E-bay's detailed fee breakdown

[musicwhere]

I recently had sold item for which E-bay took a hefty 13.5% final value fee based on selling price, shipping costs, and state sales tax. Detailed breakdown showed all this data. I don't understand the reasoning or rationale they have for calculating fee on sales tax. Seems to me that would be contrary to commonly accepted business practices, standard accounting procedures, and possibly illegal because they essentially are taxing the tax. A complete clear explanation would be much appreciated. Has anyone else noticed this and ever questioned it? Thank you.

[lakefor94]

Folks come here daily with the same type of post. Here is one from just a tad earlier today.

https://community.ebay.com/t5/Selling/Final-value-fees-on-sales-tax/td-p/33898029#M2252041

Charging final value fee on the total price of the sale including sales tax is standard across all sales venues that use a payment processor 

[janet9988]

Sellers pay FEES to collect the complete payment from the buyer.

All stores are charged a fee to process  a buyers total payment. This is nothing new.

Same as on the flip side..When a customer uses their card to pay for anything the buyer is charged the interest rate on the the sales tax charged if not paid off.

[heckofagame]

It is a small price to pay to have them collect and remit sales tax to all the states they collect for. 

[inhawaii]

They are not "taxing the tax".

What ebay charges is a FEE not a tax.

That fee is based on the total amount of the sale: item price + shipping + tax.

It is legal.

It is common.

It is spelled out in ebay's user agreement.

[buyselljack2016]

I don't understand the reasoning or rationale 

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the reasoning or rationale for it is to make it a simple as possible (likely why they refer to it as "simplified fees" since about 2020) for eBay, while at the same time adding as much as possible to eBay's bottom line (their overall purpose for existing)

Processing fees, although they may seem like a "tax", are not a tax.

[house*of*paws]

Hi @musicwhere 

It actually is customary to charge fees on the total amount of the buyer's payment ... regardless of the individual components that make up the payment.   PayPal charges fees on sales tax ... as do credit cards ... and I can assure you that it is legal.

MANY people have questioned this as they suddenly notice that they are charged fees on tax ... but it has been mentioned in eBay policy since Managed Payments begun.  [I found 6000 posts in the eBay Community on this subject.]

If you think about it ... if eBay didn't charge fees on taxes ... it would merely increase the percentage of fees so that the total came to whatever amount it wanted/needed.

[duffy4444]

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@musicwhere wrote:

I recently had sold item for which E-bay took a hefty 13.5% final value fee based on selling price, shipping costs, and state sales tax. Detailed breakdown showed all this data. I don't understand the reasoning or rationale they have for calculating fee on sales tax. Seems to me that would be contrary to commonly accepted business practices, standard accounting procedures, and possibly illegal because they essentially are taxing the tax. A complete clear explanation would be much appreciated. Has anyone else noticed this and ever questioned it? Thank you.

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@musicwhere:

   First of all, this topic has been beaten to death here on this forum.

   Second, charging fees on the total  transaction amount has actually has been common business practice for years and years - either in brick-and mortar store cc payment processing or on the internet.

   Thirdly, it is NOT a tax on a tax. It is fully legal as a fee on a transaction, not on any particular item or tax structure.

   Lastly, keep it in perspective; for an average of only around 1% of the total sale, you get eBay to keep track of all the hundreds or thousands of sales tax entities in the US and submission of sales taxes to those agencies FOR YOU. It's a freaking bargain, and I doubt you would want to do that on your own.

Cheers, Duffy

[tobaccocardyahoo]

Ebay decides what it fee structure is and how it affects its profits.

You get to decide whether Ebay's fee structure is suitable to your business and whether to continue to sell on Ebay.

The total you pay in Ebay fees is usually close to or a little under the big ecommerce sites like Amazon and Walmart and usually above Etsy.

There are an increasing number of items which are no longer economically attractive to offer online unless your need for funds is so strong that you can accept a profit which is well under the minimum wage.

[1tuna]

its fairly simple to understand but nobody is taxing the taxes

the name of the game is roll it all in together and then ebay gets there slice of the pie

ebay jacks up the total first with shipping, then that amount is taxed and you then pay fees

there are no fees that are unheard of or extraordinary

that sort of stuff is the domain of hotels bills and rental car bills

its been done this way for years and it will continue to be done the same way

@musicwhere 

[monroe67]

"Has anyone else noticed this and ever questioned it? Thank you."

Indeed, yes, many, many people have noticed this and most of them have questioned it here, in eBay's Community Forum.   All kinds of accusations have been made -- immorality, illegality, comparison with various failed political and/or economic theories throughout human history, blaming different presidents, lots of conspiracies.  

Here's a question I wonder if the OP could address:  OP, how is it that you have sold 3,200 items in your eBay lifetime, and 14 items since May of this year, and you have only now discovered how the fees are calculated?  

Did you never care before?  Did you completely trust eBay before?  Did you never look closely at your sales breakdowns?  

eBay did raise the percentage in the Final Value Fees (FVFs) in mid-February of this year, for some categories but not all.  The increase was 0.35%, less than one-half of one percent.  The standard FVF percentage is now 13.25%.  (AND every order is charged a $0.30 fee.)  

[soh.maryl]

"A complete clear explanation would be much appreciated."

So you've not ever read eBay's fee schedule and explanation of how the FVF is calculated?

Might be a good time to do that.  

[monica-sells]

if you got to this post, and still don't understand the 'rationale'

then you never will....all these previous posts spell it out very well

[inhawaii]

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@monica-sells wrote:

if you got to this post, and still don't understand the 'rationale'

then you never will....all these previous posts spell it out very well

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Not understanding it is one thing.

Not agreeing with it is another.  😉

[buyselljack2016]

Could be that $101 sale that piqued their interest in the "fee" structure.