11.5% fee on sales tax?

[craigsfinds]

Could someone explain why ebay is charging sellers an 11.5% fee on sales tax? A have years of accounting experience and this looks highly unethical. 

From ebay's help page: The new final value fee is calculated on the total amount of the sale, inclusive of tax, shipping or handling, and any other applicable fees. 

[potank0]

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@craigsfinds wrote:

I have years of accounting experience and this looks highly unethical. 

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In all your years of experience have you ever noticed corporations don't really care about looks?

[craigsfinds]

11.5% - 13% fee to manage the sales tax is way too much. 3% would be more reasonable. If you think that's not appropriate, feel free to support your side with facts and leave out the attitude. 

[alcoforever]

If ebay only charged 3% on the tax portion, it would complicate the bookkeeping.  Also, if only 3% on the tax portion, ebay would have to raise the FVF on the item, again to around 12-13%.   You are going to pay one way or another so get used to it.

[craigsfinds]

Complicate the Bookkeeping? Considering the vastly more complex issues ebay already deals with, I find it difficult to believe that charging sellers a different percentage on the tax would be difficult or complicated.

Why is 3% too little? Credit cards and paypal do quite well charging less than 3%. So no, I don't buy either of your premises. 

[slippinjimmy]

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@craigsfinds wrote:

Could someone explain why ebay is charging sellers an 11.5% fee on sales tax? A have years of accounting experience and this looks highly unethical. 

From ebay's help page: The new final value fee is calculated on the total amount of the sale, inclusive of tax, shipping or handling, and any other applicable fees. 

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Pick a couple of your recent sales, ones with sales tax of course.

Calculate the total fees under the old system (separate fees from eBay and PayPal) and then calculate the fees under MP.

You will find that the fees for sales to States with an 8% Sales Tax to be almost identical, sales to a 10% sales tax rate State will be slightly higher, sales to a 6% or 0% sales tax will be slightly lower.

I'm sure you can come up with a scenario where a seller ONLY sells to high sales tax states will be pay more. Of course I could counter that with a scenario where a seller only sells to low/no sales tax States and that seller will pay less. The truth is that most sellers will sell to high, low or zero sales tax States and at the end of the year their fees will be almost the same (more or less by pennies) as if done under the old PayPal system.

Let's try a sample item (I'm using non-store rate for simplicity)

$20 sale with $5 shipping and tax at 8% (total transaction amount $27)

Under eBay/PayPal

eBay fees $2.50 + PayPal fees $1.08 (2.9% + 340 cents) = $3.58

Under eBay/MP

eBay fees @ 12.35% + 30 cents = $3.63

8% sales tax you pay an extra nickel

6% sales tax you pay one cent less

If you want to create more scenarios try playing with the transaction value, the higher the value of the sale the smaller the fee increase.

$100 transaction with 8% tax

eBay/PayPal, 10% of $100 plus 2.9% of $108 plus 30 cents = $13.43

eBay/MP, 12.35% of $108 plus 30 cents = $13.63

That's a 20 cent difference on a $100 transaction, 0.002% difference

For seller who ship internationally, there are additional savings because only sales to Australia, New Zealand, Norway and Mexico are taxed, all the rest have no taxes added.

[alcoforever]

3% is too little because it would drop ebay's profit after MP to less than what it was before MP.   I can guarantee you that ebay is not going to suffer making less under MP than they did under paypal.

[fern*wood]

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@alcoforever wrote:

 I can guarantee you that ebay is not going to suffer making less under MP than they did under paypal.

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I can agree with that.  So, why did ebay present this as a savings for many sellers?  I'd rather not play games, and they really should change the wording I quoted above where they stated no fee to the seller for their collection of the sales tax.

[craigsfinds]

Got it. Thank you! I should have done the math rather than assume 11.5%-12.35% fee on tax would end up costing a lot more. 

[mam98031]

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@dhbookds wrote:

So in your experience..........how is a credit card charge to a store handled?  The Store pays a fee to the cc company........isn't the fee based on the total sale which includes sales tax (if applicable)........?

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@dhbookds 

I can completely understand this if Ebay was only charging the Money processing fee on the sales tax.  

A FVF on sales tax is not so common and is completely different from a money processing fee.  Just because Ebay lumps it together doesn't mean it isn't still there.

[mam98031]

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@jeff-second-chance-silver wrote:

They charge their fee on shipping expenses too which ultimately deletes any "so called" discounts they claim we receive on postage.  

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If you don't like the discount you get on Ebay, you can print your shipping labels through any other online provider you may choose.  

However if you are shipping Via USPS FCP [first class parcel], you will find out that ALL, every single one of them, offer the same rates as Ebay does for FCP domestic.  The reason for that is because USPS does not currently allow for negotiated rates on FCP domestic.  

FCP International is negotiable and in the past few years, in my experience Ebay has done a pretty good job negotiating this and they are lower than other sites to include Amazon.

@jeff-second-chance-silver 

[mam98031]

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@jellsello wrote:

Where are people seeing this 11.5%? I keep seeing 10% on the help pages.

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The 11.5% is the rate if you are going into MP.  If you are not yet in MP, then your rate would be different plus you pay the PP money processing fee.  For you when you go into MP your fee will be 12.35% and that includes your money processing fee so you will save about 0.55% on your current FVF for about 90% of your sale and the other 10% or so that is sales tax is also charged this full fee and we aren't currently use to paying a FVF on sales tax.  But with the reduction of the FVF on the majority of the transaction you likely will not see a whole lot of difference in your net fees.

@jellsello 

[mam98031]

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@alcoforever wrote:

Ebay uses one rate on the totals to simplify bookkeeping.   If ebay didn't charge an FVF on the tax portion, the FVF percentage would have been higher, somewhere around 12.5 to 13%.   Find another windmill at which to tilt.

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@alcoforever 

Where did you get this information from?

[mam98031]

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@fern*wood wrote:

 This is a quote from ebay announcements discussing the collection of the sales tax:

"Once we start collecting tax in these states, you do not need to take any action. There are no extra charges or fees for this service."

Don't get me wrong, I'm glad they collect and remit this tax for me as a seller, but I'm just saying they don't exactly explain the fees correctly in my mind.  Obviously they are charging to do this in one way or another.  To me "Simplified" seems to mean we simply wanted to make some more.

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While I absolutely do not like the fact we are now paying FVF on sales tax, that statement you found is just that, a statement at that time.  It is not a promise that it will never change.  I'm confident we can find all kinds of old statements by Ebay that have no meaning today.

[mam98031]

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@alcoforever wrote:

3% is too little because it would drop ebay's profit after MP to less than what it was before MP.   I can guarantee you that ebay is not going to suffer making less under MP than they did under paypal.

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@alcoforever 

Where are you getting this information from?

You realize if this were true that Ebay has never made any profit in MP from the start, right?  Barring start up costs as those have to be written off over time.  But without considering start of up cost if what you say is true, then they would have never been able to profit off the program because up until the 12th, there is NO fees at all on sales tax in MP for those that were in the program prior to July.

[mam98031]

@craigsfinds