In these harsh economic times, it is in everyone's best interest to try to save as much money as possible. One of the places you may try to cut back is when buying nonessential items. One increasingly popular way to save funds is buying on the auction market. The auction market is a very good way to save money on the items you want, if you know the tricks. This article will briefly explain how auction market works and how to get the most bang for your bid. Ebay and Quibids are some of the largest retail and penny auction sites, respectively.

How the Auction Market Works
Retail Auction
The online auction market works very similar to the live auction market. You view an item you want and place a bid on it. If your bid wins, then you win the item. Just like the live auction market, a bid is a promise to buy the item; if your bid wins, then you have to buy the item. Only in certain cases will you be able to retract a bid. In certain cases, there will be an option to "Buy It Now" as well. What this means is that you can opt to avoid the bidding process entirely and buy the item outright for a predetermined price. Once an item has been won, you go through the steps to pay and have your item shipped.

Penny Auction
A new trend in the auction market is the Penny Auction. Gaining steam in 2011 with the premise of saving the buyer the most money possible when buying typically high-priced items, several penny auction sites have popped up and have been peoples' go-to place for getting typically high-priced items for cheap. How the penny auction works is you buy a certain amount of bids for a flat rate (the bids are worth around 60 cents), which are used to try to buy items. Every time you bid on an item, a bid is removed from your account and a timer pops up. If the timer reaches zero, then you have won the item. There have been cases of bidders winning items for up to 97% off the retail price. The danger is that there are others bidding on the items as well.

How to Beat the Auction Market
Wait Until the Last Second
When it comes to online bidding, your best bet is waiting until the last second. Waiting until the last second of a bid will save you both time and money. When you wait until the last moment to make a bid, you avoid driving the price up by making early bids, which will cause the other potential buyers to make higher bids. By keeping the bid amount low, you will end up paying a higher price, and it will also save you the stress of having to constantly watch the item to see if you've been outbid.

When it comes to penny auction sites, the same rule applies, but you should be more careful when you choose a bid. Remember that your bids on penny auction sites cost money, around 60 cents each. Now one bid may not seem like much, but you could very easily get into a bidding war, spend a significant amount of money on bids and still have to pay for the item.

What this means is that if you see an item such as an iPad, and the current price is $2, you should probably hold off on bidding. Reason being is that more than likely someone else is going to bid on that, because the price is that attractive. This trend will continue until you get into a price range where the savings are no longer astronomical and people will drop out, this is when you should bid.


Set Price Limits for Yourself
While the aim is to try and get the item for less than the retail price, there comes a certain time where the amount that you would have saved will not be worth it. If you get to the point where you would only save $30 on a $600 item, then it's probably not worth bidding on. If you've reached that point in the bidding process, then you would be better off buying the item for the retail price, because when you factor in things such as taxes and shipping costs, you might end up paying the same price and having to wait, as opposed to getting your item instantly. You should always be in the mindset that another deal will come along eventually, and rushing into a buy is always the wrong thing to do.

The Bottom Line
The online auction market is a great place for you to grab items for prices that would be considered steals. However, this is only possible if you make careful decisions in regards to bidding. Approach it like you would any situation where you are typically frugal, weigh your options and think about the pros and cons before you hit that bid button. Remember, a bid is essentially a promise to buy.

Related Articles
  1. Retirement

    5 Reasons Millennials Lead in Saving for Retirement

    Say what you want to about millennials but the one thing they are doing better than any other generation is saving for retirement. Here's why.
  2. Investing

    3 Small Steps to Maximize Your Investing Goals

    Instead of starting the New Year with ambitious resolutions, why not taking smaller manageable steps that can have a real impact.
  3. Investing

    7 Creative Ways to Save for an Early Retirement

    Take note of these out of the box steps you can take towards securing yourself an earlier, more comfortable retirement.
  4. Saving and Spending

    Saving $100 Now Is Better Than Saving $1,000 In 10 Years

    Learn why it is better to save $100 every year starting right now rather than $1,000 in 10 years, and find out the benefits of early saving and investing.
  5. Savings

    How to Save Your First $100,000

    Saving your first $100,000 requires the discipline to put money away and control your spending. But just remember – the savings get bigger as you go.
  6. Insurance

    3 Reasons To Get High-Premium Health Insurance

    Health insurance is expensive, which is why many people opt for the lowest-premium plan. But that may not always be the cheapest.
  7. Savings

    Building an Emergency Fund

    Do you have enough savings to cover the costs of unforeseen crises? We show you how to plan ahead.
  8. Home & Auto

    What are The Best Ways to Save on Moving Costs?

    Because buying a house isn’t cheap, funds might be limited during your move. So, to avoid additional stress, here are seven money saving tips.
  9. Retirement

    4 Financial Fitness Tips for 30-Somethings

    When it comes to investing, your retirement plan could be considered the core of your financial well-being. Here we tell you how.
  10. Investing

    3 Ways to Get Comfortable with Investing This Year

    This New Year begins, turn a fresh page on your relationship with investing and make a pledge to do a few things that will allow you to be more confident.
RELATED FAQS
  1. How does the trust maker transfer funds into a revocable trust?

    Once a revocable trust is created, a trust maker transfers funds or property into the trust by including them in a list with ... Read Full Answer >>
  2. How is marginal propensity to save calculated?

    Marginal propensity to save is used in Keynesian macroeconomics to quantify the relationship between changes in income and ... Read Full Answer >>
  3. How do companies use price discrimination?

    Price discrimination is a strategy that companies use to charge different prices for the same goods or services to different ... Read Full Answer >>
  4. What is the importance of residual value in an automobile lease?

    The residual value of a car is often used by banks and auto dealerships to determine how much to charge per month for a lease. ... Read Full Answer >>
  5. What are the different types of price discrimination and how are they used?

    Price discrimination is one of the competitive practices used by larger, established businesses in an attempt to profit from ... Read Full Answer >>
  6. When is an expense ratio considered high and when is it considered low?

    A number of factors determine when an expense ratio is relatively high or low, but a good, low expense ratio is generally ... Read Full Answer >>
Hot Definitions
  1. Socially Responsible Investment - SRI

    An investment that is considered socially responsible because of the nature of the business the company conducts. Common ...
  2. Presidential Election Cycle (Theory)

    A theory developed by Yale Hirsch that states that U.S. stock markets are weakest in the year following the election of a ...
  3. Super Bowl Indicator

    An indicator based on the belief that a Super Bowl win for a team from the old AFL (AFC division) foretells a decline in ...
  4. Flight To Quality

    The action of investors moving their capital away from riskier investments to the safest possible investment vehicles. This ...
  5. Discouraged Worker

    A person who is eligible for employment and is able to work, but is currently unemployed and has not attempted to find employment ...
  6. Ponzimonium

    After Bernard Madoff's $65 billion Ponzi scheme was revealed, many new (smaller-scale) Ponzi schemers became exposed. Ponzimonium ...
Trading Center