A Dell notebook computer regularly priced at $730 sells for $48.01. A Kindle 3 with Wi-Fi, normally a $140 purchase, sells for $10.91. A PlayStation 3 bundle priced at $400 is bought for only $5.74. No, this is not the black market selling stolen goods – these are brand new products sold and shipped to your home through the website BigDeal.com.
How are BigDeal and retailers giving such staggering discounts while remaining profitable? It’s the same way casinos are able to provide eye-popping jackpots without going out of business. The name of the game is numbers, and BigDeal knows how to keep them in its favor. BigDeal may appear similar at first to other online auction websites, but for one important difference: unlike eBay or other auction sites, placing a bid on BigDeal is not free. On BigDeal, users must purchase bids for 75 cents apiece. To average consumers this may seem negligible in comparison to the substantial discount they hope to receive when bidding on a product.
But for BigDeal, this translates into substantial profits. Each bid raises the price of the item by a single penny, and adds 30 additional seconds to the auction clock. Other bidders then have the short opportunity to cast additional bids. This system means that if the price of an auction item is raised only $1, BigDeal receives $75 in bids.
Unlike other online auctions, being outbid means BigDeal users must bid again or lose all of the money spent previously placing bids. In every auction, there is only one winner; the discounted price for the item (and the profit for BigDeal) comes from the net loss of the several other bidders. High-end items up for auction, such as laptop computers and Kindles, often generate hundreds of bids, as is shown by the statistics BigDeal provides for each auction.
Luckily for bidders, BigDeal does offer a “Buy it Now” feature, which subtracts the cost of your used bids from the normal retail price of an item. This is useful for those who really want an item and are willing to pay full retail value, but want to try their luck for a potential discount.
The lucky winners of BigDeal auctions can walk away with items discounted 98 percent off retail value, as is shown by the numerous advertisements highlighting the website. What isn’t strewn across the homepage of BigDeal, however, is the money lost by bidders who failed to place the last bid after sinking numerous bids (and a substantial investment) into an auction.
It’s important that users do a bit of research before bidding on the website. BigDeal provides various statistics on previous auctions that include the total time of an auction, the total number of bids, the winning price, and the percent off retail value. Using these tools, and being fully aware of how the bidding system works, bidders are more likely to snag the item they really want while using the fewest number of costly bids.