Is there a formula which might help you in winning penny auctions? Probably NO, but yes, here is this formula which might help you in saving some bids.

How would you find out if any penny auction site is involved in shill bidding or using bid bots? It's a real difficult task to find out. Even some of the very popular penny auction sites have been accused of using bid bots.

So what to do? The idea of staying away from penny auctions seems to be the ultimate answer but you'll always have a thought in back of your mind that you might have won had you tried this or that trick. Penny auctions are very lucrative and sometimes you might get some extremely good deals .

We came up with a formula which might help you win penny auctions and if you follow it then it will also ensure to some extent that you lose less number of bids. It will definitely not save you from penny auction which use shill bidding but yes, it'll help you in saving some bids which you might have spent(wasted). This formula will actually help you in determining what is the right time to start bidding on a penny auction.

Very well, how does it work then? This formula tells you when you should start bidding by calculating if the penny auction site has recovered the cost of the auction item. If you know that the penny auction site has made enough from the auction hence they may stop their bid bots then it'll be a safer bet to bid on. It's not a fool proof idea and there are loop holes however it can be used as a general guideline and there is a fairly good chance that you may end up saving more than 50% of the bids irrespective of win or loss.

Ok, let's do some simple maths. We always know 3 things before we go for bidding on any penny auction site. If you don't know any of these before you start bidding then you are there to just lost money like crazy. So here are the 3 things and we have given abbreviations to these terms.

MRP - Maximum Retail Price of the auction item
CPB - Cost per bid
BI - Bid increments

MRP is fixed for items, e.g. ABC gaming console with MRP of $400. Cost per bic or CPB might vary depending on the bid pack size you purchased. Some penny auctions have fixed cost per bid, typically in range of $0.50-$1.00 USD. Bid increment is when someone make a bid, how much price is increased. It may also vary based on auction types, typically 1 cents but could be 2 cents, 4 cents or else depending on the auction.

Now assume that you want to bid for your favorite gaming console which costs $400 USD. Cost per bid is $0.60 or 60 cents and bid increments is 2 cent.

MRP = $400 USD
CPB = $0.60 USD
BI = $0.02 USD

Number of bids required for penny auction to break even = $400 / $0.60 = 667 (Rounded off)
Auction price at which penny auction break even = 667 x 0.02 = $13.34

PRICE AT WHICH YOU SHOULD START BIDDING = (MRP/CPB) x BI

This calculation shows that if an auction item costs $400 then you should start bidding when the auction price exceeds $13.34 USD. Similarly, you can calculate when to start bidding on any auction using the formula above.

There is a chance that auction may finish even before reaching this price but why to worry, same product will be on auction again .. isn't it? You can save a lot of bids (money) if you use above formula and it'll definitely increase your chances of wining once you start bidding after the calculated price is reached. To prove this, take a simple example. Suppose you start bidding on an auction item costing $100 from $0 and spend 500 bids to win it at final auction price of $5. If you would have started bidding after the price reaches $3.33 (calculated prices using CPB=0.60, BI=0.02 and MRP=100) then you would have saved hell lots of bids.

You can always argue that there is a chance that if you were not bidding then probably auction might have finished even before $3.33. Yes, it certainly might have but as we mentioned earlier - everyone gets a second chance and the same auction item will be on sale again so why to worry. If you can save some of your bids and win for less then why not?