Fees

Yes, fees. You didn't think you were going to get away with listing and selling on ebay for free, did you? No, nothing in life is free, and ebay is no different.

There are two main types of fees that all sellers see on a regular basis: insertion fees (I'll refer to them as IFs) and final value fees (FVFs). Generally speaking, you'll be paying these every time you list something, as well as every time something sells.

In addition, there are paypal fees, which I'll discuss after I'm done discussing all the ebay fees.

Ebay seems to be continually changing its fee structure. And that fee structure is quite complicated. Your fees will vary depending on whether you're listing a drill or a car. They will vary depending on whether you are listing in auction format, or fixed price. They may vary depending on which category you are listing under.

It would make little sense for me to list the fee structure here, as it might change tomorrow. Rather, I'll simply list the ebay page which explains the fees to you:   http://pages.ebay.com/help/sell/fees.html

As you can see, the fees are quite varied. Currently, ebay is running a promotion by which sellers can list their first 50 auction items for free, then pay an IF (insertion fee) after that point. It didn't always used to be this way. And, this promotion may end next week, who knows? That's why I am not spending a whole lot of time telling you about current fees and regulations in my blog, as they can change at any time.

Let's say you've already listed 50 auction items for free this month, and are ready to list your 51st. Here's where you will need to pay attention, because pretty much every listing decision you make from this point forward will have an affect on what you will pay ebay at the end of the month.

Suppose you have a little trinket that you picked up at a yard sale for $1. You think it might sell for $25. You can either list it in an auction format, or as a fixed price. Remember, an auction format (AF) means people will potentially be bidding on your item. I say 'potentially' because it's always possible that NO ONE will bid on it, resulting in a non-sale. You will likely want to start out your AF listing at $.99 rather than $1. That's because an auction IF is 15 cents more at $1 than it is at $.99. That's just the way it is. 

You could also list it as an auction, beginning at $24.99 (not $25, because $25 starts a new pricing tier, and starting an item at $25 will cost you $.75, whereas, if you start the bidding at $24.99, the IF is only $.50. I know, it's only a matter of a quarter, but, over time, all those quarters will add up. At the end of the month, do you want to owe ebay $47.50, or $66.25? Your choice. Study the fee structure page. Print it out if you need to, and tape it to the wall in front of your computer. 

Now, here's another catch at deciding what to start an item out in terms of price: Suppose you think it will ultimately sell for $25. You may be right. But, it could potentially not sell AT ALL. Suppose no one else thinks it's worth $25. Then, you'll end up still having the item, because no one bid on it. And it cost you $.50 to list it. Now, you have $1.50 invested in the item (the $1 you paid for the item at the yard sale, + the $.50 in fees you already paid to list it once on ebay.

Now, in most cases, you can re-list an unsold item on ebay once for free. Your $1 yard sale trinket that didn't sell at $24.99 may be relisted for a second run on ebay for free, meaning you won't have to pay that $.50 IF again. I italicized 'may', above, because ebay doesn't offer free relistings on everything. You'll have to do some checking on whether your item qualifies as a free relist.

So, if it didn't sell for $24.99 the first time around, do you think it'll sell a second time around for the same price? Likely not.

However, let's start all over again. Same item. Different tactics. This time we list it, but start out the bidding at $.99. Even if you only get one bid on it, you are only out $.11, right ($.10 for the listing fee, plus $.01 because you originally paid $1 for it, and you lost a penny when it sold for $.99)? Do you think your chances of it selling above $.99 are fairly good? Chances are, that it will. Suppose a week goes by and the final sale price is $16.50. Less than the $25 you wanted, but hey, it still sold, right? And, you didn't lose a cent! In fact, you made a little bit!!!

Keep in mind that once you list your item, it may not be available on all ebay's computers and servers for up to 8 hours later. I know, I don't like it either. If I am paying for a full week of an item being listed on ebay (336 hours), I want it visible to potential bidders for 336 hours, not 328. But, it's neither here nor there, as we have little control over it anyways, so why even worry about it. I generally don't worry about it too much- I only bring it up because if you list an item, and turn around five minutes later and search for it on ebay, chances are 50/50 that even you won't be able to find your own listing. It's just because it takes up to eight hours for all ebay's computers to index one another and all get on the same page.

Also, keep in mind, that, even though you may list an item on a Friday evening, and even though it's visible when you do a search for your own item, and find your own item on ebay 30 minutes later, don't get discouraged if you don't get any bids within the first hour. Or even the first 24 hours. Or even the first three or four days. You see, most activity on listings seems to take place within the last 12 hours of a listing expiring. Just is. This is especially true for hot items. 

Also, people may be a little wary of bidding on your item, particularly if you are a new, untested, unproven seller. Your buyers and bidders will undoubtedly be checking out your feedback before they bid. I know I do. That's part of the reason why it helps you tremendously to have a few feedbacks under your belt from other sellers (after you yourself have made a few purchases on ebay). As your feedback continues to grow, sellers will become more and more willing to buy from you. They'll see that you have a 100% +FB score, and a page full of nice comments left by others in other transactions you've been involved with. This feedback score, and feedback history is like your credit score on ebay. As you go around the block a few times, more and more people will begin to trust you as a seller.

OK....  I've gotten off the topic of fees a little bit. I hope I am not boring you when I go off-topic. At least I am going on different tangents on things that I think will help you.

So. Your item sold for $16.50, and it will cost $8.80 to ship the item to the buyer. Buyers pay for shipping, unless you dictate otherwise, so the total cost to the buyer will be $25.30. Let's keep track of your fees and costs as we progress through this example (I say fees AND costs, because fees are just one part of your overall costs):  $1 for the item at the yard sale + $.10 to list it = $1.10 so far. 

Now let's go back to that ebay fee page and see what the final value fee (FVF) will be. I can see that ebay's going to slap you with a 9% fee when the item sells. It sold for a total of $25.30 in our example, including shipping, so 9% of $25.30 is $2.28. On your handy dandy pocket calculator, simply type in 25.3 x 9 % = and it should give you 2.277 as the answer. Well, that figure is a dollar amount. Round up to $2.28 as your FVF.

$1 = $.10 + $2.28 = $3.38 in costs so far. But we're not done yet.

You'll likely already have set up your paypal account, and your buyer is likely going to pay you with a paypal payment. Unless you accept checks and/ or money orders (quite rare nowadays, but it can still happen), you are going to accept paypal as a means of payment. I strongly recommend accepting paypal as a means of accepting payments. 

Paypal, too, has a tiered system of fees, meaning that the fees I pay paypal are likely going to be different than yours. Payal fees are based in part upon the volume of money paypal processes for you. Paypal has different rules and criteria for determining what the paypal fee is going to be. Let's just generalize here and say that the paypal fee is going to be 4.9% of the transaction total + $.39. Weird, I know, but I didn't make up the rules.

OK, so 4.9% of $23.30 is $1.14, + $.39 = $1.53 as a paypal fee. Paypal took $1.53 right off the top, which you will NEVER see, as their fee for the transaction. In fact, paypal won't even deposit $23.30 in to your account. They will slice off their fee ($1.53 in this case), and deposit the remaining 21.77 in to your paypal account.

So, let's review ALL our costs:   $1 + $.10 + $2.28 + $1.53 = $4.91.

So, let's figure out our profit. Let's take the dollar amount the item sold for, NOT INCLUDING SHIPPING: $16.50. Subtract all our costs thus far:  $16.50 - $4.91 = $11.59. 

Your profit on that $1 item would be approximately $11.59. Keep in mind, this is just an example. I generalized a lot here. There are plenty of other things I glossed over, but I hit all of the main points. 

Can you live with a profit of $11.59 on that single item? That depends on you. But what if that $1 yard sale item ended up selling for $37.90? Or $55.15? Or $92.02? It can happen.

Here is where having a large number of item in inventory can pay off. Sure, I might only make $11.59 in profit on one item, $5 on another, $26 on a third, $18.50 on a forth, $3.95 on a fifth and $10.88 on a sixth. Add all that up. My profit for the day might be $75.92, after all six items that I listed sold. Or it could be $50. Or it could be $250. 

I would venture to guesstimate that my average per-item profit is close to $25. And I am averaging selling 10 - 12 items a day. You do the math. It works out well in my favor, and the same can happen to you.

I hope this sheds a little light on the fees you'll be committed to paying day in and day out as an ebay seller. Sure, there are some ways around some of the fees. You could avoid paying the paypal fees, and only accept checks or money orders. That will save you a small sum.

But, the flip side is that you'll lose in a couple ways. Not only will you lose most of your buyers, most of whom will WANT to pay with paypal, but, what happens when you deposit a check from a buyer and it bounces? Who do you think gets charged that $37.50 bounced check fee? If your bank can't get it out of the person who wrote you the check, they are going to come after YOU for it. The bank is going to collect on that bounced check fee from someone.