Calculating Your Edge

Bidding at online penny auctions involves more losing than winning, and this is what makes them tough. In order to be profitable, you need to obviously win more in the few times that you do win in order to compensate for the many times that you will lose. This makes it tough to figure out if you have a winning strategy. It is entirely possible that you will win your first few tries at penny auctions and then be a loser for the rest of your penny auction career. This is perhaps the worst thing that can happen to you because you will always have those big wins in the back of your mind.

To figure out whether you are a profitable penny auction bidder, you need to make a list of every auction you have bid upon, the amount that was paid for the item, the actual retail price (not the one listed by the site but a more realistic one), and of course, the amount of money you spend upon bids. Tally up your profits and compare them to your expenses. An accounting program or Excel can do this task for you quite easily. If you have a positive number at the bottom of the page, you are profitable. But then again, this is not truly indicative of future ability. You need a large number of samples for your data to have any statistical credibility. Unfortunately, the number of auctions you bid upon will not be enough to give you a true idea of your ability until you have been doing this for several years. Still, this does not mean that you should discount the data. Use the limited data you have to give you the best results possible, and adjust your strategy if need be to increase future profits.