I also always bid in the last 10 seconds or so. Actually, the first bid on that 664 was me, but that was an unreasonably low figure because I wanted ebay to remind me of the auction before it ended, which is does if you've been outbid.
Now, the reason for sniping is simple. People get all emtional about things, and artificially inflate their perceived value of something if they think someone else thinks it's worth more. So, what typically happens is they'll bid £20 because they think that's a fair price. Someone else will bid £25 and they'll think a bit more and decide to up it to £30 because it's obviously worth more than they thought. The person bidding £25 might actually have placed a £40 bit, so it'll instantly go up to £35 and they'll see they're instantly outbid, and go "ooh, gosh, this must be really good" and so they'll bid up to £50. (I know these figures aren't exactly right, the ebay bid increment is actually £1 at these prices).
Usually, there's some psychology involved though. People decide to increase their bids more the closer it is to the auction end, because it then becomes the need to make a snap judgement and by then they're emotionally involved because they've already placed 3 bids. In reality, though, they're actually bidding £50 for something they initially thought was worth £20. And they might actually get it for £45 in this scenario and think they've got a bargain, but they've still paid more than double what they thought it was worth and more than everybody else thought it was worth.
My strategy is to decide well in advance what I think something is worth to me. So, maybe I've looked at recent prices and decided it's worth £40 (the second bidder in the scenario above). I see someone has already bid £20 on the item, but that's fine because I think it's worth more. In the dying seconds I bid £40 and it trumps the £20 bid and I win it for £25. I'm happy, I got it for less than I assessed it was worth and more importantly, I haven't allowed anyone the chance to bid emotionally above me. Another positive point is that I'm already online and so I can pay for the item within a minute of the auction ending, which always makes sellers happy!
On the other hand, I might bid £40 and the previous guy actually had a higher bid and it sells for £45 and I have no opportunity to increase my bid. That's fine, it's more than I thought it was worth, and he had obviously also previously assessed the value and bid £45 or £50 or whatever and got it for a fair price. I'll just wait for the next one. You've got to be pragmatic though when the auction completes for the just bid increment above your maximum bid. It could be they just pipped you at the post, it could be that they were prepared to pay far, far more. You've just got to accept that the price was more than you previously decided it was worth and wait for the item to come up for sale again.
What also often happens, as in this case is I'll decide it's worth £50. I wait until the dying seconds to place my £50 only to discover that by the time I click confirm it's already above that and the bid isn't even recorded.
Sometimes (actually more often than I'd care to admit), I've forgotten to actually log on to place my last few seconds bid. Or more annoyingly, the ebay session timed out and it decides you need to log in which takes longer than the time left, etc. In those cases, an automatic sniper would have helped out, but even though I like to take the emotional aspect out of bidding, it's definitely exciting to find out instantly if you've won or not.
Either way, I'll rarely put a bid on early an item unless it's just to remind myself I'm interested (actually, I won a PS3 and a 6128 that I didn't really want because the starting prices were lower than I thought they'd sell for but nobody else bid). Because all you're doing is giving people longer to think about a higher value for the item. The only time when it's actually a good strategy is if something has a definite worth of maybe £20.50 and the bids are already up to about £16. If you bid £20.01 then you'll beat a later bidder of £20 by a penny, but due to the bid increments, the next bid will need to be £21 and so most people won't bid further because they can get it cheaper elsewhere. That said, there are a lot of stupid buyers on ebay who'll happily pay more than the buy it now price from other sellers or even from a normal online shop, because they've got emotionally invested in an auction.
The other interesting thing I've noticed is that a high starting bid will put people off - e.g. often things remain unsold where the starting bid is £40, even though the 99p auctions often go for a higher final price. Again, this is usually when you have 2 emotional people outbidding each other over several hours before the end of the auction.
