penny auction

A penny auction is a type of online auction where each bid increases the price by a small fixed amount—often one cent—but placing a bid costs the bidder a fee, typically purchased in advance as bid packs.

The auction timer resets with each bid, extending indefinitely.

The model generates most revenue from bid fees rather than final sale prices, making it profitable for operators even when items sell far below retail.

Critics consider penny auctions a form of gambling, since most bidders spend more on fees than winning items are worth: I lost fifty dollars in bid fees trying to win a ten-dollar gift card at a penny auction.