Thursday, January 31, 2008

eBay Lowers Fees Smoke Screen for Raising Fees

Lower seller's fees, among other changes, was the big announcement from eBay on Tuesday January 29, 2008. According to eBay sellers spoke and eBay listened. But did they listen or is eBay out to gouge the sellers even more.

Here is excerpt from announcement message received by ebay members ... " You asked, we listened. We're reducing Insertion Fees and adjusting Final Value Fees to lower your up-front cost to sell on eBay " .

Looks good at first. If I were an eBay seller I am liking this. I'm going to save a little money when I sell my stuff. Got calculator in hand now figuring my increased profits.

But wait, I overlooked the important ADJUSTING Final Value Fees (FVF) words later in the sentence. Further investigation into adjusting FVF yields some unfriendly results. Increases of 2 - 3 percent in FVF depending on listing format.

Look here at how eBay tries to disguise this fee increase. Every place where an initial listing fee is lowered there is italic text to make this decrease stand out. Then look at the next chart where the FVF is raised and you don't see anything to bring the increase to your attention.

Starting or Reserve PriceCurrent Insertion Fee Insertion Fee (effective 02/20/2008)
$0.01 - $0.99$0.20$0.15 Lower fee!
$1.00 - $9.99$0.40$0.35 Lower fee!
$10.00 - $24.99$0.60$0.55 Lower fee!
$25.00 - $49.99$1.20$1.00 Lower fee!
$50.00 - $199.99$2.40$2.00 Lower fee!
$200.00 - $499.99$3.60$3.00 Lower fee!
$500.00 or more$4.80$4.00 Lower fee!

Closing PriceFinal Value FeeFinal Value Fee (effective 02/20/2008)
Item not soldNo feeNo change
$0.01-$25.005.25% of the closing value8.75% of the closing value
$25.01 - $1,000.005.25% of the initial $25.00, plus 3.25% of the remaining closing value balance ($25.01 to $1,000.00)8.75% of the initial $25.00, plus 3.50% of the remaining closing value balance ($25.01 to $1,000.00)
Over $1,000.015.25% of the initial $25.00, plus 3.25% of the initial $25.00 - $1,000.00 plus 1.50% of the remaining closing value balance ($1,000.01 - closing value)8.75% of the initial $25.00, plus 3.50% of the initial $25.00 - $1,000.00 plus 1.50% of the remaining closing value balance ($1,000.01 - closing value)

As an example, I will sell one item on auction format under current fee structure.
My item will list at $24.99 for 7 days.
My total cost to list and sell (that's my goal to sell it - I did not list this item to have go unsold) item $1.91.

Now I will sell under the new fee structure to take effect February 20, 2008 using this same item and same format.
I am ecstatic as this new fee structure will cost me a nickel less to list my item.
My total cost to list and sell this item $2.73.

According to my 3rd grade math level $2.73 compared to $1.91 doesn't look like my fees were lowered at all. That measly nickel I saved was crushed by the overall cost increase of nearly a dollar. Taking the cost of my $24.99 item into account, this leaves me very very little room for profit. And unless I am stupid, I am not giving my items away, so it doesn't look like I'll be selling on eBay anytime soon. If I sold on eBay today I'd be packing my bags and moving out. Any seller who wants to maximize their profits finds a venue that gives them the lowest overall costs. Any seller who feels this increase is not that bad is a fool and deserves to continue getting robbed.

You could argue this slightly less than a dollar increase is nothing. After all it is only one item. Well many eBay sellers sell 100's to 1000's of items. Take a dollar times a thousand and this phony fee decrease will cost them alot of money. That's exactly how eBay sees it. They look at the big picture. While the little guy says, it's only 75 cents, I'll just shut up and pay it, eBay sees it as 75 cents times how many million users??? Now that's alot of money.

eBay sellers surely wanted lower fees, it's hard to believe they asked for the higher fees.

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