Friday June 24, 2011

Penny Auction Sites Could Cost a Chunk of Change

Ever wonder how those "penny auction" sites work? Well, this article explains it very well and, let me tell you, they have a hell of a racket going.

So how can the sites afford to give such steep discounts? Consider an item that sells for $100. Bidding starts at $0, so users would need to have placed 10,000 bids to drive up the price by a penny at a time. If a bid costs $1, the site would have raked in $10,000 on the sale. That's not including the $100 the winner has to pay for the item.