Today I got spammed in my e-mail about these penny auction sites where the starting price for products are literally one penny which increases as more people bid. The catch is that in order to bid you have to purchase bid credits of sort which can cost about fifty to seventy five cents a bid. With that in mind I guess it is easy to see how the company can make a lot of money as I would assume a lot of people that bid don’t end up getting the item at all and so those bids are almost pure profit for the business.
That’s not to say you can’t find a great deal though as I am sure it is one of those sites where you have to sit there forever trying to find the best deal. I always get a little paranoid about sites like that as for some reason I always think that there is say an employee of the company working in the background to keep the bids going. There isn’t really a way I have seen either that a company can show to the public where that isn’t the case and that everybody bidding is legitimate.
Maybe if one day I get some free credits for these type of sites I could document it to see what happens.