They make their money from getting you hooked on bidding for things. At $.50-$1 a bid, you can eat up your savings pretty quickly if you're not careful. It is true that exceptional deals can be had if you are willing to spend some time finding them and looking for opportunities to get in on auctions at the right times. I have a brother who tried it. He got a laptop for under $100, and some camera gear pretty cheaply, but he grew tired of getting outbid, and did not want to spend the money to do it right.

It really is more akin to gambling. There is one winner who gets a really great price, but the entire cost + profit is subsidized by all the people who bid and didn't get the item. Those folks could be considered as actually losing money on the deal.

The $10-$30 dollars in bids you get to sign up are of course a loss leader. You can use that up in a couple auctions easy and end up with nothing but a new addiction. :*)

As long as you try hard to hold your losses to a few bucks on any auction you try, you might win 1 in 20 auctions. Is that worth it?

. . . who knows - you may be the extremely lucky guy who gets a top-of-the-line iPad for $57, but you also can lose out on lots of them before getting it, and you have to be prepared for that.

just don't do it. Someone actually published an psych/economics paper on the idea before anyone built the websites (the 1st one I was aware of was swoopo). It's diabolical. The bidders get so invested in the money they've already sunk into bidding they short circuit their decision making capability. Each step of the way they compare the small incremental cost to some idea of the value of the thing and the money they've already sunk into bidding. All you need is two people to say "what the hell, I'm in this far, might as well ride it out to the end" and then absurdity results.

Go ahead and pick out a couple auction, divide the sell price by the bidding increment to see how many bids were made and multiply by the bid fee. It's crazy.

...looks like swoopo went bankrupt though...weird. This after MSN Money called it "The crack cocaine of online auction websites" and the NY Times called it "devilish"
http://en.wikipedia.org/wiki/Swoopo

If bids go up by a penny at a time and a bid is 60 cents, then a $50 iPad brings in $3,000 in bid money.

wait... so you lose your bid if even if you don't win the auction?

I would never participate in something that insidious.

Yep you lose your bid. That is how they make insane money.

If you feel you have "invested enough", you can apply all of your bids to a direct buy price. But guess what? The buy out prices are very close to retail or even a little higher.

The moral of the story is, if you weren't prepared to go out buy the item you were bidding on for a market price, don't get in the auction.

But for addictive personalities it is positively evil.

michchamp said:

wait... so you lose your bid if even if you don't win the auction?

I would never participate in something that insidious.

Click to expand...

Yep, you pay 60 cents each time you bid and the bid amount goes up 1 cent and 15 seconds get added to the clock (that part is also important). So you get situations when a $100 item is only bid up to $5, but there are 2 or 3 people that have sunk ~$50 into bidding and neither one wants to give up.

Swoopo used to sell bids too. People would bid on packages of 100 or 1000 bids. It's evil genius stuff.

KAWDUP said:

Yep you lose your bid. That is how they make insane money.

If you feel you have "invested enough", you can apply all of your bids to a direct buy price. But guess what? The buy out prices are very close to retail or even a little higher.

The moral of the story is, if you weren't prepared to go out buy the item you were bidding on for a market price, don't get in the auction.

But for addictive personalities it is positively evil.

Click to expand...

Never heard of the option to apply bids to a direct buy price. That must be a newer feature.

I think that one is part of Quibids. Anything to differentiate in what is starting to be a pretty crowded space. No matter how its done, the "owner" ends up getting several times what the item is worth from failed bidders, and certainly is making a profit on the "buy for a direct price" option too.

I know I watched a signed mini Jets helmet that was valued at $150 in a bidding war. It started with like 50 seconds left and then the bid went from .40 cents all the way up to $1.90

And I think the bids cost .60 per. I was like why would anyone bid on a mini helmet