Penbid uses proxy bidding in single item auctions. Bidders place bids by the highest amount they are willing to bid. Then the penbid computer bids on their behalf by the bid increment amount as other bidders challenge that highest bid amount.

Remember if you are approaching the end of an auction, you have to have time to enter bids before the closing time. The proxy bidding system prevents the clock from running out on you, especially if you lose your internet connection at the very last second, the internet slows to a crawl, or another bidder is at their computer hits the enter key at the very last millisecond and out bids you by some ridiculous small amount.

Remember your outbid notice by e-mail may not reach you in time to bid and in some cases not at all, as e-mail can be unreliable on the net. You may at anytime check the standing of all your bids from Buyer Services.

1. You see an item you want
Lets say you see an item you want and you are the first to bid. It is a single item auction without a reserve price* on the item. Lets say the starting price of the pen is $100, with the bid increment of $5.

You know your are willing to pay up to $200, so you place your $200 maximum bid.

* If there was a reserve price on the item the reserve price will act as the first bidder in the auction and all bidders would be bidding against that reserve price until it is met. The notice "reserve price not met" will appear at the top of the items page.

Results
You become the high bidder, but the current price does not go up to the highest your willing to bid in this single item auction. The Current price only goes up by the bid increment amount. However the first bid is always the starting price of an auction. So the current price stays at $100.00, with an increment of $5. And you are the high bidder at $100.00. But, penbid remembers your willing to bid up to $200.00.

2a. Now a second Bidder bids (lower)
Say a second bidder comes along and decides to bid $150.00 and places their bid. The system immediately remembers you as the first bidder left a $200.00 maximum bid amount. Immediately this second bidder is out bid by you. Because the second bidder only bid $150.00 and the system is remembering you left a maximum bid of $200.00 (a proxy bid). penbid places your bid for you at $155 out bidding this challenging bidder by the current bid increment of $5.

Results
The current price the item becomes $155 with a bid increment of $5. You remain the top bidder at $155 and the second bidder becomes the bidder under you at their $150 bid. penbid continues to remember your maximum bid amount of $200. So until someone out bids the highest amount you told penbid to bid for you, you will remain the high bidder and the system keeps bidding for you until your maximum bid is outbid.

2b. Outbid Example
Had the second bidder, bid above your highest bid amount the system would have out bid your $200 maximum bid by $5 and then penbid would bid for them as other bidders challenged their maximum bid. So lets say the second bidder bid $300 and not $150. penbid checks your maximum bid and sees that you have been out bid and sends an outbid notice to your e-mail address.

Results
The Second bidder becomes the top bidder at $205 out bidding your maximum $200 bid by the $5 bid increment. You become the bidder under them at $200. The current price of the item becomes $205 with a bid increment of $5. penbid remembered your bid at maximum $200 and out bids you by the $5 bid increment. Now penbid remembers that this new high bidder has a maximum bid of $300 and begins to bid for them until they are out bid.

Comparing the above example to a physical world auction If you where at physical auction hall where all the bidders are in the same room able to look at each other and the auctioneer in the front of the room, no one can see what the highest bid you are willing to pay is as it is only in your mind.

None of the bidders holding up their hands know at what point the other bidders will stop bidding. Basically penbid holds up your hand for you, for as long as you tell us too by entering the maximum amount your willing to bid. penbid will keep bidding on your behalf in a single item auction until your maximum bid is outbid by another bidder.

So while you are sleeping, working and going about your life the computer is bidding on your behalf for your convenience. So if an auction ends a 3 am, you don't have to get up and bid, knowing the system will bid the highest amount your willing to bid as other people challenge your maximum bid. This saves you a lot of work and prevents you from being out bid or lose an auction because you where not able to get to your computer or onto the net for some reason.

Reserve price auction
If a seller has placed a reserve price on a single item auction it is clearly marked as having a reserve price. That reserve price is acting in the same manner as a bidder in an auction. The computer bids for their reserve price just as if it where the first bidder in the auction. This is called CompuBid. If your are bidding against the seller, the item highbidder will be marked "CompuBid" if you did not meet the reserve price. Once the reserve price has been meet, the "reserve" logo disappear, and CompuBid will be disabled. You will then only be outbid by other buyers. The CompuBid function was enabled to let you know right away if you meet the reserve price, and to give you the option to meet the reserve price right away.