Penny Auctions :: new way of Auction

For buyers, maybe it's the promise of getting name-brand merchandise for a song, with a little of that game-show-like buzzer-beating thrill tossed in. And that's where this business model gets its juice: An unsold item whose current high bid is $5 has already lined the pocket of the site owner by as much as $500, but you could win that item for a single "penny" bid that's really as much as $1 - but no more.

For most players, the payoff isn't nearly as good as the promise - and, for the site owners, it's not even a particularly good business to be in. So what's the appeal of penny auction sites? To anyone?

Like those essay contests where a $25 entry free can get you a house, the lure is getting something whose value is indisputable for pennies on the dollar. Of course, it was an early internet startup that got the ball rolling - eBay more or less premiered the online auction. For the site owners, maybe it's a steady income - if you can come up with what can be pretty hefty startup costs and then fight off the trolls and the (sometimes unfair) competition.

They are a combination of bingo night, the Home Shopping Network and a slot machine addiction. And, like with those one-armed bandits, a lot more of your coins are likely to go in than you ever get out.

Just like a traditional offline auction, bids prolong the action by anything from 10 seconds to two minutes. In a penny auction, site owners control the items up for bids.