Cents and Sensibility

23 06 2010

It’s funny how people behave when it comes to pennies. Some folks will actively seek out the penny slot machines in Vegas because the initial stakes are so low. But then they will pour copper coins into them all day long. Other folks play penny stocks in hopes of turning a quick fortune. After all, a stock that goes from 1 cent to 2 cents has risen 100%.

And then there are the folks who play the penny auctions, like at Quibids. how could you possibly go wrong when you’re only tossing pennies?

Easy. Even though bid increments are usually only 1 or 2 cents, most of the penny auction sites impose hefty bid fees. Like Quibids. Each bid costs 60 cents. Every time. You could win the bid on an item that ultimately sold for $1, but if you were only one among two bidders, you could easily rack up $30 in bidding fees. Total sale: $31.

In order to play at Quibids, bidders have to buy a pack of bids ($27 for 45 bids is the smallest pack available). That’s kind of like food and beer tickets at the fair. You don’t want to waste tickets, so you are implicitly encouraged to keep eating and drinking. And bidding.

But the auctions are somewhat rigged. Bidding is often fast, but each time someone raises the ante, the countdown clock is extended a little longer. Quibids wants to give everyone, and I mean everyone, a chance to use up those bids. Because it means 60 cents each time you click. And since they already have your money on those bids, they are helping you return to the ticket machine for more.

Quibids doesn’t make money on the final bid; the cash is in the bidding. Let’s suppose they are selling an item they paid $30 for (and might have a face value of $100). It only takes 50 incremental bids of 1 cent to reach $30 in revenue for Quibids. Cha-ching.

And what about the poor sap who loses the auction? You see, the psychology is in place for this thing to get out of hand, because each time you bid it is you who is out 60 cents. So on that $30 item that ultimately sells for 50 cents, Bidder #2 is down $15 just for playing. And losing.

To help set people at ease, Quibids offers losers the opportunity to purchase (at full face value) the item they missed out, minus any bid fees paid. But the bargain no longer exists at that point. You have to win the auction in order to reap any benefit.

Which is why I am not playing.

The merchandise array is a mash-up of whatever Quibids is able to secure from retailers and wholesalers. It’s kind of like Woot.com, but with a hefty dose of insanity stirred in for good measure. Penny auctions are normally a great deal for the auctioneer, and a lousy one for the losers.

I think I’ll just keep stooping over to pick up pennies I find on the sidewalk. I toss them into a coffee can of “found money.” I’ve got nothing to lose. Except maybe my back.

Dr “Take Stock Of That” Gerlich


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