Here's how it works:
* You purchase bidding tickets in pre-packaged blocks of at least 30. Each ticket costs you 75 cents, with no volume discount.
* When someone uses a ticket to place a bid, the purchase price goes up by 15 cents and the auction time increases by 15 seconds.
* Once the auction ends, the winner pays the final price and gets the item.
I just watched an 8GB Apple iPod Touch sell on swoopo for $187.65. The final price means a total of 1,251 bids were placed for this item, costing bidders a grand total of $938.25. So that $229 item ultimately sold for $1,125.90.
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Man, that is some evil genius level stuff right there! Doing the math, 75 = 15 * 5. So for every dollar the auction goes up, Swoopo has made $5 on bid tickets! And their only real expense to run this whole thing is the cost of their internet connection! They could easily make 450% profit - a number so ridiculous that it would make any casino owner (who tends to make only 15-25% on his games) blush in shame!
The real kicker, though - the one that really makes you laugh out loud - is the "auction for bid tickets". Wow.
"Nobody ever went broke underestimating the intelligence of the American public." -H. L. Mencken
See also: Dollar Auction, All-Pay Auction