Creation of a Separate Handling Fee by State

[lesey06]

Sellers  have different ebay final value fees based on the buyer location because state taxes are included in the calculation.  In order to remedy this extra cost, Ebay should allow the seller to be able to charge different handling fees by state.  Additional I know my shipping costs are different as well by location.  I am on the west coast and it costs more to ship to the east coast using ground advantage for example, so I could build that into the handling costs as well.  Thoughts?

[mam98031 · Accepted solution]

There is an easy remedy for this.  When you set your pricing, assume there is going to be an 8% sales tax on the order as that is the average across the nation.  Some states will be lower and others a little higher, overall it should work out.

So for a sale that is $100 x 8% = $8.00 in sales tax x 13.25% Ebay FVFs [or whatever it is for the category you sell in] = $1.06.

So you would increase your pricing of the item by about $1.10, so you are covered for the FVF on sales tax.

We don't have to over complicate this issue.  We have been dealing with this now about 5 years as sellers, as it started in 2019.

[kenneth686321]

Just build it into your price. If you sell an item for $100 including shipping assume 10% ($10) tax. You will be paying an extra $1.32 extra in fees. So just raise your prices by $2 to have a nice round number. 

Easy Simple  

[lesey06]

A handling fee by state really seems like a simple and fair solution as it can be a one time setup.  As far as fairness to the buyer based on your suggestions a Nevada buyer have to subsidize a New York or California buyer.  Doesn't seem fair or proper to me.  

[slippinjimmy]

Sales tax doesn't differ that much from State to State, just pick an average like 8% for your calculations, for a few States it will be a bit low, for many States a bit high and for a small number of States (those with no sales tax) you will make some extra money on the handling charge.

Keep in  mind,  for a $100 sale the difference between the highest rate (10%) and the lowest (5%) will only make about a 66 cent difference in fees.

[nobody*s_perfect]

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@lesey06 wrote: ... Ebay should allow the seller to be able to charge different handling fees by state.  ...

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Sales tax rates vary not only by state, but by location within the state because so many states allow localities to add their own increment on top of the state sales tax. For instance, in Arizona, the base statewide sales tax rate is 5.6%, but localities can add up to another 5.6%, bringing the total rate up to 11.2%. Colorado has a base sales tax rate of 3.90%, but local rates can bring that up to 11.2%. Precision is impossible, so IMHO a rough estimate flat rate handling fee makes more sense.

https://www.avalara.com/taxrates/en/state-rates.html

[lesey06]

I understand the cost per transaction may be small.  However lets says the difference is only $0.50 on 8 transactions a day is $4 which is about $1500 a year.  It may not be to you however to me that is material .  Just as important is fairness to the buyer based on your suggestions a Nevada buyer have to subsidize a New York or California buyer. Doesn't seem fair or proper to me.

[toysaver]

We could be allowed to have the individual states as locations we don't ship to.  

[ajs_coins_and_alchemy]

🤨 ... You realize sales taxes aren't uniform across a state, right? Different counties and municipalities have their own taxes ... 

If I buy something in my town, or ship an eBay purchase to my home... I pay 8%. If I go across the street into the next town, or ship to my PO box in that town, it's 7.25%. If I go a few miles down into Cook County, or drive into the city (Chicago) I'm paying 10+%

That right there is a 2.75% or more spread in sales tax in Illinois depending on location. Do you have a solution for this as it isn't just based on state?

Assume an average sales tax, the FVF on sales tax is not a ton.

[lesey06]

I'm not asking for ebay to calculated it, it would up to the individual seller.  Also would be helpful in the additional ebay fees for shipping based on destination.  Which no one has addressed yet either.    I don't feel a handling fee table per seller is a big ask of Ebay and it allows fairness to the ultimate buyer.

[mam98031]

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@kenneth686321 wrote:

Just build it into your price. If you sell an item for $100 including shipping assume 10% ($10) tax. You will be paying an extra $1.32 extra in fees. So just raise your prices by $2 to have a nice round number. 

Easy Simple  

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10% is high.  The average sales tax across the nation is simply not that high.

[lesey06]

Hi,  I'm not asking for ebay to calculated it for us,  its is the seller discretion as to how much they want to add on state to charge.  I think going to the county is too much of a ask however a 50 state table is not.  Not sure what a "ton" is to you,  however at $0.50 a transition base on 8 transactions a day is about $1500 a year, which to me is material and that does not even include an extra   $1000 - $3000 in FV fees based on shipping to an east coast destination versus west cost (I am on the west coast).

[nobody*s_perfect]

How would you decide what percentage to charge as a handling fee for buyers in (for example) Arkansas, where buyers in one part of the state would be paying a sales tax rate of 6.5% but buyers from another part of the same state would be paying a sales tax rate of 11.5%?  

It makes more sense to just set an average rate for all buyers, such as the 8% suggested elsewhere in the thread, and add that to your asking price.

Many sellers just leave their shipping calculator set to charge buyers the retail postage cost rather than the discounted eBay rate. The difference between the retail and online rates serves as a built-in handling fee to cover overhead such as packaging materials and eBay fees.  And of course the savings is roughly proportional to the postage cost that the buyer pays, so it addresses your concern with variation by destination distance.  However, since eBay introduced those nice economical Cubic rates, the price gap is sometimes excessive.

[mam98031]

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@lesey06 wrote:

A handling fee by state really seems like a simple and fair solution as it can be a one time setup.  As far as fairness to the buyer based on your suggestions a Nevada buyer have to subsidize a New York or California buyer.  Doesn't seem fair or proper to me.  

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On your 1.50 sale, the FVF due to taxes would be pennies.  Now I can see how this can be important on a listing that isn't making you much money beyond pennies.  1.50 x 8% average sales tax = 12 cents x 13.25% FVF = 2 cents.

Using an average rate is fine.  I had suggested an 8% average and in Nevada [that you seem concerned about] their average tax rate is 8.24%, so they are fine.  California is 8.85% and New York is 8.53%.

There is no need to make this more complicated than it needs to be.  We as sellers and all the buyers have been dealing with the international sales tax now since 2019.

[lesey06]

Why should a buyer in Nevada have to pay an extra $2-$3 to subsidize the extra costs due to sales tax and extra shipping costs to a New York purchaser?