How to Actually Save on selling fees using eBay Managed Payment Fees vs the old PayPal System.

[james_river_city_sales]

eBay's marketing for managed payments claims that "most sellers will see savings." This statement is completely false and should be changed to "some sellers will see savings, most will see an increase in selling fees." This is because managed payments charges based on the total transaction (incl taxes), while the old PayPal and eBay system (old) was two parts, one on original transaction amount and the other on the total transaction (incl. taxes). This means the buyer's sales tax will be the determinate factor in whether a seller actually saves money between the two systems. I am doing this to clear up a lot of misconceptions from sellers that truly believe managed payments is cheaper and as knowledge for sellers who just want to maximize their proceeds under the new system.

Now I will calculate the breakeven sales tax rate for when sellers an actually see realized savings on their fees. This will be new system vs. old on a $100 transaction (standard, under $7,500):

Variables:

t = sales tax.

12.35% ((1+t)*100)+0.3=10%(100)+2.9%((1+t)*100)+0.3

12.35% ((1+t)*100)=10%(100)+2.9%((1+t)*100)

12.35% ((100+100t)=10+2.9%(100+100t)

12.35+12.35t=10+2.9+2.9t

12.35t-2.9t=12.9-12.35

9.45t=0.55

t=0.55/9.45

t=5.82%. 

To conclude this math exercise, eBay managed payments has the same fees as the old system if the sales tax rate is equal to 5.82%. A sales tax rate below 5.82% is the scenario that sellers will actually save money with eBay managed payments. Anything over 5.82% means sellers will be paying higher fees. 

How does this stand with potential buyers? Out of the 50 US states plus Puerto Rico and D.C., only 25/52 have a base sales tax rate under 5.82%. Population wise, only  35.43% of the that population has a base sales tax rate below 5.82%. NOTE: This only for base sales tax, I am not even accounting for additional local surtaxes. The number of actual buyers that will save sellers money on fees decreases when that is factored in.

So what can an eBay seller do to net more money and save like eBay claims you will? Exclude selling to specific states that have a base sales tax over 5.82% at the cost of reducing the pool of potential buyers. Or... accept eBay wanted to get PayPal's fees at the expense of sellers like the sheep we *bahhh* are  *bahhh.*

Also non-refundable $0.30 final value fee per transaction? That's silly. Buyer cancels a transaction before it's even shipped and you still have to pay $0.30... That's just greedy. 

This is just my two cents. I'm just a part-time seller on Amazon, Newegg, Etsy, and now eBay. I got into selling on eBay on the prospect of a lower cost of selling, but somehow my Amazon cost of selling is matched (under 40 transactions per month) and sometimes lower than eBay's. Perhaps a full-time seller or enterprise seller would feel differently.

Feel free to chime in.

[dhbookds]

So what can an eBay seller do to net more money and save like eBay claims you will? Exclude selling to specific states that have a base sales tax over 5.82%

nope, you can't do that.............

[comics-scifi-collectibles]

@james_river_city_sales  As a TRS+ seller my fees overall are less than before because my 10% off of the sellers fees now applies to the total fees charged.

Also, if I have to refund a buyer in full for any reason ( unless ebay forces a refund)  then I now get all my fees back except the .30 cents

Before paypal kept their 2.9% and .30 cents transaction fee.  

It's true for most sellers some sales will have slightly higher fees and some will have slightly lower fees. 

[nobody*s_perfect]

PayPal charges their 2.9% fee based on the buyer's total payment including sales tax.

If a buyer is refunded for any reason, including cancellation of the transaction, PayPal keeps their entire fee not just the 30 cents.

[silverstatetreasureboxes]

Gosh I just loath math problems...yuk!

[oldold-timer]

Some of us used to pay for eb fees with cash-back credit cards at 1.5%.  Now with managed payment's eby takes fees from pending funds, which saves eb on credit card fees and costs those sellers that use those cards a little more.

[somanypcs]

A top rated seller has a better chance of lower seller fees using MP, but many sellers use USPS First Class Letters to save on postage ($.55 vs. over $2.00).  Since tracking is not available on letters, these sellers have NO way to become a TRS.  Sellers whose average sales were less than $10.00 were able to have a PayPal micropayment account (5% on sale amount and $.05 transaction fee.)  These high volume, low cost sellers are seeing MP fees over 200% higher on the sale of a $1.00 item.

[luckythewinner]

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@james_river_city_sales wrote:

So what can an eBay seller do to net more money

Feel free to chime in.

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What can an eBay seller do to reduce his fees to ZERO?

Stop selling here. 

But I like my nose, so I won't cut it off to spite my face. 

[james_river_city_sales]

Paypal’s total fee includes total transaction. 

Someone didn’t pass Algebra 1....

[james_river_city_sales]

Yes, it’s MP is geared toward complacent TRS. It’s not going to attract any fresh blood, which the platform clearly needs.

[Anonymous]

What is this managed payment system? I can't see anything from my account that is any different? Does that mean I'm not in it? How do you know if you are? 

[james_river_city_sales]

Mercari is super super cheap for selling, but the markets are not nearly as deep as eBay.

Newegg is also cheaper for electronics, but the market is deepest for new products over used/refurbished. 

[Anonymous]

I know - I can't follow this at all. I cried my way through Algebra II so much so that my teacher felt sorry for me, and gave me no less than a B. My parents would look at my report card and were like, "Wow that's really good!" 😬 

[Anonymous]

Don't scammers get sellers on Mercari a lot? I've heard a lot of bad things about Mercari. You don't even get paid for your first few sales until your buyer says they like the item. Sounds like trouble to me. I got scammed on my very first eBay sale, but I rarely get scammed any more (because I have an established account here.). I've thought about trying Mercari for a few things, but I don't know... 

[jayjaspersgarage]

In some states like California you are lucky to live in a county with sales tax under 9.5%.  On the other hand we have also become millionaires through real estate investments.  Ebay is merely a garage sale to many of us, albeit an entertaining garage sale without the hassle of social distancing.