There is another penny auction site like this, I can't remember the name off the top of my head though. Basically, you buy "bids" for $0.60 to $0.85 per bid, you then bid on an item, and the price goes up by a penny. If you win the auction, you pay whatever the ending price is, plus you've paid the .60 to .85 per bid.
So, let's say I want an item, and so does someone else. So just the 2 of us in the auction.... The bidding (I think) always starts at $0.00.
I place a "bid" which costs me $.60. Then they place a "bid". I then place another "bid" which costs me another $.60 (the item price is now at $.03, because there have been 3 bids)
So on and so forth.... let's say the auction ends at $.11, and I win it. I have paid $3.60 for my bids (I've bid 6 times at $.60 per bid) and $.11 for the item, plus any shipping costs. (I realize most auctions won't end for $.11, but I wanted an easy way to try and explain!)
Also, most items have a "sticky clock" where if you bid in the last seconds of the auction, time will get added back onto the clock. (up to an extra 20 seconds I think)
I'm not saying whether I think the site is a good idea or not, that is up to you as individuals, I'm just trying to help explain how it works...
Hope this helps! :-D