The next thing to consider when thinking about creating a penny auction is the types of products that you are going to offer for people to bid on and win. You need to think strategically about this.
The most popular penny auction items / products to consider are generally high end technology gadegts and consumer goods that are probably outside of the everyday budget of most people that will be using your website. However, you also want to make sure that these high end goods are well known and desired. For example, I am sure there are some very expensive and advanced electric fire places out there - but that doesn’t mean people will want to bid on one in an auction.
Instead, in your penny auction, you would want to concentrate on items such as Plasma T.V’s, laptop computers and the latest games consoles. Almost really expensive Christmas type gifts. There is a good reason for this. They are aspirational products that people may have used before; this direct experience with what you are offering on your online penny auction website is key. They know that these items are good, fun but, however, are a luxury which can rarely be bought without much thought and consultation. Therefore if people think that they can have these for free, they will take the oppertunity. In short, if it would appear that a small financial input, with some risk carries a potentially large payout then this is attractive - especially when the product they are bidding on is well known and desireable.
This is what penny auction studies experts call the endowment affect. Once the user has bid on an item, it is in their nature to keep bidding to make their previous bids worth it. Think of averaging down in a falling stock market, so that you hold more stock at a proportionately lower price than you did before, this is the same mentality that can be applied to the tactics of a penny auction website. The end result being that people will go past the amount they may initally wanted to have spent in the penny auction just because they have already spent so much.
Stay tuned for a look at the concept of bid packs and how this will help your penny auction website to remove the ‘real’ money aspect from the user experience and so encourage more bidding on your website.