- I already know at a glance the fee percentages are going to be EXACTLY the same in both scenarios, because I know I dont even need to look at the shipping - Question is, how is it you think these numbers wont be the same - How can they not be - Its the most simple math... Wouldnt mind knowing where you got your degree in mathematics - As a side note, In 1st year statistics, my professor informed me I was the only person to ever get higher than a 4.0 in his class in his over 20 years of teaching - On the final question of the final exam, which was worth 30% of the entire exam, I recreated and simplified the text book formula to receive additional points - He told me he ran it by several of his colleagues and it held up under every scenario or circumstance - who knows, it may be the new text book formula and someone else got credit for it rather than myself haha
Anyway here are your scenarios assuming that they are the same item and what you pay for shipping is the same as what the buyer paid:
Scenario 1: Item price - $20 / Posted shipping cost - $10 /sales tax rate - 7%
Total Sale = $32.10( $20 + $10 + $2.10) generates 13.25% ebay fees of $4.55(including .30 Transaction fee)
We never see Sales Tax, so Total Sale for accounting purposes is $30
$30 sale -$10 shipping = $20(net after shipping)
Net Revenue after shipping is $20(which is the items selling price)(which is and always was our only profit bearing number in this sale - we know it right from the start since shipping is a wash - I'm accounting for it here to show the work, though I really dont need to if I want to get a quick idea of what my profit after fees is)
So the ebay fees of $4.55 represent 22.75 % of the $20 net after shipping. end scenario
Scenario 2: Item Price - $30 / Posted shipping cost - Free / Sales tax rate - 7%
Total Sale = $32.10( $30 + $2.10) generates 13.25% ebay fees of $4.55(including .30 Transaction fee).
We never see Sales Tax, so Total Sale for accounting purposes is $30
$30 sale - $10 shipping = $20(net after shipping)
Net Revenue after shipping is $20(which is the items selling price)
So the ebay fees of $4.55 represent 22.75 % of the $20 net after shipping. end scenario
The fee percentages are exactly the same and how couldn't they be? -Please Please let this sink in this time
Nothing to "sink in" you are simply juggling the numbers. The effective rate is about the FVF's eBay charges on a transaction nothing else. They are part, and only part of the selling costs. Shipping is a selling cost not a fee. In scenario 2 you have no idea what the shipping cost was that the seller factored into the item price so you have no way to determine it or subtract it out of the calculation and why should you your are figuring the effective fee not selling costs. Your calculations should look like the following. Your model fails to hold consistency. Net revenue is a separate issue from the effective fee rate. In both of the following situations the $30 Gross revenue is what is going to factor into the 1099 that eBay issues you. The sellers bottom line net revenue will come once their taxes are done.
Scenario 1
Scenario 2
