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At Penny auctions, you pay for every item you bid on, regardless of whether you win the auction or not. After the auction starts, the price of the item starts from zero or the buyer can set the start price which is usually very low, much less than the actual selling price of the product. Each offer raises the price by a penny and resets the countdown. When the time is up, the last game is the highest bid. Here, unlike standard auction bidders can't set the bidding amount. It's important to understand that auction sites don't make money by selling items at low prices. They make money by selling bid packages. When you participate in an auction, you have to purchase a bid package. Each time you bid, the number of bids decreases. Each auction is configured for a specific time period. In some cases, however, a new bid may add a few extra seconds to the auction. This means that it is impossible to know exactly when the auction will end. With thousands of bidders and no idea when the auction will end, their chances of winning anything are slim. But you still pay for every offer. And this is where website owners make their money. It is not uncommon for hundreds of people to hold thousands of auctions before the end of the auction. If you lose an auction, some auction sites will offer you the option to purchase "retail" products for less than the auction price. In most cases, items purchased from the auction page are marked. So, to sum up, penny auctions, also known as bid-based auctions or live auctions are auctions in which each participant must pay an auction fee for each incremental bid. Each auction starts with a small reserve price and a countdown timer. Each new auction raises the current price by a small, fixed amount and resets the timer.