Trying to understand selling fees. Help?
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‎09-10-2022 03:30 PM
Haven't sold anything on Ebay in a long time, and just recently got back into it. I find the selling fees confusing, and pretty much deceitful. As an example, I'll use the latest low-cost item I sold. The item price was $4.99, shipping was $3.81, and sales tax was $0.26, for a total sale amount of $9.06.
Ebay's so-called "13%" final value fee (12.9% to be precise) is for some reason applied to ALL of that amount, shipping and tax included. Which means Ebay took $1.17 in fees for this order. (Then there's the extra fixed amount of $0.30 per order which they add on for fun, so the final fees were $1.47). The reason this is very strange to me is because the only amount I received on this order which can actually be called MINE is the item price of $4.99. The shipping money I received is not income for me, because obviously I have to pay back that exact amount in order to print a shipping label. And of course the sales tax is not part of my income either: that's just a tax the buyer paid to Ebay.
But nonetheless, Ebay is taking:
13% of the item price (which IS my money, so this makes sense).
13% of the shipping price (which is NOT my money, so this doesn't make sense).
13% of the sales tax (which is NOT my money, so this doesn't make sense).
So where is Ebay's 13% cut for shipping and sales tax actually coming from? It's ultimately coming out of the item price, the $4.99 I made on the item. And $1.17 is 23.5% of $4.99, not 13%. And again, once you factor in the $0.30 just-for-fun fee, then they took $1.47 which is 29.5%. This is the percentage Ebay actually takes from the sellers themselves.
Surely people have already pointed this out before. And I guess you just have to deal with it, or go sell stuff somewhere else. But it's pretty irritating that Ebay would advertise "13% selling fees," when in reality the percentage is more than double that, almost 30%. In my opinion, companies should have more respect for their users (and more self-respect for that matter). This legitimately has me wondering whether Ebay is worth using.
Trying to understand selling fees. Help?
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‎09-10-2022 03:42 PM - edited ‎09-10-2022 03:46 PM
Yes, people have pointed this out before. Approximately 10,000 times since eBay started charging their final value fee based on the buyer's entire payment (including shipping and handling) in 2011.
The impact of that 30-cent fixed fee, and the FVF on sales tax and shipping, is particularly significant for lower-priced items. Many sellers have decided that eBay is not the right venue for low-value items due to the small profit (or even negative net).
On the other hand, if you sell an item for $100 with $10 shipping and the buyer pays $10 sales tax, for a total of $120, then the 12.9% of $120 equals $15.48, which is of course 15.48% of the selling price. The higher the selling price, the lower is the impact of the inclusive formula.
Trying to understand selling fees. Help?
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‎09-10-2022 03:49 PM - edited ‎09-10-2022 03:50 PM
you are understanding the fees quite well....
there is no "so-called" Final Value Fee....you correctly state is 12.9%
What is the Final Value of the order? In your example it is 9.06....
There is no discrepancy, no play on words, no misdirection....
There are more than 1 component to the "Final Value Fee"...one component is the item price, on component is the shipping, and so on.....
Let me nicely ask you this
"...The shipping money I received is not income for me,..."
if it is not income, what is it? (because you determine this amount)
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‎09-10-2022 03:55 PM
My selling costs (not to be confused with eBay fees) are about 25-30% of the total sale.
I know the approximate costs(varies with sales tax rate) before I list.
I do not list a $4.99 item, and expect to make much. Actually I don't list items that low, as I know it is not worth my time even if I got it free.
Trying to understand selling fees. Help?
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‎09-10-2022 03:55 PM
If you factor in promoted listing fee it's a lot worse.
I suggest you use calculated shipping and don't pass eBay discount to buyers. Your shipping fee is too low. Just my opinion.
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‎09-10-2022 04:10 PM
I understand they define the "final value" amount as item + shipping + tax, and so they take their percentage out of all of that. But I do believe most people are probably surprised to learn this, as it doesn't really make sense. When most people think of "selling fees," they assume we're talking about a percentage of what I earn from a sell. Not a percentage what I earn, plus a percentage of shipping, plus a percentage of sales tax. I'm questioning the logic of the system. The shipping and tax amount is not my money in any meaningful sense, so when Ebay takes a percentage from those amounts, it's really coming out of my item price.
And to answer your other question, the shipping amount is not my money because it's for the express purpose of covering an additional cost required to complete the transaction. It's the post office's money. The $3.81 was calculated by ebay, and it went from the buyer, to me the seller, and then straight to ebay/USPS in order for me to print the label and send the item. Why should Ebay tax that money? It's not my money. So the percentage ebay takes "from shipping," they're actually taking from my item price. Same with sales tax.
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‎09-10-2022 04:13 PM
fee was more like 17%
$1.47 fee from the $8.80
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‎09-10-2022 04:16 PM
@choochoo510 wrote:I understand they define the "final value" amount as item + shipping + tax, and so they take their percentage out of all of that. But I do believe most people are probably surprised to learn this, as it doesn't really make sense. When most people think of "selling fees," they assume we're talking about a percentage of what I earn from a sell. Not a percentage what I earn, plus a percentage of shipping, plus a percentage of sales tax. I'm questioning the logic of the system. The shipping and tax amount is not my money in any meaningful sense, so when Ebay takes a percentage from those amounts, it's really coming out of my item price. <snip>
In the past sellers would list an item for $10 with $60 in shipping. That was so they could bypass the fees based on the transaction alone. Policies were changed some ten years ago. This platform is a business and also wants to make money- just like you do. They began to charge fees based on the entire transaction to circumvent the sellers who tried to avoid paying their portion. It’s also not fair to those sellers who offer free shipping and eBay encourages all sellers to offer free shipping....
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‎09-10-2022 04:19 PM - edited ‎09-10-2022 04:22 PM
simplified fees.
$8.80 with free shipping.
$4.99 + $3.81 shipping
$0.01 + $8.79 shipping
All sellers pay the same.
explanation. not an endorsement (cheerleading) of how it is done
and yes, it is a surprise for many.............. new, and returning
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‎09-10-2022 04:20 PM
Trying to make money on a $5.00 item is usually a waste of time.
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‎09-10-2022 04:30 PM
(1) That's not what Ebay's own breakdown shows. It says $9.06 x 12.9% = $1.17 (then adding the extra 0.30 makes it $1.47).
(2) Moreover, the 8.80 amount includes 3.81 of shipping, which went straight into my hand from the buyer, and straight out of my hand to pay for a shipping label. What is the logic of Ebay taking a percentage based on that 3.81? It's basically an additional charge to me personally for printing a shipping label.
(3) Also, what's the logic of them taking a percentage (from ME) based on the sales tax? What did I have to do with the sales tax?
The bottom line is, any way you slice it, they took 29.5% of my earnings, as in the money that actually became mine.
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‎09-10-2022 04:34 PM
"Surely people have already pointed this out before."
NO! You're the First !!!!! . . . . . . . . within this hour . . . . . . .
Seriously -- it seems like you have fallen into a very common trap.
"Ebay's so-called "13%" final value fee (12.9% to be precise) is for some reason applied to ALL of that amount, shipping and tax included. Which means Ebay took $1.17 in fees for this order. (Then there's the extra fixed amount of $0.30 per order which they add on for fun, so the final fees were $1.47). The reason this is very strange to me is because the only amount I received on this order which can actually be called MINE is the item price of $4.99. The shipping money I received is not income for me, because obviously I have to pay back that exact amount in order to print a shipping label. And of course the sales tax is not part of my income either: that's just a tax the buyer paid to Ebay."
Where to begin? Yes, eBay applies their Final Value Fee (FVF) to the full amount that the buyer pays.
The Final Value Fee has two elements: (1) a percentage of the total paid by the buyer plus (2) thirty cents ($0.30) per order -- not just for fun. You have explained it pretty well, so it sounds like you understand it. But you don't seem to have accepted it. Most of us sellers have accepted the fees that eBay charges.
The shipping money that your buyer pays is income to you. But you have agreed, per the terms of your listing, to use that income to buy the postage/label so that the item can be delivered to your buyer.
And the sales tax is not paid to eBay by the buyer. Sales taxes are paid to the US State to which the item will be delivered. eBay collects it, as they are required to do by the Marketplace Facilitator laws, and then eBay sorts out all that money to the various states and sends it on to the states at the appropriate time.
"But nonetheless, Ebay is taking:
13% of the item price (which IS my money, so this makes sense).
13% of the shipping price (which is NOT my money, so this doesn't make sense).
13% of the sales tax (which is NOT my money, so this doesn't make sense)."
Unfortunately for you, I don't think eBay cares whether their fee structure makes sense to you. In True Fact, the moment you click the LIST button on any listing you are deemed to have accepted, and agreed to be bound by, eBay's policies and procedures, including the Fee Structures.
"So where is Ebay's 13% cut for shipping and sales tax actually coming from? It's ultimately coming out of the item price, the $4.99 I made on the item. And $1.17 is 23.5% of $4.99, not 13%. And again, once you factor in the $0.30 just-for-fun fee, then they took $1.47 which is 29.5%. This is the percentage Ebay actually takes from the sellers themselves."
See, this is where you fall into a very common trap, when you say the 12.9% (to be precise) fee comes "out of the item price." Yes, the fee comes from the item price PLUS from the amount of postage and amount of sales tax.
As you said, yourself, early in your post: "Ebay's so-called "13%" final value fee (12.9% to be precise) is for some reason applied to ALL of that amount, shipping and tax included." Remember? And I stated earlier in this post "Yes, eBay applies their Final Value Fee (FVF) to the full amount that the buyer pays."
A lot of people on this Board have posted -- a lot -- their calculation of eBay's fees based on only the price of the item. A lot of words have been used, like scam and steal and illegal and immoral and references to failed political movements that waged war throughout the world during the 20th century. Some other posters seem to agree with them.
Personally, I do not subscribe to that theory. I accept that eBay's fee, in categories where my selling ID has listings, is 12.9% of the total paid by the buyer, plus thirty cents per order.
"And I guess you just have to deal with it, or go sell stuff somewhere else. But it's pretty irritating that Ebay would advertise "13% selling fees," when in reality the percentage is more than double that, almost 30%. In my opinion, companies should have more respect for their users (and more self-respect for that matter). This legitimately has me wondering whether Ebay is worth using."
Yes, all potential sellers who want to (try to) sell on eBay have to make that decision for themselves.
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‎09-10-2022 04:36 PM
eBay's definition of logic is illogical. What is sad is that most small sellers don't have clue as to how fees work here.
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‎09-10-2022 04:37 PM
Choo Choo opines-- I find the selling fees confusing, and pretty much deceitful.
kabilab comments--I disagree that e-Bay's fees are deceitful. They may be confusing, excessive and/or unacceptable to sellers, but the platform clearly enumerates their cost of use.
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‎09-10-2022 04:38 PM
The FVF's have not really change that much in the past few years other than some of the fees you used to pay when PayPal was the financial processor are not incorporated under Managed Payments. You should read the following to get a good understanding of the fee schedule.
https://www.ebay.com/help/selling/fees-credits-invoices/selling-fees?id=4822
Since the FVF calculation is applied to the entire transaction amount the effective fee on your transaction is 16.7%. With regards to the shipping you will discover that that is considered as part of your gross revenue and will be included in the 1099 eBay sends you if you exceed $600 in total gross transactions during the calendar year.
It appears you are using calculated shipping which in your case is probably a good choice since most of your items appear to be shipping first class. You may want to consider adding in a handling fee to cover the cost of the FVF (12.9%) that is applied to your shipping cost.
When you prepare your taxes all the expenses are deductions to your gross income which is usually reported on a Schedule C or Schedule D. Things like the eBay fees, shipping cost, COGS, POV, packing materials, etc. are all deducted to leave you with a net income amount. This is the amount you will pay income and SE tax on.
You may want to take a look at your sales and your costs to see if you are making an actual profit on your investment. If not you may want to adjust your pricing.
