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.

[silverstatetreasureboxes]

@Anonymous. 😆 LOL! I hear ya, I had to take Algebra in college to be a nurse, when the professor walked in, he was from a foreign country and couldnt speak English well. Most of us dropped his course and I signed up for the video version and passed.

[james_river_city_sales]

Who pays you Paypal or eBay? eBay had a full migration to MP EOY. 

[james_river_city_sales]

I figured most people couldn’t follow. Took me a bit to remember the method for setting up a variable cost breakeven function from my b-school days. 

[james_river_city_sales]

Yeah, there are scammers on Mercari, but I have yet to encounter any. Multiple encounters on eBay with scammers. New sellers are targets, but I don’t play ball.  

“Ship today and I’ll give you $X.”

Well I can’t ship without getting paid first. I’m not giving out stuff for free.

[quiltwomannina]

I don't sell much on eBay but I try to keep track of the percentage they charge and adjust my prices accordingly. I was paying about 9% before the change to Managed Payments. I just did the math on my most recent sales and it's now 14.4%. So much for their promotion of the idea that it was going to save me money. I don't need the daily payout - I actually switched it to weekly because I found the emails annoying (I get an alert from my bank for each transaction) and I didn't mind at all having to request the transfer from PayPal - it gave me a set figure to work with in my chosen time period. I see many complaints about Managed Payment but not so many about the difference in the fee - are others finding their fees have greatly increased? I pay Amazon 15% but I sell different things there and can figure that into the price. Here it has priced me out - my sales have really dropped when I raised my price. 

[mach128]

All that reading to save 6 cents and I have to move to another state...