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Users can also bid via SMS however it is substantially more expensive. Auctions run on MadBid.com are commonly known as bidding fee auctions or penny auctions, a type of auction in which participants must pay a non-refundable fee to place a small incremental bid. The winning bidder pays the final bid price, which is usually significantly lower than the retail price of the item.
Because most bidders will receive nothing in return for their paid bids, some observers have stated that the fee spent on the bid is actually equivalent to a wager. Each auction has a timer which typically runs for between 15 seconds to 1.5 minutes. When an auction starts the timer will count down from its set time, when a user places a bid the timer will reset to its original time and start counting down, this process continues until no user places a bid within the specified time and then the auction will close. The highest bidder (which is the last bidder) will win the right to purchase the product for the auction close price.
MadBid.com also has a Buy Now feature on some auctions, which means a user can buy the product at any time during the auction, and get a discount equal to the value of bids placed in that auction.
edit Controversy Pay-to-bid auction sites often come under scrutiny and are likened to gambling. In December 2008 the BBC questioned whether penny auctions sites were like an online lottery following a report from a gambling expert. In response to these claims, MadBid Managing Director Juha Koski commented that It has been proven over and over again that being a successful bidder on MadBid.com requires a combination of skill, knowledge and judgement. Some of our users win more items than other by deploying bidding strategies that are successful. The Gambling Commission said it could not comment on individual sites and was not convinced that penny auctions amounted to gambling. However, it added that it would keep a close eye on developments in this area.
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