In the world of bidding and auctions, there are a lot of ways on how these are held. Of course, there is the usual “who declares the highest possible price to pay wins” scenario, which we are all familiar with as well as others. Of course, the medium in which the auction is held varies too depending on the auctioneer. General settings include a physical venue where all items are shown or virtually where the bid is don through the internet.
Now, there is that one auction that is both curious and is almost akin to gambling. What I am talking about is the Penny Auction, or Bidding Fee Auction.
What Is Penny Auction?
Penny Auction is a kind of all-pay auction in which bidders are obliged to pay a non-refundable amount to place each small accumulative bid. As the process goes, the whole auction is continued whenever a new bid is placed. If no further bids were placed, the last participant to place a bid wins and pays the bid price. The auctioneer gets profit by collecting all the fees for the bid, as well as the amount of the final bid. The last bid is usually higher than the original worth of the item.
How does Penny Auction Works?
First, participants need to pay to get a bid, which usually costs a penny, hence the name. This amount often extends the bid time by a few seconds until another participant declares a bid. If no bid was raised after the last one, then the last bid wins the item, in which he needs to pay for the final amount too promptly. It is more like buying your ticket for a price for you to declare your bid for the item.
Usually, this kind of auction happens online and so rarely occur in person. For those asking if this auction caters specific items like in construction equipment auctions, then that is somewhat correct. The reason for that is any item can be put into a sale through this method.