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Profit margins are shrinking
Does anyone else feel that calculating final value fees on the total transaction amount—including shipping and tax—is excessive? Because I have to pay fees on money that immediately goes toward postage or tax authorities, my profit margins are shrinking. I strongly feel that eBay should only take fees off the listed price, as that is the actual revenue earned.
"I would like to request clarification on eBay’s final value fee structure. It is my understanding that fees are calculated based on the total amount paid by the buyer (including shipping and sales tax), rather than just the listing price of the item.
As I do not retain the funds for shipping costs or taxes, I find this fee structure to be inefficient for sellers. I believe fees should only be applied to the listing price. Could you explain the rationale behind charging fees on non-revenue amounts?"
monroe67
Mentor6 months ago"Does anyone else feel that calculating final value fees on the total transaction amount—including shipping and tax—is excessive? Because I have to pay fees on money that immediately goes toward postage or tax authorities, my profit margins are shrinking."
Successful eBay sellers take into account the things you have mentioned: that shipping and sales taxes are subject to eBay's final value fees.
Many successful eBay sellers take the position that their buyers pay their eBay fees. Any and all of their eBay fees: final value fees (FVFs), promoted listings fees, international fees, "enhanced" listing fees (e.g., using a reserve price on an auction or bold type on any listing), etc., etc.
I'll tell you what my selling ID does: she estimates that eBay will retain 30% of the listing price.
Say I want to list something, any Thing, at $50. I estimate eBay will keep 30% of $50, so I will earn 70% of $50.
$50.00 x 0.7 = $35.00. If I want to earn more than $35.00 on that Thing, I'll have to list it for something more than $50.00.
That's an estimation I do, in my own mind. I know, of course, that eBay will retain 15% of the final sale total of the watch I just listed when it sells (positive thinking!). If I actually have a payout of more than 70% of the listing price, so much the better for me.
Edited to add: My Watch Sold !! Within the first 15 minutes of its listing !! Yipppeeee !!
eburtonlab
Mentor6 months ago@efrauni2995
When eBay moved to managed payments and began calculating final value fees on the total amount including sales tax in addition to the item price and shipping, eBay also lowered the total fee percentage to less than what the total was when it was split between eBay and PayPal. Although fee percentages have since been raised by both eBay and PayPal, eBay's total fees remain comparable to what they were before, and commensurate with what other marketplaces currently offer.
The fact that sellers do not retain shipping or tax amounts is entirely irrelevant; eBay is not calculating the fee based on the seller's profit amount (which eBay does not know), eBay is calculating the fee based on the buyer's total payment (which eBay does know), and eBay chooses the percentage on that basis.
Back when eBay did not calculate fees on shipping, some sellers lowered item prices and raised shipping prices in order to pay lower fees. Obviously that was not sustainable, so eBay had to change that so that no matter how costs are split between item price and shipping, the fee is the same.
If eBay were to go back to not including sales tax in the calculation, eBay would necessarily raise the fee percentage to compensate for the change, so there would be no net savings for sellers.
efrauni2995
OP6 months agoI would prefer for eBay to implement a flat-fee structure based solely on the listing price, even if that fee percentage is slightly higher. Applying fees to the total transaction—including shipping costs and taxes—creates unnecessary complexity due to regional fluctuations. A simplified fee model would allow for more predictable profit margins and consistent competitive pricing.
Shipping costs fluctuate significantly based on carrier zones—for instance, shipping from Florida to Georgia versus California—which impacts final profitability. Because eBay calculates fees based on the total transaction amount (including shipping), these variable costs make it difficult to maintain consistent profit margins.
inceptions
Mentor6 months agoHi @efrauni2995
eBay processes the buyers total payment - not just part of it. They also perform all of the sales tax remittance to each state for you. These processing fees are merged into the final value fee. They could state this as a separate charge, but why? It's not going away.
Just as you establish your profit margin, so does eBay. If you want more profit, you are going to have to either raise your prices or lower your cost of goods.
efrauni2995
OP6 months agoI would prefer for eBay to implement a flat-fee structure based solely on the listing price, even if that fee percentage is slightly higher. Applying fees to the total transaction—including shipping costs and taxes—creates unnecessary complexity due to regional fluctuations. A simplified fee model would allow for more predictable profit margins and consistent competitive pricing.
Shipping costs fluctuate significantly based on carrier zones—for instance, shipping from Florida to Georgia versus California—which impacts final profitability. Because eBay calculates fees based on the total transaction amount (including shipping), these variable costs make it difficult to maintain consistent profit margins."
mr_lincoln
Mentor6 months ago@efrauni2995
This will never work and as a matter of fact, it never worked in the past. Years ago eBay did not charge fees on shipping so Sellers listed their $ 100 for $ 1 with $ 99 shipping cost. eBay got hosed on missing out on Seller fees because of dishonest Sellers.
Charging fees on everything works if Sellers know how to price their items.
-Cost
-eBay fees
-Profit margin
If their prices are not structured properly they will lose money or maybe not make their target profit margin. I view shipping as a break-even proposition and in the middle of last year set up my shipping to be 20% off Retail. While I would prefer setting a % OVER commercial rates eBay does not offer that. I print my discounted labels through eBay ...that discount offsets the fees owed on the paid shipping from the Buyers.