Selling fees

[e-sister11]

I don't know if this has been covered here, but I noticed a disdain for older topics anyhow, so I thought I'd better start fresh:

Please list pros and cons regarding the fees for listing a basic auction item such as a pre-owned handbag. 

I've noticed that a seller could actually lose money if not careful because eBay counts SHIPPING as part of your profit, even though for mine, the shipping calculated barely covered the actual price of shipping I paid, so the discount wasn't helpful since eBay is taiking a fee based on the larger shipping amount, and then Paypal takes their cuts on top of that (before eBay takes their cut, so on the gross, not net).

Don't offer me a discount, then, already, eBay?!

I calculated, as a new seller, based on my first ten sales, that on average, the fees ate up about 25% of the actual selling price of the item alone- once shippingcame out and eBay & PayPal took their cuts.

So I was wondering, if I charge free shipping and try to calculate a flat ship rate into the selling price, will eBay take a cut on the shipping I actually pay in addition to their 10% off the total sale?

Will I lose on shipping if someone farther away buys it?  Will people even look at my auction if the price is higher, but free shipping?

And finally, what polite advice can anyone offer to make the margins more appealing to a new seller? 

Feeling disappointed in the process. Thanks in advance.

[e-sister11]

ted_200, check out this poor guy for example! A NEW laptop attache and they took upwards of 66% of his sale in fees. Let's see how they explain that the fees did not swallow up his selling price!

https://www.ebay.com/itm/Black-Heritage-Portfolio-Attache-Briefcase-Laptop-Bag-15-x-12-Unused/162880...

[coolections]

A smart seller would have never listed that item for $2.99 and made sure those fees where included in the asking price. I suppose some people like wasting money or just giving unwanted items away.

[ted_200]

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@coolectionswrote:

A smart seller would know if they have to pay $9 shipping to add $1 to the price of the item to cover the shipping fee. Do that would result in not paying ANY fee on shipping. I have never paid a fee on shipping OR the item price as my buyers pay that.

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Right, but that bears the question:  If you could have squeezed another $1 out of it, why wouldn't you have done that anyhow - back when there was no shipping FVF?  The answer of course is either a) you did that before, so now you're out another $1 in fees, or b) you do that now, which moves your point on the price-demand curve toward "lower demand".  

I still contend buyers will only pay what they will pay, and you cover all the expenses out of what they paid to you.  If you can keep adding fee hikes to the cost they have to pay, and it's still selling just as well, you weren't charging enough before.   But at some point, you can't add any more to the price and sell it, so any extra costs are coming out of your pocket... and if those get too high, there's zero profit. 

Since I sell auctions (multiple bid auctions), so I don't set the price... my buyers will pay what they will pay, they don't care who gets to keep what percentages of that.  So if one of my vendors (like eBay, PayPal, or USPS, or my suppliers...), or my state government, or the IRS, wants more, I'm going to get less, that's all there is to it. 

[ted_200]

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@e-sister11wrote:

ted_200, check out this poor guy for example! A NEW laptop attache and they took upwards of 66% of his sale in fees. Let's see how they explain that the fees did not swallow up his selling price!

https://www.ebay.com/itm/Black-Heritage-Portfolio-Attache-Briefcase-Laptop-Bag-15-x-12-Unused/162880...

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Yeah, that's pretty brutal.  You can't make any money that way if you have costs to source goods.

I assume he's just unloading it, and if he's got the shipping covered for under $10, he'll still get something out of it (about a buck-two-five) over tossing it in the trash.  A lot of smaller sellers are doing just that, and the deals those sellers present is a lot of what drove traffic onto eBay for a couple of decades.   To source that and sell it as a business, and not go broke, you're going to get undercut by Wallyworld and AMZ on price and go broke anyhow.  As they marginalize those sellers, the deals dry up, and Amazon gains more market share.

I assume he was hoping for multiple bids... he didn't get them.  Researching sold & unsold items - sold in auction format -  before you list a low cost auction for a similar item is a really good idea...

[coolections]

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@ted_200wrote:

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Right, but that bears the question:  If you could have squeezed another $1 out of it, why wouldn't you have done that anyhow. 

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I would have. Smart sellers think about how much to ask before listing. I decide how much profit and how much the fees would be and that is the total asking price. If the item in question does not meet my expectations in profit I do not list it.

[ted_200]

Current listings (111): 

https://www.ebay.com/sch/i.html?_odkw=Heritage+Briefcase&_osacat=0&_from=R40&_trksid=p2045573.m570.l...

Completed (80):

https://www.ebay.com/sch/i.html?_from=R40&_sacat=0&_nkw=Heritage%20Briefcase&LH_Complete=1&rt=nc&_tr...

Note:  eBay shows "sold" for a longer period than "unsold", so the ratio of sold to unsold is artifically high there, you can see that if you sort by most recent first...

Sold (40):

https://www.ebay.com/sch/i.html?_from=R40&_sacat=0&_nkw=Heritage%20Briefcase&LH_Complete=1&LH_Sold=1...

Sold at Auction (12):

https://www.ebay.com/sch/i.html?_from=R40&_sacat=0&_nkw=Heritage%20Briefcase&LH_Complete=1&LH_Sold=1...

In that result, we can see that seller sold two of those, with the exact same result.  Hey, the guy a few listings below that sold one at 99¢ that way!  Well... at least eBay made some money!  LOL.

[ted_200]

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@coolectionswrote:

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@ted_200wrote:

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Right, but that bears the question:  If you could have squeezed another $1 out of it, why wouldn't you have done that anyhow. 

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I would have. Smart sellers think about how much to ask before listing. I decide how much profit and how much the fees would be and that is the total asking price. If the item in question does not meet my expectations in profit I do not list it.

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I can't argue with any of that.  But what that means is that eBay is slowly pricing themselves (or at least you... and me...) out of some markets for some items, as fees and other expenses rise, because that is going to squeeze the profit margin to the point we won't list it. 

I guess my broader point would be that eBay's primary competition (in their view anyhow) has some smokin' shipping discounts in place, and the #1 problem for eBay's sellers to keep up is the high cost they have to pay for shipping.  I don't see how arbitrarily making eBay sellers' shipping costs another 10% higher is serving anyone's purpose (unless the purpose is only about fees today)... a good parasite shouldn't kill the host...

[coolections]

@ted_200

You're correct, shipping cost has made it almost impossible to make a profit on some items. Those have to be sold locally as it just is not worth the trouble, especially if a return comes into play. I rarely list anything heavy or oversize because of that, unless I got the item for dirt cheap. It surprises me how many sell those types of items here.

[the*dog*ate*my*tablecloth]

Here’s the thing. OP keeps talking about fees on profit. EBay is charging fees on revenue not profit. They have no access to your expenses like the IRS does.

What everyone is ignoring is that the FVF calculation uses a BASIS. They figure out the total fees they want then allocate it to sellers on the most fair way. Total revenue is the most fair way. When three sellers sell the same thing for the same total they pay the same in fees. That’s what fair means.

Now if you’re complaining that the fees are too high, that’s a totally different argument and the basis is irrelevant. Ebay charges what the market will bear. You either work it into your business model or change your business.

I had to change my business 15 years ago. I couldn’t be profitable selling the things I wanted to sell here. So I started buying here and selling elsewhere. Change your plan.

[fern*wood]

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@e-sister11wrote:

Here's and actual example:
Pre-owned Paper Shredder
Sale Price: $9.00
Calculated Shipping: $10.49
Total: $19.49
Actual shipping; $10.21
Fees:
*FV-$.90
*SFV-$1.05
*PP- $0.87
Total Fees-$2.82
minus the $0.28 shipping discount, total fees= $2.54
$9.00-$2.54= $6.46 net
2.54/9= 28.2% in fees

GET IT NOW?

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Your calculations are comparing apples to oranges.  You can't calculate the ebay/paypal fees on the total cost (apples) by a certain percentage and then compare that amount to only the selling price (oranges) and expect that percentage to be the same.  You do your initial percentage correctly, but expect that dollar amount to carry over at the same percentage when you change the starting point.   You start your example with total cost (price + shipping) and conclude by only using the sold price as a basis.   If you do the math on your example using the fees you calculated and compared to the total cost (not just the sold  price), you will see it is correct.  

If you want to compare the fees to only the sold price, then do it that way.  By starting with $9.00, then do your fees, and compare that dollar amount percentage wise and see the outcome.  

If you want to know the percentage of profit you will end up with, you will also need to deduct cost of goods, state/fed income taxes on that profit and any other expenses you might have.   It's quite easy to end up with over 100% of your profit being gone, but that doesn't change the ebay/paypal fee percentage.   Those fees are only one part of what needs to be considered when selling and setting your prices. 

Also, if you look at your account activity and paypal accounts they show the amount taken out of each sale and they aren't 28%, 50%, or over 100%, even though the profit you end up with might show you lost those amounts in the end, because profit % is a different animal.

If you look at the other thread going right now titled FEES, you will also see that Ted correctly states the percentage that paypal/ebay fees are calculated on.

[thatsallfolks]

So after six page of back-and-forth, it's obvious there are two "camps".

Camp "A", people who take ALL the fees and divide by item price to determine their "personal %", do so because of one or more of the following reasons (and possibly others):

• They were disproportionately affected by the shipping FVF because they sell items with a shipping cost that is a significant % of the item price
• They have a lot of competition, which prevents them from adding a handling fee to cover the shipping FVF
• Their margins are small, making their profit sensitive to changes in fees

Camp "B", people who consider the fees to be 10% + 2.9% + 30 cents, do so because of one or more of the following reasons (and possibly others):

• Their shipping costs are a relatively small % of the item price
• They sell in less competitive categories
• They sell in a category where buyers are less sensitive to shipping cost, so they can add a handling charge
• They remember when eBay used to charge for every listing, and every photo, and charged a higher listing fee if you used a higher starting bid, etc., so their total fees haven't changed much for the past 10+ years
• Their profits are relatively high compared to the fees, so their focus is on acquisition costs, etc.

Neither camp is "wrong". It's also unlikely that either camp will be able to convince the other. It's even more unlikely that anyone will convince eBay to change their fee strategy.

So in the end, you evaluate whether you can make enough money here to justify the time and the risk. And you make a decision.

[fern*wood]

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@thatsallfolkswrote:

So after six page of back-and-forth, it's obvious there are two "camps".

Neither camp is "wrong". It's also unlikely that either camp will be able to convince the other. It's even more unlikely that anyone will convince eBay to change their fee strategy.

So in the end, you evaluate whether you can make enough money here to justify the time and the risk. And you make a decision.

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I was just trying to point out that the two camps are using a different basis for their conclusions, and the OP is conflating the two different camps into one.

All costs have to be taken into consideration when selling and pricing something in order for a profit to be possible.  Knowing the correct percentage that ebay/paypal will take out is only one part of the total equation.

[chichille77]

Hello everyone,

This thread is getting a bit heated.  Please remember that it’s fine to disagree with others, but discussion should always remain courteous and respectful. 

This topic is now closed. Thanks for understanding.