Item A starting price is $3.00. Bidding increments go up $1.00 each time someone bids up to a certain amount.
Bidder 1 sees item at $3.00. Auction ends in 3 days and there are no bidders. Bidder 1 decides he's willing to pay $15 for the item, so when he goes in to bid, he puts his maximum bid at $15.00. The auction price however, still shows $3.00 with one bidder because no one else has bid on the item.
Bidder 2 sees the item the next day. Item is still at $3.00 with one bid placed. Bidder 2 decides he would be willing to pay $5 for the item,so he bids $5.00. Since bidder 1 has a max. bid set at $15.00, bidder 2 does not have a high enough bid to be placed as the high bidder. However, because Bidder 2 placed a max. bid of $5.00, the auction will go up a dollar past Bidder 2's highest bid. So Bidder 2 essentially jacked up the price now to $6.00, but Bidder one is still the high bidder because his maximum bid is set at $15.00.
Bidder 3 sees the item on day 3 for $6.00 and decides to wait and snipe the auction in the last seconds. He decides his maximum bid will be $12.00. In the last seconds of the auction, Bidder 3's snipe bid is unsuccessful because his maximum bid was not higher than Bidder 1's maximum bid of $15.00. Since bidder 3 bids up to $12, the auction ends at $13 with Bidder 1 the winner. So bidder 1 did not pay the $15 maximum bid because no one bid that high to outbid him.
Now had bidder 3 set his max bid at $20.00, he would have won the auction for a dollar over Bidder 1's maximum bid -- which would have been a $16 win. Even though his max bid was $20 the bidding stops once Bidder 3 passes Bidder 1's maximum bid.
I hope that makes sense.
