The really cool thing about buying things on eBay is you might pay less than you expected!
When you place a bid, you might get the item for less than your actual bid. eBay's bidding system is designed to be a proxy-based bidding system. This fancy terms means nothing more than this: eBay adjusts your bid as needed to ensure that you only pay the minimum you have to in order to win something.
How Proxy Bidding Works
eBay's proxy bidding works like this: suppose you bid $10 on something that currently has only a $1 bid. eBay places your bid at $1.10, and you'll be listed as the current high bidder. If others come in and bid higher than $1.10, eBay keeps raising your bid at the preset increments and keeps you the highest bidder automatically until someone bids higher than $10.
So entering the maximum you want to pay early in an auction when you enter your initial bid ensures that maximum amount is the highest you'll ever pay. If, however, you can win with a lower bid then eBay makes sure that happens. If someone outbids your maximum, you'll no longer be the high bidder, but eBay will alert you if this occurs and you'll have the opportunity to raise your maximum bid until the auction ends.
This works both ways. If you place a bid that is higher than the current bid, you might instantly be outbid if the current high bidder had originally placed a bid higher than yours.
To Bid Early or Bluff?
Is bidding early in an auction the best strategy? It can be. It shows ownership and if it's an item that many other sellers are selling, some bidders will see you've placed a bid and move down the list to the next one that doesn't yet have a bid. You might very well be the only bidder in such cases.
For other items, bidding early may be a disadvantage. You show your hand, you show interest, and some bidders might swoop in the final moments of the auction, bid higher than they otherwise would have because you showed interest early, and win the item out from under you.
As a syndicated newspaper columnist about eBay, as well as a trainer on using Direct Marketing techniques to boost eBay sales, I run into lots of eBayers who want to know the way to buy at the lowest possible price. Once I explain proxy bidding to them, they know that getting items for a low price depends on more than just the actual bid they place.