Playing
the game of poker is fun and challenging; it takes a little bit of luck and a
whole bunch of skill to win. In poker,
you have to know when to make a run and know when to quit.
An experienced poker player knows all the
scenarios and plays out each one in his or her head. They watch cards are being dealt and
keep track of what has been played. They try to read the other opponent to see if they are
bluffing or not. All of this skill leads to playing the game.
The
penny auction resembles the gameplay of poker. Instead of gambling with chips,
you are playing with bids. As you play
out the auction you are watching and waiting; using your strategy and skills to
win. There are many different strategies you can use to piece together a successful win. The strategies I am outlining
here for you are general strategies, they will work for most penny auctions.
Although, it
should be noted, that there are be some sites for which certain quite specific strategies won’t
work for various reasons because they will have their own rules and conditions. Other sites
may require the use of a specific strategy to win consistently. My purpose here is not to try
and give you every single strategy that will work on every single website, but to give you a
good selection of tips, trick, hints and strategies that will work on most of the websites most of
the time.
Once
you understand a few strategies and start to practice them, over time you will
use those strategies to develop a
system. A system has a number of decision reference points and provides you with options you can use for
success. Each person’s system will be unique based on personal preferences and characteristics.
My goal here is to give you all the information
from which you can design your own system. The reason I am not giving you a step by step formula for every given situation
is there are just too many variables. You and I can use the exact same system on the exact
same auction and get totally different results. It will take time to build that
winning formula and start winning auctions. Do not just go into the penny auction and expect to run a bunch of
bids out and win the item. There’s a skill that needs to be gained before you can expect to
win the hot items without blowing all of your bids.
Some
of these strategies will seem to contradict others and that’s fine. You don’t
want to use all these strategies at the
same time. You want to take a handful of strategies that you feel comfortable and confident to use - try them
out, if they don’t work for you, then choose others. Think of this as a menu of tips,
strategies and tactics, some will work sometimes, and not at other times. You choose what you want
to use and when you want to use them. You don’t want to use them all, all of the time.
Tips
It’s
your money
First
of all, treat your bids like cash; spend wisely, even those which you get for
free. Don’t just throw out random bids
items and expect to win regularly. You can get away with that on a traditional auction online, but the penny
auction doesn’t work like that.
When you are ready to use your bids, have a strategy in place
behind it and go after things you truly want. Avoid impulse bids When you are
looking for an item to bid, don’t rush up to the first thing that takes your
fancy and throw bids on it, hoping to
snare the item. Before bidding, take time to look and study the auction and know what you’re getting into
before you drop that first bid. We’ll cover this more in the sit and watch section.
Starting
out small
When
you are trying for your first win, a good tip – and most websites will tell you
this, is to start on the small stuff and
work your way up. Gift cards are often a good way to go, because you can add them together to make a major
purchase.
The smaller items have less competition
and some are even designed with the new user in mind, restricting bidding to members who have won less than a certain
number of items. The most important asset you have in the penny auction is your own
confidence, you must know how to win and have some experience doing it. Get some, before you move
on to the big ticket items.
Know
your prices
Another
useful strategy is knowing when to start bidding, especially if there is the
remotest chance the site is using shill
or auto bidders. You can have a good look at the site and establish an end price range for products
similar to those you are interested in.
If shill bidders are being used, the price will usually be
somewhere above the minimum price set within the system software. Granted, this can give you a
pretty big price range to work with but if you hold out your bidding until such time as the
item is actually “on the market” so to speak, you will save yourself a lot of money. But again,
if you even think that a site is using shill bidders, you should stay away, because the
odds are stacked against you.
Stick
to a budget
It
is a smart idea to go into an auction with a budget in place. You should know
exactly how much or how many bids you
wish to expend on an attempt for an item. That should be determined by your bank account (don’t spend
more that you can afford), the real retail price of the item and your best judgment of your
competitors (though in a scale, this has the lowest weighting).
Remember, the more bids you put in
do not make your odds of winning greater. Winning is determined by the number of people
in the auction going after the item and how many bids they are prepared to make. So, you
have to be conscious of the point where it costs more than retail. You should
also assess the retail price independently, do not trust the website’s retail valuation.
You can do some of
the planning and research ahead of time. You can calculate that number of bids you can make
where it just doesn’t make sense to continue on in an auction. This is really a spending
cap you place on yourself to prevent overspending. It can be tempting to keep going in an auction
and win that item. But, do you really want to pay more than it’s worth?
Another strategy to
limit losses is to block out your impulsive urges. Many people like to shop and buy on
impulse. This can get you in trouble on the auctions. You think “I can get this if I just
use one more bid! “ Then BOOM! You lose the auction and your bids. The penny auction is a
bit like gambling, it’s exciting and fun but you have to understand your limits. Sit and Watch
(patience grasshopper!)
Sit
and watch is recommended for new members to observe to see exactly what goes on
inside an auction. It is also
recommended for experienced players who want to master the system of winning more auctions using fewer
bids. Before I bid on an item I will sit and watch, taking note of the players and all the
other variables I will talk about next.
The more you learn and know the better your odds are at
winning an auction. This is important for a few reasons. First, you don’t want to just
jump into an auction and start bidding. This type of impulsive behavior will send you broke
quickly. Second, from observing the game, the players and how it’s played, you start to
learn the techniques and strategies that other players are using.
Each
auction will vary just a little bit, because each one will have a different set
of players. It is a good practice to
sometimes just observe how people are bidding and how dynamic each auction actually is. Watch exactly how many
people are participating in different types of auctions at different times and days.
One
suggestion is to keep track of how many active participants there are in any particular
auction. The more participants, the least likely you are to win. Having said that, it isn’t often that
you will be bidding on an item, without any competition. But if you detect the presence of
a seasoned pro, or someone with a bjillion bids up their sleeve, probably best save your ammo
for a different auction.
As
you watch and observe the number of active participants, write down the time of
day as well. You may find that a
particular time of day has less competitors than others, or a different type of
competitor. If you notice patterns and choose your timing well, you can increase your odds of winning. We’ll discuss
this in more detail later.
Know
and rate your competition
While
you are observing an auction, before you bid, you might like to take a look,
where possible, at how many bids your
competitors have up their sleeve and the rate at which they are expending them. You may notice that even
though there are a lot of players, some will spend their bids faster than others, some will
spend all and then walk away while others will try and spend them more frugally. Try not to
bid until you notice the action starting to fall off, which will be after most of the early bidders
have dropped off.
Additionally,
get to know the strategies of other players, observe and learn the strategy of each of the other competitors people in the
auction. This is where the people research is important. You can learn how other winners
approach auctions by watching what they do. Find a player and check out their profile (if
the website allows that). You can follow and learn what that person is doing during the
auction and how they are playing. See if they are trying to dominate the auction, or they are
slipping in with a last second bid, etc.
When
you sit and watch how the auctions play out, take notes on the various ways people
are playing each auction out. Check the
costs and see how many times winners are bidding. Also, it can pay to take note of how many times, on
average, people will bid before they give up.
If you keep a record of this you can work out
roughly how much an auction will go for, by how many participants there are and how much the
item is worth, even before a single bid is placed. Once you get to that level, you will
know when to start placing your bids.
Also,
if you instinctively know (or can roughly calculate) how much an individual
spends on winning an auction in
comparison to the retail price of the product, then you will know what type of competitor they are. If they have a
record of overspending (anything more than 1 time) do not compete with them, they are
irrational and will just eat up your bids.
The aim here is to win more items using less bids.
Anyone can win them all if they have a million bids. Of course you can always use that
strategy yourself, remember if you are watching others, they may be watching you, if you seem
calculated, cold hearted and cunning, they will not want to compete with you. At the other end
of the scale, if you seem irrational, mad as a hatter crazy then they might not want to bid
against you either. Just like in poker, you need to play the mind game, get
into their heads, but only give them what you want them to see about you.
Watching
how auctions play out and knowing the costs inside the auction will save you a
ton of money in the long run. Why?
Because you learn not to overspend, you learn to identify auctions that are too competitive and players
that bid irrationally. Remember, your bids are money so you want to spend it wisely. By
planning ahead and observing how the auction plays out, you can develop a game plan and
winning strategy.
Timing
can make a difference
As
previously mentioned, the time of day or night strategy works by getting into
the auctions at different times when
there is not as many competitors online. This works by targeting times when there are few users in the auction,
thus reducing the available competition. To figure out these times, just observe and
record the time, day and number of bidders. When you start to keep a record of times and room
size, you should start to see a pattern. Try lunch times, directly after work when many people
are driving home, and around school pick up and drop off times.
Holidays
can also be a prime opportunity for penny auction success. On a major holiday many of the potential auction hunters will be
visiting or spending time with family. So the competition is often lower during this time.
This is a great time to sneak into the auction and bid. For instance there may be certain
holidays that are shared by certain states and not others (do your own research here), at those times
your competition is limited, so hit it hard.
Here’s a tip that you can use to
get into those auctions at the right time. Make up a calendar of all the holidays, and which states
celebrate it. If you do the right search in Wikipedia, there is one already done for you, print it out,
stick it on your wall and go for it.
Of
course, the obvious problem can be that only lower value goods are put up for
auction at these times. Smart website
owners are not going to risk high value product at off-peak times. However, there’s no harm in looking and if you
see a pattern emerge, take advantage of it. Strategies
Tag
and defend
This
is one of the most basic strategies the penny auction player can make and
personally, I don’t think it is a
winning strategy to win more auctions using less bids. But, I need to talk about it here because it speaks to mindset of
many penny auction players, even amongst those that call themselves seasoned players and is a
favorite among many power bidders.
Basically,
this strategy, to my mind, is similar to a dog marking its territory on a tree,
or the person who thinks they own
something just because they “saw it first”. The premise of this strategy is that a bidder spots an auction,
places the first bid, known as “tagging” and then they try to defend the “tag” against other
bidders.
The players that use this strategy think that just because they put the first bid on, that
the item somehow belongs to them, like I said, the auction equivalent of a dog marking its
territory. I simply don’t agree with it. Now, I know that MANY experienced players will hate me for
saying this, because they think that this is a legitimate way to play and that having put
their effort and tag on the item that any other bidders are illegitimate.
They particularly
hate jumpers, which I will get to next. Tag and defend strategists truly believe that they
deserve to win an item, just because they put on the first bid, and then possibly spent a lot of
bids defending against other players. Sorry guys life is not like that - were it so every single
auction would go for 1 cent. Some of these guys also believe in revenge bidding, that is getting
out the credit cards and going into debt - just to stop their competitors from winning auctions.
I have even seen them stalking competitors on other sites, just to get revenge. It is a
strange mindset that I will never understand.
Sneak
in and save - (The Jumper)
This
is a most controversial strategy, particularly among the ‘tag and defend’
crowd. It can earn you a bad reputation
and can raise the ire of other bidders - particularly those who have expended a lot of bids to defend “their” item.
If you employ this strategy, prepare for revenge bids and revenge bidders.
Just a tip, if you
constantly employ this strategy, you may want to have a number of usernames, and rotate them
constantly. But looking at it realistically, no one can claim any particular item, the winner
is the one left standing at the end of the auction, not the guy that places the first bid. They
really have no right to be angry, and quite frankly, I think revenge bidding is simply bad
sportsmanship.
If you employ this strategy, you just need to be aware that they will call you a
“jumper”.This strategy works by “stealing” the auction at the last second. Just
as the bidding seems to slowly down and
the clock ticks down to the last second, you jump in with a bid and keep the auction alive. This works well with the watch
strategy because you know how past auctions go for price wise. The sneak strategy is
excellent for saving your bids and money! Of all the strategies in the book, this is my favorite,
because it is the most reliable and the easiest to play.
Here’s
how a combination of strategies works well with the sneak in strategy. By
watching previous auctions, you can make
a rough estimate as to where the auction will peak out. If you use the analytics software and get all of
the past history of the auctions, you know exactly where many of these will finish.
You
let everyone else use up their bids and just keep track of each member. You can tell when people
have maxed out their bid account because they quit the auction. In a sense you are in
the room as a passive bidder until the auction nears the end For example: While this guide was
being written, we observed a penny auction, on a major site for an iPad (always a popular auction).
There were a large number of people in the room. And we watched several of the bidders battle
it out over the next hour. We noticed one bidder bidding quite aggressively from the $4 range
right through to about $12, then suddenly he was nowhere to be seen. He must have used up
all his bids, going too hard too early. Then, we had a look at his user portfolio, lots of
bids and no wins. You want to wait this type of user out before you enter in a single bid. In
hotly contested auctions, they will come and go at different levels, the trick is to recognize
this type of player and let them exhaust their bids and leave before entering yours.
During
the same auction, now at a higher level, we noticed that the newbies had mostly
been exhausted and had left the game. We
could tell because the frequency of bids started to slow. Our guess was that the auction would finish at
around $40, so we weren’t interested at the lower levels. But once the action started to
slow and the timer clicked down to around 4-5 seconds before the next bid was in, we knew it
was starting to get close. Then we observed the eventual winner, who employed the “jumper
strategy”. If the auction looked like it was about to close, he would sneak in a last
second bid, then sit back and watch to see what would happen, every time he bid, it was the same
thing, 1 second left and boom the bid was placed. By this time, around 3800 bids had been
placed, and at 60 cents for each bid, the auction site had already taken well over $2000 and made
their profit target, so the likelihood of this being a bot was remote. And this
was a reputable site, so we were pretty confident that it was legitimate.
Anyway,
if the bidding frequency started back up, as it did from time to time, the
jumper backed off, only ever bidding at
the last second to keep the auction alive. It didn’t take too long before all the newbies had cleared out
and the jumper had worn down the rest of the pack. He won the auction at $41.53. On a
count, we found he had only made 63 bids (out of 4153 that’s 1.5%) for a cost of $37.80 plus
the $41.53 and shipping.
Now,
I’m not saying you can use this strategy and win every time, but this is
clearly an example where it worked. The
thing you have to work out is how many guys like this are in such an auction, what is their history and how
many bids have they got to play with? And don’t worry, if you are looking at them, they
are probably looking at you. One strategy you can use to overcome this is walk in loaded,
carry the biggest gun (in the form of a bid stack) plonk it down on the table, play strict and
hard and stare them down. Oftentimes, even if they have more experience than you, if you are
playing the exact same strategy and you have the biggest stack- they will back out early
because they know that they can’t win in a war of attrition. If however he goes away then comes
back with an even bigger stack than you… get out of there quick.
As
previously mentioned, other bidders in an effort to get revenge, will sometimes
try to “throttle” the jumper. They do
this by placing a return bid right after the jumper places theirs. This is an attempt at intimidation. If this
happens to you, keep your calm, and take either one of two courses of action, either you can
return throttle (placing a bid directly after the last bid is placed), or you can just stay the course -
only bid the last second before the end of the auction. Be warned, if you throttle, you are
getting into a bidding war and either you will win or lose by attrition.
One
last thing to note about this strategy is that by not wasting your bids early
you can watch the price as well. If you
see the cost begin to rise and bids keep continuously rolling in well over your personal limit, you walk away! Most
likely there is just way to many people in the auction bidding on this. There will be a point
where it’s not worth it. As mentioned before, you have a cap or ceiling that you limit
yourself. If this goes beyond that cap, you don’t play. Commit to yourself how many bids you are
willing to put down on the item, based on the number of players in the room and the retail
price of the item and don’t go beyond that limit.
Don’t
chase good money after bad. Just one more bid won’t necessarily win
it.Identifying and beating bid butlers Earlier we discussed how certain penny
auction website use auto bidders to make the site look active, increase the final sales price of
the item and draw out more bids from players. Some penny auction websites also provide their
customers with bid butlers, which are also called auto bidders (but they aren’t the same
as a bot bidding on the website owners behalf, so don’t be confused). These bid butlers, will
automatically put in a bid on behalf of the player when the auction timer gets down to a
certain preset point. The bidder can determine how many bids, or what dollar amount the bids
should start at and how many bids to commit to the auction. The benefit of this is that it
allows bidders to put their bids on auto pilot and “go to sleep” so to speak.
So,
how do you beat bid butlers? The best method is to simply identify them and do
not bid against them. Let me say that
again, do NOT bid against bid butlers, you are wasting your time and money.
I
know there are serial penny auctioneers out there who routinely bid against bid
butlers in a process called throttling.
But that entails you having a heap of bids up your sleeve that you are happy to waste. This book is written for the
average guy/girl who wants to win more auctions
using less bids, not dominating an auction for the sake of domination.
The
simplest way to beat bid butlers is to identify them and wait them out. To do
this you have to know when they are
timed to kick in and then know roughly how many bids are up your competitor’s sleeve - so that you can
take an educated guess as to how long it will take them to run out of bids (or how many bids at a
time they usually preset into their bid butler). Most bid butlers will kick in at around the 4
second mark, although some sites will differ.
What
you may notice during this time is the clock starts to wind down and at that
moment there will be a flurry of bids
all in the last few seconds of the auction. Once you see this, wait and see if it happens again as the clock runs
down to the same point. If it does, you may even be able to count the number of bidders who are
using bid butlers. If you have analytic software
installed (more detail below) then you can identify the bidders and their
bidding history, this will give you even
more information you can use to indicate how long (or how many bids) you have to wait. As soon as you
detect that the bid butlers have exhausted their bid allocation, you can go to work, bidding
against the rest of the real people. Combine this with the sneak in strategy and you will be
able to beat out the bid butlers and win using fewer bids.
Domination
Strategy
The
domination strategy has been talked about in many forums and often used by less
experienced bidders. It’s worth
mentioning here because sometimes you see people trying to employ this tactic. Does it really work?
It
can to a certain extent and its worth knowing even if only so you know what
your competition is likely doing. Here’s
how the domination strategy works: You work to intimidate your competition through subtle or
not-so-subtle methods.
The
first thing you can do is make up a bid name that tells people you mean
business. A name like “UnotWin”,
“BigFatCat_LoadedWithCash” “Dominance”, or “Auction closed” sometimes intimidates or confuses other
players momentarily. If the website has an avatar, some players find the meanest looking picture
that matches their name. This is supposed to show how tough a player they are and that
everyone else should “WATCH OUT”!
A
combination of the sneak and domination strategy can work very well. Here’s how
a hybrid version called the shark works.
You budget say 40 bids to the auction determined to get an item. You use the sneak and watch strategy for
the first half of the auction. You wait like a shark circling its prey.
When you notice that
the price level has reached your researched level (where most have sold at) you get ready to
bite. Once you see more bidders drop out, and the bidding slow considerably it’s time to switch
to a dominate strategy. Your first bid is when the timer is almost at 0 - maybe at around 1
or 2 seconds. Then if someone bids against you, you immediately counter bid (don’t wait till
the clock runs down). What happens is the bidding history will show your name at every
other position. It also shows that you have bid immediately after any counter bid - in short
you are dominating. Now a word of advice, if more than 2 other people jump in to the
auction at any point then you back out and resume a sneak and watch (jumper) strategy, only
bidding if the timer looks as if it will expire. Then when you do bid - you resume the domination
strategy. The other bidders will soon get the picture that you are serious and they can’t
beat you - and they will back off, leaving you the eventual winner.
There’s
one more part of the domination strategy that I will mention here, it’s not
what I’m about, but I do understand it.
It’s the person who purposely bids over the top for items, even over retail - “whatever it takes” (and that’s
a good user name by the way for this strategy) to win an auction. The reason they do this is to
build up a name for themselves so that when they enter the room - everyone else
backs off. These kinds of bidders often say they can sometimes be the only bidders in the room -
because no one else wants to compete with them. Now we are talking some serious irrationality
here and my advice is you ever come up against
them - is to back off. But if that’s the person you want to be - then go for
it. But you need to be aware that this
strategy can also lock you in to a certain type of auction or price range. For example, you can’t be the king (or
queen) of $20 gift cards, then rock up to the big TV section and expect respect. People know
instinctively that it takes more to win a big screen than it does a gift card. Not too many
people are going to spend $3000 on a $1500 TV. But they will spend $30 on a $20 gift card -
just to build a rep.
Avoid
being dominated
We’ve
already talked about irrational bidders; unfortunately, these guys (speaking generically) are a fact of life. You can
sometimes recognize them as the power bidders on certain sites. Some of them (not all) exercise
what seems like an unfair advantage, with huge bid pack reserves and an attitude that they
can’t and won’t let anyone else win. On some sites that also auction off bid packs, these types
of users over bid on them just to stop other competitors from accumulating cheap bids. If
this is the case and you keep bumping up against the bullies of the penny auction
playground, then my suggestion is to try and avoid them. Bid on products they don’t, or try
another site. I know some seasoned bidders who avoid certain sites, just because of the power
bidder bully mentality (not saying that all power bidders are like that - you may be one someday,
but some are). Going up against them, when you don’t have the firepower, will deplete
your bid account, leaving you frustrated and winless.
Gift
Cards
This
is just a little tip, but quite effective, being a little bit smart can still
get you what you want - even if in an
indirect way.
Let’s
say you desperately want to win an iPad but the power bidders are in there, or
the price gets driven too high or it’s
simply just too competitive. You may find that the competition for $50 or $100 gift cards is significantly lower.
If you can pick up just five $100 Amazon or other online retailer, gift cards at a good
price, then you can still get your iPad. However, you do need to be aware of whether the online
retailer will allow you to aggregate your gift cards (add them together) for a single purchase. So
always look for a substitute method of getting what you want. Maybe you can
pick up some smaller items and resell them on eBay and make your money that way.
Analytics
software
I’ve
put this section in last, mostly because analytics won’t do it all for you, if
you really want to win more auctions,
you need to have a deep understanding of how the game really works and what types of strategies other
players may be using. But also once you understand all the other strategies and have a winning
formula of your own, analytics will give you the last piece of the puzzle. Analytic software
will give you the extra inside edge; they are useful for showing who is bidding in an auction and
how many bids they have used. It can be very useful to find out the final price and what
everyone was bidding on. You can also use this to determine if the website is using bots to
artificially increase bids.
It
will also help you identify not only the types of players you want to avoid
playing, but the usernames of these very
players. And vice versa, it will help you identify the chumps who are blowing their bids without a system and who
are easily beat.
What
makes analysis software important is the capability to see all of the bidders
inside the auction. Most penny auction
websites just display the most active bidders over the past five minutes. They do not show the entire list of
both active and passive bidders. The software you can download will give you a history of
everyone in the auction.
Let
me tell you straight, I always use this software when it is available, I would
simply not be without it. If you don’t
use it, and it is available then you are throwing your bids down the toilet because those who are using it, and
know how to interpret and use the information are so much further ahead than those that are not,
it’s not even funny. Having said that, if you buy it without having a system for using the
information, then you can also be wasting your time. I have tried to avoid mentioning penny
auction site names, but unfortunately auction analytic software is often coded especially
for individual websites. Most often it is sold by the auction websites as an add-on.
For
example, the program Beezid Pro is an auction application for the site Beezid.
You can download this program to get
full information on a whole range of past auctions.
Bidproapp
is for Quibids. This software can see everyone that has bid, including both aggressive and passive bidders. You can find
out how many bids the individual has placed in the auction and you can use the
application to figure out where the auctions have peaked out and sold.
All
the programs are similar, if you’re on any of these sites and you want to
increase your chances of winning through
technical analysis of the auctions and other traders - you have to get these products, unless of course you’re
RainMan. It’s as simple as that, otherwise you’re flying blind.
Key
Points Summary
1. Developing
a winning strategy takes some time.
2. Watch
the auctions for some time to get an understanding of it.
3. Always
develop a game plan and budget going into an auction. Risking something on an attempt for a spontaneous purchase is a
killer.
4. Use
the Watch strategy to see what prices are winning. Compare that with the past
to understand where many of these are
peaking out at.
5. Use
the Watch strategy to see what other members are doing and learn their bidding
style.
6. Use
the Time of Day and Night strategy to get into auctions with less people
bidding. The larger amount of people on
the auction, the more bids, means prices rise.
7. Make
up a Calendar of holidays and determine when there will be less people in the
auctions.
8. Use
analytical software to understand where past auctions have peaked out and what members were bidding inside it. Develop a
strategy based on that.
9. Use
the sneak strategy to get yourself in position to “steal” an auction.
10. You
can use the sneak and watch strategy to know where it will peak out. Save your
bids to get in at that price.
11. You
can use domination with the sneak strategy to send a signal to other bidders
that you are going to win this auction.
12. Always
stick to your budget! Don’t exceed it!
