This is a type of all-pay auction, where people wanting to bid must pay a non-refundable fee to place small incremental bids. The user takes part by first purchasing blocks of bids, which can be used as they wish. Bids are typically purchased for around £1 each, in a block of 30 or more. Every time a bid is made, the sale price increases by around 10p or a similar tiny amount. When the end of the auction arrives, the last bidder wins and pays the final bid amount.
In penny auctions, many items are sold well below retail value; for just a few pennies or a few pounds. However, for every item sold below retail value, the auctioneer makes several times the retail price, through selling the right to bid on that item. This form of auction has become increasingly popular on the internet in recent years.