Penny Auctions or Gambling

FOR IMMEDIATE RELEASE
(Free-Press-Release.com) August 15, 2010 -- Penny Auctions or gambling is another new trend are spreading all over the net. The concept is very easy . 1-Buy Bids .2- Bid on items 3-win . You will win 90% lower then the market value of the item.

Seems very interesting interesting isn't it? Here is the what not is to clear to every one the amount of bids that is require to win the auction and the price. The more the item value is the more bids require to win the auction.

Here is the formula in which Penny Auctions works.
MRP - Maximum Retail Price of the auction item
CPB - Cost per bid

BI - Bid increments

MRP is fixed for items, e.g. ABC gaming console with MRP of $400. Cost per bic or CPB might vary depending on the bid pack size you purchased. Some penny auctions have fixed cost per bid, typically in range of $0.50-$1.00 USD. Bid increment is when someone make a bid, how much price is increased. It may also vary based on auction types, typically 1 cents but could be 2 cents, 4 cents or else depending on the auction.

Now assume that you want to bid for your favorite gaming console which costs $400 USD. Cost per bid is $0.60 or 60 cents and bid increments is 2 cent.

MRP = $400 USD
CPB = $0.60 USD
BI = $0.02 USD

Number of bids required for penny auction to break even = $400 / $0.60 = 667 (Rounded off)
Auction price at which penny auction break even = 667 x 0.02 = $13.34

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