DealDash Business Model | Is DealDash a Scam?

Auctions have been in existence since the 500BC and we’ve seen many new business models built around it; be it eBay auctions or a marketplace like Amazon where sellers bid different prices for the same product. Running an auction-based business model requires a lot of research and adherence to legalities or your business model will be labeled as a scam. DealDash runs one of such auction-based business models where it auctions products which eventually is bought by the customers at a comparatively lesser price than its actual price. The business model runs on a penny (bidding fee) auction strategy and offers the bids for as less as 20 cents. But before moving on to discuss the DealDash business model or whether DealDash is a scam or not, let us first discuss what exactly is a penny auction strategy.

What is Penny Auction?

Penny auction (also known as bidding fee auction) involves participants to pay a non-refundable fee to buy a bid. That is, you pay a non-refundable fee for every incremental bid you place in the auction. Each of the bid carries equal weight and marginally increases the price of the item by a small amount, say a penny, and extends the time of the auction by few seconds. The rest of the rules of the auction remains the same and the auction ends if no one bids more than the current bid in a predetermined period of time (10-20 seconds).

This strategy involves auctioneer to get paid for each bid and also the final price the item is sold for.

DealDash Business Model

DealDash Business Model is a perfect example of bidding fee auction business model where people get what they want for lesser prices without the business owner making losses.

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What is DealDash?

DealDash is a penny auction website started in 2009 which lets you bid for a exhibited product and offers the product to you at the price you bid for if you’re the final bidder. The website runs on one of the most simple yet interesting business models.

dealdash auctions

A bid is offered at a cost ranging from 14¢ to 60¢ depending upon the offers and discounts. These bids make you eligible to take part in an auction. However, these bids are non-refundable and if you’ve used a bid once for a product, you’ll have to use another to bid to participate again in the auction. This explains the revenue model of DealDash.

How DealDash Works & Makes Money?

DealDash, just like any other penny auction website, makes most of its money by selling bids. The bids are sold in packs of 100s and other sizes and the more you bid, the more money the company makes. In addition to the value of the bids, the company also receives the final price at which the product is sold.

dealdash scam business model

Suppose there’s an auction for a t-shirt (actual cost – $10) at DealDash. Just like any other auction, this too will start at $0 and will go on to as high as bids take it to. Let’s assume that you won the T-shirt with your bid of $5. Dealdash will get $5 from you along with the total value of the bids (from all the bidders) for this T-shirt. If the cost of one bid was 20¢ and every bid increased the price of the t-shirt by 1¢, the total amount of bids on that t-shirt comes out to be 500 and the total revenue generated by the company from that t-shirt amounts to $5 + $100(500*20¢) which is way more than the original cost of the T-shirt. This also explains why the company offers free shipping.

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DealDash Business Model | Is DealDash a Scam? 1

However, unlike other penny auction websites, DealDash also offers you an option of getting your used bids back if you choose to buy the product at the original price. This is what separates

Is DealDash A Scam?

DealDash has received a lot of criticism and has been often compared to gambling as people lose money on bidding. Nonetheless, all of these terms and conditions are specified on the website and the people are well aware of the risk of losing money.

To get away with this criticism, the website also has an option of ‘buy it now’ where they give an option to the not so fortunate bidder to make use of his lost money and buy the auctioned product at the original market price and get back his lost bids.

Is DealDash A Scam? No. There are no proven reports of bidding computers or other shill bidding practices being used by the website.

The website is often given a tag of being a scam after a not so fortunate bidder loses a lot of money in bidding. One should limit himself while bidding on these websites and the results will be a healthy and not so scammy looking auction.

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18 Comments

  1. You are way too kind. DealDash’s ads are deceptive. The ads don’t tell how much the winning bid actually cost the winner or what DealDash received in total for that prize. And the price specified for the “buy it now” option is at best fantismicly high.

    If the “winner” researched the item, the might have found a better value elsewhere online.

    Reply
  2. I just saw a DealDash commercial on USA and ended up here. Now I’m wondering if they are doing something wrong why nothing has happened to them till now!
    I believe they are just growing more and more.

    Reply
  3. I don’t think that’s fair to be forced into buying a thing just to get your bid money back , there are other actions you can buy something then pay for it after u won the auction, you don’t have to put up money first you don’t lose money it’s just ridiculous this deal – business and I think it is a fucking scam pardon the French but I’ve never seen nothing as stupid as this by bids and then put your bits up and if you don’t win the auction you lose that money bullcrap who ever heard of such I give you a 10 thumbs down and would never consider ever dealing with DealDash and there are free auctions out there crap most of the stuff on here you can get just as cheap or cheaper without the auction or putting up money to try and buy something that you might not end up getting to begin with it’s insane

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  4. Okay I am confused. I just downloaded this and I bid one bid on an item and it said I won. So did my one .12 cent bid win? And is it only one bid or is it the buy it now price of $40 plus my .12 cent bid?

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  5. It is most instructive to look at the auctions for “bid paks.” Except in very rare cases, the total number of bids placed (final price in $ X 100) far exceeds the bids won and the difference is a net gain for DealDash since these will be replaced by bid purchases. These occasional “bargains” are always featured in the “recent winners” entries. It is also clear that a few- perhaps 2 dozen – bidders have accumulated vast reserves of bids and will dominate any auction they choose to enter. I remain puzzled by those bidders who “win” by placing more bids than they will receive by winning!

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  6. Shame on you and ANYONE who doesn’t condemn penny auctions. You’ll never “win” anything at a price less than retail – certainly nothing popular or electronic – and probably a LOT more than retail. Just like a slot machine, you get pulled in the keep bidding (“Aww, I almost won!”)…you’ll never win anything except a membership in the suckers club. Big deal: Deal Dash lets you “buy it now” if you don’t “win” the auction (which you won’t) at a price higher than retail! Penny auctions should be outlawed. They prey on naive and ignorant people, which is about 90% of the population. Just awful that they continue to operate. I’m sure they use “bot” bidders just to insure no one ever gets a deal on anything except junk, dollar store items. I’m sure people “win” stuff like that – for two dollars instead of one. Some deal, huh? People are so stupid I shouldn’t care, but I still hate seeing these companies get rich on people’s stupidity. It’s sad. It truly is. And this guy endorses it so he’s just as bad.
    No integrity anywhere anymore.

    Reply
  7. If I tell you I am going to take your wallet, am I less of a thief for being honest about it?

    At least with eBay the buyers are not directly billed for winning, and instead it’s taken out of the listing and final bid value fees charged to the seller… The math is easy.

    Too good to be true applies here.

    It’s just a scam where they tell you how they do it, but not what the penalty is in certain terms.

    How is it legit for bids to have variable values, paying just for the right to bid, and no proof all bidders are legitimate account holders.

    You can ignore any facet of their gem of a scam, but who really determines what a fair buy it now price is, and if being forced to accept that or lose your “bids” isn’t really taking a loss compared to other item outlets?

    For me, Homey don’t play that… Not even on Christmas….

    Reply
  8. Deal Dash currently has 49 complaints registered on the Better Business Bureau’s website. Most of them aren’t from people who don’t understand how the system works. It’s from shoddy business practices and violations of its own business model, from extending the 10 seconds after someone has won to 13 seconds, refusing to replace defective items, and putting in bids from people who haven’t placed any bids. They also are involved in a lawsuit in Minnesota right now over their shoddy merchandise. And you may say it isn’t a scam? Mama used to say: If it sounds too good to be true, it usually is. End of discussion.

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  9. It sounded really good until I read all of the information on the page showing how you want to order your “bundle” and I discovered that this is like a club where you receive a certain amount of the product EVERY MONTH without you reordering. DON’T DO IT, PEOPLE.!!!!! It’s almost impossible to turn these clubs off once you’ve started with them and that’s what they’re counting on. They’re using Morgan Freeman and Jennifer Anniston to hook you in. I joined a club that I didn’t know was a club because they were using Meghan, Duchess of Sussex, as their frontwoman. Then when I tried to get out of it, I had to go through hell and high water to turn it off. DON’T DO IT, DON’T DO IT, DON’T DO IT!!!!!!!!!!!!!!!!!!!!!!!!!

    Reply
  10. Help me understand because this is confusing. You said the shirt cost $10 but in the end it sold for $5 to the highest bidder. Ok I get it but if each bid goes up by a penny you would need 500 pennies to reach $5. So at 20 cents a bid and 500 total bids that comes to $100 not $50 so I’m wondering where you got the math that it was $50? These websites are tricky and a huge waste of time and money you barely win anyways.

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  11. Not a scam? Haha! Penny auctions in general maybe not but I’ve watched countless deal dash auctions that must be shill bidders or robots. People spend 2, 5, 10, 20x what an item is worth in bids and not do the buy it now when they lose. More commonly too, I would guess 60-80% of their auctions will go from 3-5 bidders that were at it for hours all of a sudden drop out at once and a shill bidder wins it. I don’t know how they haven’t been investigated for fraud at this point. And if it’s not them responsible, then they’re allowing it to happen.

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  12. If somebody says they are not a scam then they probably work for them…it’s a good scheme but only naive people will fall for it

    Reply
  13. Deal dash has its own robot shill bidders to up the bids, yes I’ve won auctions, but they tend to limit your wins . Its ok i will still bid there, i just am more careful after 6 yrs. T hey have a greay return policy, and kinda cool stuff.

    Reply
    • Hard to believe you would still waste your money on this ripoff scheme after already knowing that no one wins anything for less than retail. The only person making money is the site owner. He “sells” an iPhone for about $1000, takes in $5000 in “bids”, goes out and buys the iPhone for $950 and pockets $4050! You “maybe” saved $5 but probably spent more than the store price! They also buy cheap junk from China, advertise it as something expensive and sell it cheap. The “winner” thinks he got a great deal but he didn’t. These people should be in jail. Biggest ripoff in internet history. And a new sucker comes along every day, so they prosper!
      Horrible.

      Reply
      • I agree with you ! Why would you buy bids bid on something not win the bid and still pay for it it’s fucking insane these people should be in jail this is the biggest scam on in the internet and it’s unbelievable that people still buy into this I don’t understand totally insane and they think they almost got me there are other sites where you can go bid on something and then put your credit card into by afterwards you don’t have to put a credit card in before by bids not get the bids back I eat your money back it’s just ridiculous I so agree with

        Reply
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