Friday, December 3, 2010

Bid like a Pro

You have probably seen ads for those "miracle auction" websites, where you can buy a $2500 HDTV for $70, or a $500 smartphone for $15. The deals sound bee-honey-sweet, right? Well, if you have not purchased your bid package yet, then perhaps you want to read this first.

Unlike regular auction services, like eBay, where you pay for the actual products you purchase, with the "sweet deal" websites you pay for bidding itself, regardless of whether you actually win or lose the auction. Here is a simple example on how it works.

Typically you need to purchase a bid package, at say $1 per bid. Now, assume the auction starts at $0.01 and the price goes up by one cent per bid. At the end of the auction the HDTV is sold for $70.02, which means it has taken 7001 bids for the price to reach the final amount. Now, let us assume 3 bidders participated in that auction and it went like this:

Bid 0001 by Bidder A takes the price to $0.02
Bid 0002 by Bidder B takes the price to $0.03
Bid 0003 by Bidder A takes the price to $0.04
Bid 0004 by Bidder B takes the price to $0.05
...
Bid 6997 by Bidder A takes the price to $69.98
Bid 6998 by Bidder B takes the price to $69.99
Bid 6999 by Bidder A takes the price to $70.00
Bid 7000 by Bidder B takes the price to $70.01
Bid 7001 by Bidder C takes the price to $70.02

As we can see, Bidders A and B placed 3500 bids each and Bidder C placed just one bid. In other words Bidders A and B spent $3500 each (the total of $7000) so that Bidder C could buy the $2500 HDTV for $71.02, which is the final price of $70.02 plus $1 for his single bid.

Sounds cool, doesn't it? The auction service owners and Bidder C must be really happy. Bidders A and B? Well, not so much.

Want to bid like a pro? Here is what you do:

Go to a real auction service, like eBay. Search for the item you want to purchase. Check the seller's feedback, and continue searching in case they have less than 99% of positive feedback. Make sure you know how much you are willing to spend on the item. Then place a bid and set your maximum price to the difference between what you can spend on the item and the posted shipping cost. Then simply log out and wait for an email from the auction service. Either you have won and you can pay for your item, or you can start searching for another auction.

Here are some additional tips:

1. Sometimes you can get a great deal on high-end products from a seller who does not have any feedback yet. It is risky, so only recommended if you can inspect the item in person prior to placing a bid.

2. Sometimes sellers make mistakes while listing items, and because of that very few people see their listings. Be smart in your searches. E.g. when you are looking for a "Pioneer Elite Laserdisc Player" try searching for "Elite Laserdisc Player", "Elite LD Player", "Laserdisc Player", "LD Player", and so on. It may happen that someone who is selling it may list it as "Pioner Elite Laserdisc Player" or even "Panasonic Elite LD Player", and if you are lucky, you may be the only bidder.

3. If you like thrills and adrenaline, you may try placing your bids within the last few seconds before the auction ends. If you set the limit high enough, your chance of winning may be better this way, since bidders often increase their limits only once they learn they have been outbid.

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