If you're reading this blog, it may be because you've already had some experience with “penny auctions” or you're trying to figure out whether you should go on a penny auction site at all. I can't make your decision but I can tell you, my real deal fun true story. I landed on the deal fun site after browsing eBay. The site made a comparison of DealFun vs eBay. The pitch is that on DealFun, because it has less competition than eBay, you can buy products for 40% to 70% less than you would on eBay. This is an apples and oranges comparison.
Here's how it worked for me. I signed up with a new account; input my personal information and credit card number. Then I bought a starter package for $119 along with a starter bonus giving me 340 bids. Each bid is worth 60 cents. But because I got a "starter deal" I paid only 35 cents per bid. I then went to the auction page and selected an iPhone 4, unlocked, 16 GB that would retail for $649.00.
It was being auctioned for $29.82 and had less than an hour left to sell. I waited until it got to the last 15 seconds and then placed my 1st bid. The price was then $32.60 rising one penny with each new bid. Remember each time someone places a bid the clock resets 15 seconds and the price increases by one penny.
There are two ways you can bid, either manually by clicking a bid button, which is mindlessly insane, or by using “bid buddy”. Bid buddy will bid for you automatically. You can set bid buddy to start at any price and make as many as 25 bids before it stops bidding for you. If it runs out there would be no additional bids placed on your behalf. 25 bids could last for 10 minutes or 10 hours depending on how many other people are bidding on the same item.
When I started using bid buddy, it told me that this same product had last sold for $58.18. So I engaged bid buddy starting at $55.00 with a full 25 bids and continued to refill it until 11:30 PM. At 7 AM on the 2nd day the price for the iPhone had risen to $82.19 and my bid buddy was at 0 bids. Because others continued to bid throughout the night the product was not sold. At 7:30 AM I began loading up my bid buddy with 25 bids every time it got low. At mid morning I only had 270 bids left in my account and there were only two bidders left online so I thought I could win. I tracked the bidding into the morning until I had to leave home for an appointment. I continued to track the bidding, via my smart phone, replenishing my bid buddy each time it ran out. But more people got online and continued the bidding. At 4 PM I ran out of bids in my account.
When I checked my DealFun account at 5:30 PM the iPhone 4, had been sold for $168.18. So let's do the math. I spent $119 on bids and of course got nothing for it. It is possible that the winner spent $200 to $300 or more and then paid $168.18 for the iPhone 4. The total purchase price would therefore be $368.18 to $468.18 plus shipping. DealFun on pure bidding income alone made $10,090.00 plus the $168.18 for the iPhone 4. The $10,090.00, (16818 x $.60=$10090.00), came from 100s of the bidders, like me; who did not win. Disclaimer: Now the total may have been less since many bidders buy or win bids and therefore pay less than retail for each bid, like I did. DealFun says credits cost 60 cents and each credit is worth 1 bid. As in my case you will see that my bids cost less than 60 cents (actually 17.5 cents), not counting the 140 bids I lost somehow as you will see below, since DealFun gave me 2 times my bids for the initial cost of $119.00.
This type of penny auction appeals to our willingness to risk our money to buy, what we consider, something for nearly nothing. It is a form of gambling? Or does it appeal to our win or die mentality. It has a psychological attraction for many reasons. You be the judge.
The winner in this case bought an iPhone 4, for $181 less than retail, so in their case, saved on the iPhone purchase. Everyone else was a loser. If you watch the DealFun video they will tell you, that even though you didn't win, and spent perhaps $100 or more dollars attempting to win you had fun in the process. You can still buy the unlocked iPhone for $649.00 plus shipping if you want it. You have to ask is spending $119 plus your time to monitor the auction really fun? Remember at a real auction you don't have to spend money to bid. So this is not a real auction. If you want more info on “penny auctions” follow this link: http://www.100auctionsites.com/penny-auction.php.
As a new customer on DealFun, if you don't win on your 1st try and use up all your bids they will replenish your starting account amount for free. They did this for me but when I attempted to sign back into my account for another auction I found it had been deactivated.
I've asked them to reactivate my account and I am still waiting. I will update this blog if or when that happens.
Update August 4, 2011
DealFun made good on their guarantee to newbie bidders and restored my account and my original 340 bids somehow diminished to 200 while I waited for my account to be re-activated. So I began bidding again. I am still bidding on the iPhone 4 in another auction. I will post the result of this auction. Will Herbie run out of bids again or be successful. This should be interesting.
Update August 6, 2011
The rest of the story. I bid off and on, for the iPhone 4, for 36 hours. This product was at $80.00 when I started and finished at $286.88 when it sold. Me along when many many other bidders may have spent a total of $5000.00 or $6,000.00 in bid cost; Maybe less if you discount it for "starter deals", free bids and lower cost won bid cards. Remember each penny represents a 60 cent bid paid for by each bidder. The actual winner may have spent a total of $586.88 plus shipping for a $649.00 product. Sure they got a discount but this may not have been the first time bidding as in my case. It doesn't matter how much DealFun made on the auction, they made more than $649.00 bottom line is I spent 119.00 total for 680 bids (retail price worth $408.00) and got N O T H I N G! My estimate is there may have been between 150 to 300 other bidders who also got nothing.
At least at a real auction like eBay or some other online auction you bid, win or lose, you don't have to pay for the privilege to participate but pay only if you actually win the prize. My conclusion is that there is a fool born every minute and you never get something of value at no cost. In this case you may pay for nothing and get it. Reading this article may have just saved you a whole lot of money!
Update August 4, 2011
DealFun made good on their guarantee to newbie bidders and restored my account and my original 340 bids somehow diminished to 200 while I waited for my account to be re-activated. So I began bidding again. I am still bidding on the iPhone 4 in another auction. I will post the result of this auction. Will Herbie run out of bids again or be successful. This should be interesting.
Update August 6, 2011
The rest of the story. I bid off and on, for the iPhone 4, for 36 hours. This product was at $80.00 when I started and finished at $286.88 when it sold. Me along when many many other bidders may have spent a total of $5000.00 or $6,000.00 in bid cost; Maybe less if you discount it for "starter deals", free bids and lower cost won bid cards. Remember each penny represents a 60 cent bid paid for by each bidder. The actual winner may have spent a total of $586.88 plus shipping for a $649.00 product. Sure they got a discount but this may not have been the first time bidding as in my case. It doesn't matter how much DealFun made on the auction, they made more than $649.00 bottom line is I spent 119.00 total for 680 bids (retail price worth $408.00) and got N O T H I N G! My estimate is there may have been between 150 to 300 other bidders who also got nothing.
At least at a real auction like eBay or some other online auction you bid, win or lose, you don't have to pay for the privilege to participate but pay only if you actually win the prize. My conclusion is that there is a fool born every minute and you never get something of value at no cost. In this case you may pay for nothing and get it. Reading this article may have just saved you a whole lot of money!
