You're probably getting outbid by these small amounts because the previous bidder bid a higher amount than what you just bid. They had already placed the higher bid, but eBay only displays enough of the highest bid to outbid the lower bid.
If Person A bid $7, and Person B bids $10, eBay will only up Person B's bid enough to outbid Person A - $8 (or $7.50). Then when you try to beat $8 and you bid $9, Person B's original $10 bid will bump it to $10 and - voila - you just got outbid instantly.
Good luck!
2purrcats