Penny Auction Startup Myths & Flaws: Introduction

by Amanda Lee on January 12, 2010

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Start a Penny Auction,

Work At Home,

Make Unlimited Income!

Maybe you found this article because you’ve recently stumbled upon Swoopo, BidRay, BidCactus, BidFire, BidRodeo, Beezid or the like, you’re in awe of the pay-per-bid, penny auction concept. You watch the auction timers tick down and back up again (10,9,8,7….20..3.2..19…) for hours, hundreds (even thousands) of bids at $0.40-$1.00 a click are placed right before your wide-eyes, then you think, “Ah-ha!, Why hadn’t I thought of this! If only I owned Swoopo, I’d be rich!” Of course, this is before  you found out that there are dozens of Swoopo Clone scripts being sold for as little (and less) than $7.85.

This $7.85 Swoopo Clone script was for sale on eBay back in August of last year:swoopo clone

According to the description, this under eight-dollar script is a “powerful, scalable & fully-featured application that lets you create the ultimate profitable online penny auction website, just like TeleBid, Swoopo & Madbid.  And they didn’t forget to add the effulgent dubious claim that the proud owner of this under eight-dollar software  will allow you to MAKE AN UNLIMITED INCOME!”

UNLIMITED -adjective

“Without any qualification or exception; unconditional.“

Little did you know the script you are interested in may just be pirated software (warez) and infringing on copyrights.

Apparently the old adage still applies here, if it looks too good to be true, it probably is too good to be true.

There are tons of people who want  to “stick it to the man,” everyone wants financial freedom, some want it with as little to no effort as possible. Ok, who likes to work anyway? :-p

The real problem here is when people don’t even care if they rob the working man in the process

With the growing popularity of penny auctions you can bet there’s going to be a lot of bidders and observers who want to get in on the action. Not only as bidders, but as penny auction site owners. They see how much money people are spending bidding and see the possibility for an easy online business, they’re sure that the site owners must just rolling in the PayPal dough.

It seems as if there’s a new thread started on our forum each day from people eager to learn how to start their own penny auction.

We receive questions ranging from types of items that should be offered to technical requirements, scripts, incorporating and marketing costs.

Most everyone thinks that starting a penny auction site is an easy feat, but the truth is it’s really harder than most people think.

Over the next few posts (or as many as it takes) Penny Auction Watch will attempt to dispel penny auction startup myths, as well as discuss the various penny auction scripts on the market today and why some of them shouldn’t be for sale at all.

No, I’m am not a penny auction site owner out to hopelessly bash your dreams of starting your very own online penny auction business. I have, however, met dozens of them over the past year and believe me, it’s not as easy of a business to get into as you would like to think.

In closing, I’ll leave you with our list of dead penny auction sites (R.I.P.- some, we couldn’t be happier to see them gone), it’s growing by the day.

And to think  that this list is only just a glimpse of the penny auction sites that have come and gone over the last few months…

Stay tuned!


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  1. Another Penny Auction Startup Asks for Bots
  2. Startup Penny Auction Receives $4.5 Million in Funding
  3. Designer Fashion Entertainment Auction Startup ToVieFor Shuts Down
  4. PennyPlex Introduction Q&A

Tagged as: flaws, get-rich-quick schemes, lies, myths, penny auction scripts, penny auction startup, scams

{ 9 comments… read them below or add one }

David January 12, 2010 at 1:06 am

Disclosure – I am involved in a new Pay-Per-Bid auction (www.YooBeeDoo.co.uk).

Starting a Penny Auction or any other fee-based auction is just like any other business start-up (read incredibly hard) EXCEPT it has the added disadvantage of a high bleed rate when you don't have enough users (it's not like an online shop with low-ish running costs if no one is buying). It is not something to be done lightly! When dealing with people's hard earned cash, you really do owe it to them to provide a decent and honest service…and with an $8 script and done 'part-time'…I just can't see that happening. The above list isn't even complete… Each and everyone of those sites, unless scam sites, will have lost a tonne of money before closing…

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Jared January 12, 2010 at 4:17 am

You’ve completely overlooked the fact that the <$8 USD script is stolen/warez and is illegal to own… I should know, I bought it and then received a C&D from the software owners…

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auctionwatcher January 12, 2010 at 7:00 am

You're absolutely right, and this <$8 script is not the only pirated warez being distributed and used. More on this soon. E-mail me if you have any additional info. editor [at] pennyauctionwatch [dot] com

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matt January 12, 2010 at 8:20 pm

you can add stealabid.com to that list they were pretty shocking

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Quick2Bid - Viraj January 12, 2010 at 10:51 pm

Disclosure – I am the CEO of Penny Auction, http://www.Quick2Bid.com

Completely agree with David and Auctionwatcher's comments

There are plenty of people who get in involved on the false pretence of a cheap entry to market. Even if it were the case, having the website is effectively like having a shop front – it is no guarantee that the business behind it will be viable or profitable.

It is sad to see, because they not only lose hard-earning money, but it creates more sceptics and taints the industry

The real barriers to entry come from marketing, proper web development, legal costs, building great customer service and…. products – yes, the majority of auctions make a loss and each of those is money out of your pocket before you can even come to pay fixed costs.

Long term full-time dedication, business acumen and investment provide the only chance of survival (let alone profit).

Another old adage very much applies: Nothing is easy and anything worth having, is worth working hard for.

Look forward to reading the rest of this series of posts.

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FirePies January 15, 2010 at 1:37 am

Thank you for the information I have read so far on your site. It is indeed a pity to see so many penny auction sites to have started and failed because the owners did not do their homework first. It looks like easy money from the outside, but anyone who has any experience with business or life in general should know that if it looks too good to be true, it probably is. And penny auctions are no different if it looks like easy money. Yes, there is money in it, but there is a lot more to it than simply throwing stuff out there for auction and hoping everyone comes to your site to bid.

I am a web designer and have toyed with the idea of starting a penny auction site after a friend introduced me to the concept. Instead of doing an entire auction site, I have decided to host a once-per-month 6-hour penny auction on one of my current websites that sells open fire cooking tools and camping accessories. I think the auction will be fun and should generate some decent income during our slower sales months.

To draw more bidder interest and increase activity, We are selling bids for only 10 cents each for the very first auction with hopes of at least breaking even. This should hopefully attract plenty of bidders for the first event and generate plenty of interest in auctions during the following months. Since I'm only trying to pay my bills and not retire this year, I will sell bids @ 25 cents per bid for future auctions. My son is a very sharp programmer and is going to write me the script to operate this part-time auction. If it is possible, I am going to ask him to somehow include something in the script that would exclude bots from bidding so that all bidders have a fair and equal chance to win an item.

Also, in reading the comments, it seems that many (if not all) of the failed auctions started out with a good idea but failed to realize that in order for it to work and be profitable at all, they would need to have enough bidders to pay for the overhead. When I first saw a penny auction as a business person and realized the income potential, I got excited. But at the same time, as a web designer, I had to ask myself "where did all of these bidders come from?" Websites fail because they don't draw traffic. I'm sure that a good chunk of those mad profits is spent drawing traffic. After giving it some thought, I decided that a penny auction site would be a great idea if you had a considerable chunk of money to invest in getting it off the ground.

Armed with this knowledge, I am going to only run my auctions one per month, and will sell bids in advance of the auction. If there are not enough bidders prior to the start of the auction to make it profitable, the auction will be canceled for that month and all bids will be refunded or, if the bidder requests, carried over to the following month's event. This way, we know up front how many items we can put out for auction each month without sending ourselves to the poor house. We will also feature a Buy it Now option during the auction where watchers who do not wish to participate can purchase auctioned items at a discount from our normal retail.

Thanks again for the very informative site!

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Pennyscam February 9, 2010 at 5:52 pm

Potential owners visit- http://www.pennyauctionscriptscam.com

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Greg Fisher March 20, 2010 at 4:50 pm

My partner and I are trying to start up an online auction site, http://www.jeeler.com. It will be significantly different than the others. Right now we are waiting for the legal papers and changing the script we did buy to fit our needs (hopefully it is not illegal software). We are checking into it now that we have read some of your information. Also, we are looking into any back doors that might have been put into the script by the writters.

I believe advertising is the key to success, which is very expensive.

We want to run an honest and profitable business that is fun for the user.

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Rest For the Weary January 24, 2011 at 1:28 pm

I release this declaration in the united states of America and the World that every thief will fail in his undertaking and every good man or woman will find success and Happiness. From this day forward 1/24/ 2011.

Reply

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