A penny auction site is a new type of online auction website where instead of just paying the winning bid for an item, each bidder also pays a fee to make a bid. The auction ends after a period of time, typically ten to twenty seconds, without new bids, the last participant to have placed a bid wins the item and also pays the final bid price, which may be significantly lower than the retail price of the item. The auctioneer makes money in two ways, the fees for each bid and the payment for the winning bid, totaling typically significantly more than the value of the item. Such auctions are typically held over the Internet, rather than in person.
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