Are Penny Auction  a scam or a bargain?

Conceptually Penny Auction sites are very smart money makers which will probably be only gaining more popularity, or notoriety in the future

10 ways Penny Auctions are  Different than EBay’s
Bids cost from  .60 to $1.00 each
The site admin controls supply and demand
Product price increases .01 cents per bid / to .10 cents per bid
Products start at $.01 to .10
Placing a bid at the last second resets the timer 10 to 20 seconds
‘Bid Butlers’ can be used to automatically place bids within certain price ranges.
Bid butlers not allowed in nail biter auctions
If another bid butler matches your bid butler’s price range all bids are automatically placed and auction time is extended significantly (usually) as all those bids add 10 – 20 seconds each.
beginner auctions allow you to compete with only people who haven’t won an auction
One auction site swoop bug.com offers several options that are much different from the traditional penny auctions. Swoopbug along with the buy it now option also offers a bid til you win option ( members with paid bids get to bid on auctions and if the member fails to win the auctions the bids are returned to that members account until such time as the member has won an auction ) this option does not apply to the nail biters or non profit auctions.
Speaking of non profit auctions Swoopbug also offers a free service to registered non profit or charitable organization. All proceeds minus the cost of the item being auctioned is sent directly to the Non profit.( No administrative fees or deductions )

Verdict: Penny Auctions are  not a Scam and Definitely not a Bargain
These Auctions make too much money using gambling psychology and marketing. It doesn’t need to do anything illegal to add icing on the cake, its profits are already enormous. While it can be profitable to setup bots that bid up the price until a target is met, penny auctions can do this legally by Google ad bombardment of certain products and keeping the supply of products low most penny auctions have  a limit to the auctions There’s no real way to know for sure if they have any shady methods, but in my opinion they’re already making too much money to risk anything stupid that might arouse suspicion and lead to a PR disaster.
It should be noted the question isn’t how much the penny auction site make on any particular item, rather can you actually win an expensive item for the cost of a dollar ? The answer is yes. Just because an item costs 5 hundred dollars at a retail store and there are 900 bids ( at a dollar each ) doesn’t mean squat. The last bidder to make the one dollar bid wins the item and that’s that. Sure the others lose but the winner sure isn’t about to complain, such is the case with lottery tickets. When you purchase a ticket and do not win, you may feel bad, but the next day your back at that counter buying another ticket or two right.. People seem to be fixated on how much the site is making and losing site of the fact that not matter how much the site makes there are winners and as such there are going to be losers.

Logical Pitfalls
There’s several ways you can fail at these auctions Understanding these 5 points should increase your chances and make your expectations more reasonable.
Pitfall #1: Gambling psychology
Penny auctions are a modern, more aggressive implementation of the dollar auction which is designed to make logical people waste an irrational amount of money. Most auctions have a big red ‘last 10 to 20 seconds’ countdown flashing hundreds of time before the auction ends. Most of the time on items that are worth something: many people lose, 1 person wins. Like gambling, people are much more likely to remember how many times they almost won or won rather than all the times they lost, getting hopes they’ll learn to play the system or if they did something just a little bit differently it will lead to success. If a person has submitted a majority of their bids, and they only joined the site to buy a particular item, it may seem logical to continue bidding more than the item is worth just to try and avoid having to buy more bids or risk a clean start with few bids on another auction. It’s easy to not think clearly when you constantly have a resetting big red flashing 10 second count down. Pull away from the page when you need to think about something and don’t act until you’re completely sure. Calculate the cost to risk analysis and be aware of how many people are bidding. Lurk if you’re a new user.

Pitfall #2: Sold for Only $x! I should have bid
Many higher price items sell