Well one of the sites that was mentioned by my wife was quibids.com. From what she understood, people could bid on items similar to an EBay auction, and save as much as 80% on the item retail price. I come from the philosophy that if it sounds too good to be true, it usually is so I decided to investigate the company online. At first I saw a bunch of questions asking if quibids.com is a scam but surprisingly most of the answers were no. So my next thought was ok, well how do they make money while selling items like the iPad, Macbooks, etc at such a discounted rate? Well I did the math so here it is!
Lets look at bidding on a iPad in an auction at Quibids or similar penny auction websites. Well before you get started you have to purchase your bids upfront in fixed increments. The price equates to $.60 per bid that you make on an item. You have to purchase enough bids upfront however since you lose your bid cost (or 60 cents per) if you do not win the auction. Huh you say??? Well more on that later. Ok, now that you have purchased your bids, you choose to bid on the iPad. The item starts at zero dollars and the bids raise the price by 1 cent per bid.
So if we do the math, it costs you $.60 cents per bid but the price only goes up 1 cent per bid when a user decides to bid. Therefore lets do the math. Lets say a person wins an auction for the iPad at $100. Sounds like a great deal for this person right?? Well, remember I just said it cost 60 cents per bid. So if it took the person 300 bids, they would have to pay $180 plus the $100 plus shipping for a total of around $300 or so for the iPad. This is still a great deal right??
How can they do it?
So how does Quibids make money? Well, at 60 cents per bid, it takes $60 to equal $1 of price bidded. (i.e. 100 * .60) So if the person wins the bid at $100 for the iPad, Quibid makes a whooping $5700 for selling a $800 iPad ($6000 total- $300 paid by winner)!! You of course have to deduct the actual inventory price and overhead costs from this but you get the picture.
Is this a scam?
Well, no. Quibids is banking on you the bidder driving up the costs of the product and/or making numerous bids on a product to drive their profit. Most of the high end products will start bidding at 1 cent so they are pretty much guaranteed to come out ahead most of the time. There is the occasional steal here or there where a person gets lucky but those are probably few and far between. Someone will pay and that someone will most likely be you if you lose the bids you participate in since you do not get your money back. Repeat, you do not get your 60 cents per bid back if you bid and lose.
My wife and I have decided that Quibids auctions are basically like gambling since you have no guarantee that your bid will lead to a return. Therefore we have decided not to participate at this time. Please check out my new blog if your looking for legit ways to bring in income or invest time that will have some return. If you have participated in or actually won an auction from Quibids, I’d love to hear your testimony.
Also if you wish you had a business like this for yourself, well you can! ZeekRewards offers opportunities for people to start their own penny auction business by joining their program. You can find out more information here or bid on products here (500 FREE bids to start). **(8/17/2012) Update…just found out that ZeekRewards has been shut down by the SEC for being a Ponzi Scheme!! Here is the article by CNN on how the owner took millions and is trying to settle the case. I have tried to dispute the charge since the transaction happened less than 45 days ago. However my money probably gone :(**