A snipe is a last minute bid, generally placed in the last minute or closing seconds of an auction. This can be done manually, with you sitting in front of your computer, bidding at the last second, or it can be done via software, such as Auction Sniper. The point is to get a high bid in, giving others little time to respond with a counterbid.
If someone bids higher earlier in the auction, that person will win, because he bid the highest. That is how auctions work. An important point to be noted here is that you have no way of knowing what his high bid (proxy bid) really is; you only know that he bid at least enough to be on top. For example, if bidder A bids $42 and bidder B bids $75, while the auction is still going on, you will see bidder B listed as the high bidder at $43, because $43 is one bid increment over the next-highest bid of $42. You know that B bid more than A, but you do not know by how much. If the auction ends without further bidding, B will win for the same $43 price and you will never know what his max really was.
Let us say that bidder C comes along and bids $61. Bidder B will still win, but he will be listed as winning for $62, since much more of his proxy bid was used up to keep him as top bidder, by placing him one increment (in this case, a dollar) above the second-highest bidder, C.
Why snipe? Because many people do not bid their max. This is particularly true of bidders new to eBay, though you would be surprised at the old-timers who do the same thing. Trying to get a good price, they tend to bid just enough to stay the high bidder. They do not bid what they are REALLY willing to pay until someone else comes along and outbids them. Only then do they bid higher. Sometimes this cycle goes back and forth, with two or more bidders (called "nibblers") continually outbidding each other, in an expensive game of one up-manship. But these same nibblers tend to leave their bids alone if no one else outbids them.
That is where snipers come in. Bidder X may have bid $25 on an item, but will go higher if someone outbids him. He may go up to $100 if he feels he has to, in order to win, but leaves his bid at $25, thinking he is somehow getting a better deal. He overlooks the fact that if he bids the $100, he will not pay that amount, unless other bidders push the auction price up that high. So along comes bidder Y, a sniper, who bids $50 in the last seconds and wins for $26! There is no time for bidder X to come back and raise his bid. He is upset, because he knows that he would have been willing to go higher. Additionally, he does not know that bidder Y's max was $50--all he sees is that he lost the auction for one dollar.
Does sniping work every time? No. There is no magical way to guarantee a win. But eBay is replete with bidders who nibble and do not observe or analyze their own bidding behaviors, and that is why we snipers tend to win. Consequently, we have a very high success rate--mine approaches 97%, with all of my losses going to higher bidders who were willing to pay more than I was.
The key is to decide the ABSOLUTE max you will pay, set your snipe through AS, and leave it at that. They will take care of the rest. Do not obsess about getting the very last bid in--at three seconds, instead of eight--just decide what the "I will pay this and not a penny more" amount is and stay with it. It is more important that your bid get in near the end, than it is to risk your bid not reaching eBay in time. (If someone else bids that late in the auction--less than fifteen seconds remaining--he is another sniper and was probably going to bid at that point, regardless of whether or not you had bid, so do not get unnerved by that.) This is why it is important to bid your absolute maximum. Most of the time you will find that your max does not get reached and you will get your win at a good price. When you do lose, it will not be because you did not bid your max; you will simply have been outbid—whether by another sniper or by someone who bid much earlier in the auction—but you will know that someone else was willing to pay more.
Most of us tend to use a 5-10 lead time; some members add a few seconds on Sunday evenings (eBay's busiest time) and on any day when an auction ends exactly on a quarter hour (X:00, X:15, X:30, X:45), as these are also busy, due to sellers' incentive listings. We also bid unusual amounts and occasionally we end up winning auctions where others bid even dollar amounts or just one cent over the dollar. In other words, bid $23.83 and not simply $23.01.
Good luck to all!