Are Penny Auctions Like DealDash Too Good to Be True?

5 min readAug 16, 2019

In 2008, the first penny auction website officially launched. It’s been 11 years since then, but the world of penny auctions is still little understood and often draped in mystery. This may be because so many of the facts surrounding penny auctions seem too good to be true. 90% discounts on hot tech products, bids of $0.01, tons of inventory, and the list goes on and on. In the world of scams and scammers, we’ve been conditioned to be as suspicious as possible of offers like this. We’re always waiting for someone to say, “And all I need is your social security number!”

But unlike many of the scams seen online, penny auction sites have persisted for over a decade. So what’s the truth behind these sites, and with dozens of different platforms how can you be sure which are legitimate and which can actually offer all of the things they claim? Can any of them really give you 90% discounts on products?

Let’s find out.

Pirates, Profiteers, or Partners?

The main concerns behind penny auctions is what exactly their relationship is with the users they convince to bid on the site. That’s because one of the biggest questions is how exactly these sites make money if they’re selling products at such discounted rates. It’s this question that leads many people who see their ads or hear about them online to conclude that they must be a scam — after all, if it seems too good to be true, that usually means that it is.

So which idea about penny auction websites like DealDash is the accurate one? Are they pirates who are simply lying to users in order to illegally steal their money? Are they profiteers who manipulate the truth in order to earn a profit with unsavory practices? Or are they something else, a business like any other that’s developed an effective model to provide profits for them and value to users?

To find out, it’s important to develop an understanding for how penny auction sites actually work from the inside out.

Inside the World of a Penny Auction Site

DealDash was founded almost exactly ten years ago, back when penny auction sites were relatively new to the world. Since then, they’ve become one of the most established and successful penny auction providers in the world. But how can a company like this survive for a decade when their business model is built on offering expensive products at rock-bottom prices?

The answer lies in the way that they structure their bids and auctions themselves.

An auction on DealDash begins at $0.00, and each bid made by a user raises the price by exactly $0.01. Each time a bid is placed, a 10-second timer resets and begins to count down until the next bid is placed. Whenever that timer is allowed to run out without an additional bid occurring, the current bid wins the auction.

But what really makes penny auctions unique is that each bid placed has a set cost required to place it. On DealDash, that price is $0.15 or less. A user must pay a fee of $0.15 for each bid they place on an auction, whether or not they win the auction in the end.

This is the key to penny auctions, and what allows them to be effective for both the users and the companies themselves. This approach limits how high auction prices rise, keeps users from spending too much to participate, and allows companies to earn a profit along the way.

Because each bid is only $0.01 in the auction, even a thousand total bids would only result in a price of $10.00. But that equates to $150 in bid fees paid by users, spread out over dozens or hundreds of bidders so that each only ends up paying a few dollars on average to participate in the auction. These fees help auction companies thrive while providing a valuable service to users — access to inexpensive opportunities to get great deals on products they love.

But who are these users making penny auction sites like DealDash so popular?

Who’s Using Penny Auction Sites?

Penny auctions have become popular among a wide range of users. They started out as a place for online auction enthusiasts to experience the thrill of fast-paced auctions that could result in massive savings. But since then, they’ve emerged as a place where people from all backgrounds can access deals if they’re willing to put in the time to learn the right strategies. Fortunately, sites like DealDash have tools designed to automate the process. They allow you to set bid limits and will then strategically placed bids on auctions based on your parameters.

One active member from DealDash’s community, Craig from Los Angeles, tells about his experience:

“I was watching a TV show, and on came this commercial. At first I thought, this can’t be real, they can’t be giving out deals like these. But then I went on the site and purchased bids, and started winning auctions for products at such great prices, it was unbelievable.

After winning a few auctions, and getting the products delivered to his doorstep, he was convinced that there was indeed something there, as he recalls:

“The auctions can be challenging, but it’s fun — and it’s a ball when the products are at your doorstep and you get to open the boxes.”

He has been very happy with the product selection and is excited to show his favorite products bought from DealDash:

“I’ve gotten cufflinks, towels — outrageous — but the best thing is absolutely the drones, they’re great quality and easy to work with. I feel like a professional pilot now.”

As long as penny auction sites continue advertising as high as 90% discounts off the retail price of products, there will always be those who are skeptical of the way those discounts come about. But a unique business model shouldn’t cause you to write off an entire auction format. While there are certainly auction sites that are less reputable than others, just as there are certain restaurants that you wouldn’t eat at if given the choice, doing your research will reveal a world of auction sites that have been functioning and thriving for years will providing a fun and effective way to get great products for less than their retail value.

So the next time you hear someone bashing penny auctions and how they’re nothing but a scam, have them give you a penny for your thoughts on the matter.




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