is an interesting concept but definitely in the realm of gambling. This is a no-no at least for US based penny auctions.

However, there are other types of auctions, most notably, 'reserve bid auctions' in which there is a reserve bid that is hidden from the users. Bidders then start bidding and the person who uncovers this bid wins the auction. There could be some goodies on the way towards the final bidding just so everyone wins something instead of the winner-takes all model of most penny auctions. Currently, the most popular penny auction in this category is PennyGrab which has a really loyal bidding base, which is quite rare for any penny auction.

More and more bidders are preferring this auction model because they don't like the timer and possible shill bidding. There are many new innovations in this sphere, and I see a few new sites coming up as well with similar concepts. This could be a legitimate alternative to traditional penny auctions, but there is yet to emerge a contender as strong as Quibids.

Please don't forget to vote for which kind of penny auction you like the most - find the poll to the right hand side of this page. I would love to hear about your thoughts and experiences on both these auction models


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