Participants pay a non-refundable fee to purchase bids. Each of the bids increases the price of the item by a small amount, such as 0.01 USD (1¢) or 0.01 GBP (1p), and extends the time of the auction by a few seconds. Bid prices vary by site and quantity purchased at a time, but generally cost 10–150 times the price of the bidding increment. Once the auction is over, the auctioneer collects the final cost of the item in addition to the money already collected by selling bids. A TechCrunch article on MadBid, one such site, called this model "a license to print money."[1] Other examples of bidding fee auction sites include Beezid, Ziinga, DealDash, and PisoBid.[2][3][4]For example, if an item worth $1,000 sells at a final price of $60, and a bid costing $1 raises the price of the item by $0.01, the auctioneer receives $6,000 for the 6,000 bids and $60 as the final price, a total of $6,060. This represents a profit of $5,060 for the auction site. Assuming the winning bidder used 150 bids in the process, they would have paid $150 for the bids and $60 for the final price, a total of $210 and a savings of $790. It must be noted that had they not won the auction they would still be out $150 for the bids without receiving the item.Some auction websites offer a 'Buy It Now' feature which 1) allows users to apply the money spent on bids during an auction to the full retail price of the item or 2) allows users to receive a refund on bids if they choose to buy pay retail for the auction item.
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