The recent surge in popularity of penny auction websites are a cause of entertainment for some and a cause of concern for others. Websites such as Bidoncash.com allow registered users to place auction bids for monetary prizes by charging a single fee per bid, usually one cent, and then allowing the auction to escalate. While Bidoncash.com is essentially an online gaming website and can be interesting and potentially even profitable, the mathematical concept behind the site suggests that any money made from cash bids is extremely low yield. That is to say that the amount of money invested into the site by penny bids is much greater than the returns of even the largest cash prizes. This Bidoncash Review analyzes how the site operates and collects revenue, and how a player could potentially win cash prizes from the auctions.
The foundation of how Bidoncash works lies in the notion of individual prices for bids. The term “penny auction” is an accurate description of the site (and other imitation websites) as most bids cost only one cent to place. This money is permanently lost and only qualifies one single bid, so that another bid will cost another cent. The allure of penny auctions is the rock bottom price compared to the payout, and even bidding a dozen times will only cost a handful of pennies while the payout can be fifty to one hundred dollars means that lost auctions will not be a detriment to registered users. In addition, they will gladly come back for another chance at a new auction.
Bidoncash relies on a psychological principle as its means of profit production. The notion of “sunken costs” apply to money (or other resources) that have been invested into a case that has yet to produce results. Sunken costs means that the only way one can receive the benefit of the money they have already invested is to invest more. Many other businesses use sunken cost psychology for time or money; movie theaters will drastically overcharge for new releases even when they are poorly received; the high ticket costs ensure that customers do not leave the theater as they want to get their money’s worth. In this movie example — as in the case of spending money on a bad meal — the customer cannot improve the quality of their purchase, but believe they can justify the expense by seeing it to the end.
Bidoncash uses sunken cost in their auctions by charging for individual bids. A one cent bid spent on an auction will almost certainly be overbid in a matter of seconds (unless the bid comes in the absolute last instant of the auction), as the cost for a bid is essentially nothing for competitors. Sunken cost leads one to believe that as they have already invested money — whether one cent or more — they should invest more or the money is lost. The reality is that the money is not irretrievable, but the only way to return any profit is to invest more. This causes two specific results for almost every auction.
The first result is that the cost of the cash prize is increased drastically as dozens or hundreds of bids are piled in. Bidders for a one hundred dollar prize may continue to place bids when the auction fee rises above one hundred dollars, thinking that their money will have gone to waste even if they must pay more than they will receive. The escalation can grow out of control, especially in the last moments of bidding, as scores of bids come in.
The second is to provide the financial backbone for the site. However much Bidoncash has to shell out for the prizes is irrelevant, as the thousands of bids have added up to an amount that, even at only one cent each, well covers the cost of the auction.
Bidoncash is a site that promises easy money, and there is a slim capability to make money from the bids. However, it should be approached as a site for entertainment purposes, as it relies upon poor decision making from bidders to make money for its host and programmers.