** Ebay bids - how does it work**?

Your report or your experience are flawed. You should have paid $7 unless you did an automatic bid which you seem to have done with your words "The next bid ..." Automatic bids take the place of sitting at the machine trying to put in a slightly higher number than the last bid as the time is running out with people trying to cope with the variable delivery rate of the Internet. You put in an upper limit you are willing to pay and so does anyone else. After the final time has run out, if the bid is still lower than your limit, but you have not won, the automatic bidders are taken in rotation in the order they were put in and the bidding is taken up step by step by the minimum (or what you specify - not strong on my recall of this) - when each bidder's limit is reached, they are dropped. When one bidder is left, that one gets the object at that price. In your example, there were no other bids before closing and you were the only automatic bidder, so your bid was put in at $5.25 and you won.

You pay only what the highest bidder bid, say $5.25 not your highest bid. It all depends on what the next highest bidder bid. Your bid exceeds his and so you win because you were willing to pay $7.