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Yes, that's correct. In most auction systems the person can set the start price and also their "reserve" price. I personally think you just need one or the other, but the option is there if people want to use it.
There will always be minimum bid increments so auctions don't just go penny by penny (that would be terrible). Right now the increment is at least $0.25, but you should be able to bid $0.33 if you want to.
I've got a note into my programmer to get his thoughts. Either:
A) The system needs to be adjusted to accept anything over the incremental price.
B) Messaging needs to be made more clear when a bid doesn't work. Like "You must bid in increments of $0.25"