How do i start a penny auction site?

[iAnswer]

I'm 13, but when i get older i want to start a real penny auction site. I would like to have as much info as possible about do i need a license, programs for the website,advertising, everything that i can do to get started.

[PennyBurners]

First off, bravo for being 13 and aspiring to running a business!

Let me break your question up into sections:

"do i need a license"

Generally you are required to obtain an occupational license from the county or city your business operates out of. Be it a penny auction, or a Wal-Mart.

"programs for the website"

First off, you need a domain name. http://www.GoDaddy.com is the world's largest domain registrar (the place you buy domain names).

Once you buy a domain, usually only about $10.00 for a year, you need to find a host.

The domain name is just the address online where people find your site. The host is the computer, called a server, where your website is actually located. The host is critical, as many penny auctions that fail or get poor reviews are just guilty of not doing their homework on finding a great host. I love http://www.WiredTree.com. They are consistently rated #1 in customer service. They are centrally located in the United States, in Chicago. Chicago is a major hub for the internet, so WiredTree, along with other hosts, can have redundant connections to the countries best internet providers. Lastly, choosing a host located near the center of the country helps keep ping times from users on both coast as low as possible, which is essential for penny auctions.

Software is usually called a script. Most of these scripts (if not all) run on Linux/Apache servers. There are dozens of scripts online, ranging from a few hundred to a few thousand. Like anything else, you can pay premium to get a custom-built script. When you are ready to start your penny auction, just research all options and make the best choice for you. What is best right now, probably won't be the best in 1-6 months. The script is what dictates the features of the penny auction. Such as; Buy it now, Auto list feature, Bid Butlers, Blind Auctions, Beginner Auctions, Nail biters (no bid butler), Free bid auctions, % of bids back for the winner and runners up

"advertising"

You can get some base customers by teaming up with my website, http://www.PennyAuctionList.com. We will talk with you, and make sure you are operating a legitimate penny auction. I even have a "Verified Penny Auction" list of sites who go through our Verification Process which we promote.

However, forums and lists alone are not real advertising or marketing. They help establish a base level of trust, which is essential, but not enough to sustain a penny auction.

Advertising for most penny auctions seems to be Google Adwords, and FaceBook. I always am amazed when these great verified sites on PennyBurners have not tapped their local market. In my opinion, online businesses are always struggling to get trust. Online pay-for game sites are not exception. What better way to get trust than to say "Check out our penny auction site, if you live in the area, we will hand deliver your item, like a good neighbor" or something like that.

Google Adwords is tricky, and many big penny auction sites are not doing a great job of managing their campaigns. They spend more money than they have to, and are paying more for poorly set up campaigns. Make sure you learn about Adwords, or get some professional consultation or help in that area.

Money:
The bare-bones money required, in my opinion, would be $20,000-$30,000.
-License/DBA/Incorporation $400
-Script: $2,000-4,000
-Hosting/Domain for one year $2,200 (you normally pay this month-to-month, but get a discount for paying 3+ months in advance)
-AdWords/FaceBook advertising for one year $10,000

The number of items, and their value needs to be relative to the number of active users you have at any given time. Starting out, you may only have 2-4 auctions a day with each item's value being $10-50 each. As your site grows, you can steadily increase the value and number of items to maintain variety, and enough auctions for more people to win. This is also where you need to think about "Win Limits". Win limits are different on each site, as they should be. These help keep aggressive bidders (also known as power bidders) from winning everything, which will keep others from bidding against them. That will give those aggressive bidders great deals, and eventually make you wind up going bankrupt.

My advice, is to join http://www.PennyBurners.com and introduce yourself. I personally do not care that you are 13, and in fact commend you for your ambition. 13 year old people like you are who will become future employers and help run this country. You do not have to say who you are, or how old you are when you introduce yourself. Just post the questions you have in the appropriate places, and ask for help if you need it. We are a friendly bunch of people who like to help others.

We hope to see you soon!
-Nicholas & The PennyBurners Team!
Hope to see you soon!
-Nicholas & the PennyBurner Team!