The magic of the Penny Auction business model.

 

When people hear that I am involved with Zeek Rewards, the company that pays people a commission to promote Zeekler Penny Auctions, I understand their scepticism about sustainability of the business model.

I too was very sceptical at first. I could not understand how a company could stay in business when it sold most of its products way below cost. That the company also paid people a commission to help it do this made even less sense.

Then I started asking questions and doing some research and I found the real reason the company can be profitable and why it made sense for it to pay commissions to ordinary people like you and I to promote it.

Here is what I discovered, first lets look at the Penny Auction business model which is simple but sheer magic at the same time because it taps into three of the fundamental motivating forces of all of us:

• Getting something for nothing.
• Getting a bargain.
• Getting something we could not normally afford.

It is exactly the same set of motivating forces that make people camp out on the pavement (sidewalk) overnight, in rain or sun, blistering heat or freezing cold to be the first in line when an electronics store opens the doors on Black Friday or some other widely promoted sale.

The same force that keeps most of us buying lottery tickets week after week when we know that the odds of us winning a big prize are lower than getting struck by lightning or growing a third eye.

The same compulsion that causes people to throw away fortunes at casinos hoping for a lucky break.

Where the magic comes in for Penny Auction businesses is that huge numbers of consumers can be persuaded to channel these forces  into Penny Auctions at a ridiculously low-cost (for each bid) but in sufficient numbers to generate revenue that exceeds the nominal loss incurred on goods sold on the auction.

Here is an example:

A member must purchase bids to be entitled to place a bid for any item on the auction. This double meaning of the word “bid” can get confusing so look at it this way, the bid the member buys to qualify to participate in the auction is his or her entry ticket.

Here is how the numbers might look:

Say 1000 members participate in an auction for an iPad with a cost to the business of $500. The winning bid is $15

If bids (tickets to participate) cost $0.65, then 1000 x $0.65 = $650.

$650 revenue – $500 cost = a gross margin of $150 + $15 paid by successful member = $165 to pay for overheads, commission to promoters and profit for the business.

That is how the Penny Auction business can operate profitably while selling products below cost price. Magic

Now lets look at the benefits to the members of Zeek Rewards who do not participate directly in the Penny Auction side of the business, but earn their commissions from it.

The benefit to the Penny Auction business is that thousands of people place one or more on-line ads every day. It is not too difficult, time-consuming or boring for us to spend less than 5 minutes a day doing that. Much simpler than if the company had to employ people to do that.

The benefits to us as members are huge:

• It is the only home business I have come across that rewards people as long as they do 1 simple task a day (place an ad.)
• Because of the magic of compounding, it is possible, over time, to generate a useful income without recruiting new members.
• The simple report system allows every member to see exactly how much he or she is making each day.
• The success of the business relies on one of the most basic human motivators – greed!
• Consumers tend to maintain their “gambling” spending (lotteries, casinos, electronics bargain sales) as economic conditions get worse.

So that is why I am so enthusiastic about promoting the Penny Auction business. I am building my pension plan and I can see how it is accumulating each day. It is an ideal business for baby boomers, you need very little in the way of computer skills to do it successfully.

Start building your pension plan by checking  out Zeek Rewards. If you want to bid on some bargains, go here to my Zeekler site to get 50 free bids to start you off.

Wishing you success in all your endeavours.