I just stumbled over an "auction" site tonight called "SWOOPO" and noticed that there were "just a couple of minutes" remaining on a Nintendo DS that was (when I first encountered it) going for $1.50 or some such. As my kids would be VERY happy for me to snag a DS, I started watching this.
This Swoopo system is different from a place like eBay in a number of specifics.
Number one, it costs 75¢ to place a bid (every time you up your bid), and each time a bid comes in, a few more seconds are added to the count. On a non-augmenting clock, this auction would have been over a half hour ago, but it's gotten under 5 seconds several times, and has shot back up to 3-4 minutes repeatedly (this one re-sets in 15 second chunks and if a lot of auto bids come in at once it jumps quickly).
Bidders can either do so "live" (as at least two are, going head-to-head) or plug into an auto-bidding bot your minimum bid, your maximum bid, and how many bids (at 75¢ each) you're willing to have it make (there are at least two bidders still in with that).
Another difference is that each bid represents only a 15¢ increment ... so for the cost of the item to increase by a dollar, there need to be seven bids ... each being charged 75¢! So, for every $1.05 the item cost goes up, Swoopo makes $5.25 ... and with the clock re-setting, the auctions can go on and on and on (like the DS one I'm watching, that is still going on, thanks to the clock re-set!
The price of the item just past $45.00, which is a nice round number (in 15¢ bids), so let's look at the numbers ... to reach $45.00 that means (assuming a 0 start) that there have been 300 bids, each netting Swoopo 75¢ ... or $225.00 on a product that has a "suggested retail" of $169.99! And this is still running ... a bunch of auto-bids just hit and the clock's now up to 13 minutes.
Obviously, it must really suck to lose one of the auctions (since if you've been actively bidding, like several of the folks in this one, you've spent a substantial chunk of change at 75¢/bid), so there is a a built-in "urgency" to outbid the other guy (because if you don't win, you're just out the bid charges with nothing to show for it!), plus the clock resetting give you plenty of time to re-bid.
Again, this is sleazy, but brilliant. It's been structured to use all sorts of psychological hooks on folks ... while milking everybody involved in the auction at 75¢ for every 15¢ increment! Now, you can bid on bid vouchers (one 50-bid voucher, worth $37.50 lust went for $1.17 ... I guess that started at $0.02), so there are ways to minimize one's bid costs ... but this is a heck of a business model.
The Nintendo DS unit (a $169.99 "value" item) finally went for $66.45, meaning that there had been 443 bids put in (and the winner was NOT one of the more active bidders on this!), so that there had been $332.25 paid to Swoopo for the chance at winning it. Sounds like a bad bet for the bidders ... I guess I'm glad that it took several steps to get signed up on the site (and I balked at having to spend a minimum of $22.50 to buy an initial block of 30 bids) so I could get a sense of what this thing was about before jumping in with a series of bids!
Anyway, I found this fascinating (albeit sleazy), and thought I'd share!