Penny Auctions – A New Business. The Internet Crane Machine.
~For awhile I have been studying the Penny Auction Sites online. After much thought and turning the concept over and over in my mind I realized what was so deceptively simple and beautiful about them was what they reminded me of.
I’m not sure whether this was intentional from the inventors of these sites or merely happenstance and approached directly from a mathematical stand point but nonetheless what I came to realize is that these websites are the internets version of the “Crane Machine Game” or “The Claw”.
The game with a glass case full of stuffed animals and other prizes that you would try to win by putting in a coin or token and getting your chance at operating the crane and lowering it strategically over the prize you wanted and with deft precision and timing you would grapple your bounty and bring it on home to poppa’ in the retrieval bin. Ah, the joy of winning that prize!
~Do you remember the great little characters in the Toy Story Movies who see “The Claw” machine and are more or less drawn to it in a trance like state. That’s actually a really good place to start this because it’s not just those cool characters who are drawn to the game.
The concept whether intentional or not has ended up on the internet. There’s no “Claw” actually, that’s been replaced by a timer which allows for a multi-player platform and there’s really no stuffed animals anymore. It’s Gift Cards and Electronics and some sites have even auctioned cars!
~Here’s how penny auction sites work. Participants place bids on the auctions. Each bid costs the player .50 cents to 1.00 dollar on some sites but the average is about .60 cents a bid. The cost of the bids is where the sites make their money.
Well to balance the action of the game and allow the prizes to be won at a price which is often way lower than retail, each bid placed costs .60 cents to the player but the auction only goes up .01 cent for each bid placed. Hence the name – Penny Auctions.
~Here’s an example – Let’s say an Apple MacBook could be won for say – $125.00 (these computers have actually gone for prices this low and even less, it is very feasible to win these items at these unbelievable prices and that’s the whole point of these sites, research it yourself if you like because you will find this is true.), that’s a great price for a MacBook as anyone shopping for one would know. Well, the item was won for $125 bucks, the winner has to pay shipping, which we’ll say is $20 bucks and they won the item by placing 100 bids at .60 cents each so that’s an additional $60 dollars which altogether comes to $205 dollars for a brand NEW Apple MacBook. That’s Amazing!
You know what else is AMAZING! The part I haven’t gone over yet.
Remember, I also mentioned that each bid placed by each auction participant is .60 cents and that’s how these sites make their money. Well think of that $125.00 dollar laptop. That was actually 12,500 bids at .60 cents EACH! That’s $7500.00!
Yes, these websites are generating crazy revenue off of these really top quality items they are auctioning on their sites. The $125 dollar example I gave you is more indicative of an iPad because I have seen the Macbooks go for say $1100 bucks but still that’s a great deal when it’s a fully loaded Macbook worth $3500 retail. And at $1100.00 dollars that’s $66,000 that one of these penny auction websites can generate off of high dollar items such as Macbooks.
The concept has taken off like a wildfire. Penny Auction Sites are a dime a dozen right now but there are some really good ones that are paving the way.
Online Shoppers and Shwag Junkies – def.-(..if they can win it or buy it for less than retail or get it for the heavenly, “FREE” then they’re sending every email and proof of purchase they can get their hands on)…yes, those freaks love these sites. And I love them, because they shop and buy.
~And sometimes they “WIN” what they’re after which just keeps them coming back for more. Just think of them as those kids at Chuck E. Cheese who grew up and realized they could play all those games to their hearts desire and do it right from the comfort of their own home. It’s better than anything because you don’t have to go nowhere to buy it …..just keep clicking and you might win it for an unbelievable price! Which is better than buying something at retail any day of the week and everyone knows that!
I was immediately taken by how ingenius they are. And whether you love them or hate them I believe they are here to stay. These sites have evolved and participants have really determined what they like. Gift Cards, computers, cameras, and all sorts of items have become just as popular as big ticket items which allows it to have a sustainable market.
~Just think of the Penny Slots in Vegas. They are a major cash cow to the Casinos and have been for years. Why do you think the penny slot section is so huge in these casinos. The penny slots bring in a vast majority of the casinos percentages.
Well for these Penny Auction Sites, affordable and more importantly, EASILY WINNABLE items are going to be the real cash cows for these penny auction sites.
Who wouldn’t throw $20 bucks at a $150 Home Depot Card. See the enticement is just too great and the wonderful thing is there’s lot’s of gift cards, there’s more than enough to go around. Everyone has a great chance at winning these things and that’s the appeal.
Well, the reason I went through all this was to share what I had found out from researching them. Hope this was helpful and make sure you do your due diligence before you participate on one of these Penny Auction Sites.