The Price of Success

Understanding eBay's selling fees

by staff writer
- Apr 01, 2008

This article was updated to reflect eBay's Spring 2010 changes, which take effect March 30, 2010.

Fees on eBay are part of the cost of doing business. They can't be avoided, but with the right approach they can be managed, and even minimized.

It helps to first understand the different kinds of fees sellers encounter. They break down into three main categories:

  • Insertion Fees
  • Final Value Fees
  • Listing Upgrade Fees

If you go through PayPal or another electronic payment processor to complete your transactions, or have a merchant account for processing credit card payments, there are separate fees for using those services.

Front-end fees

Insertion fees are like a door charge. You pay to get in, whether your item sells or not—just as you would if you placed a classified ad in the newspaper. However, if your item doesn't sell, eBay will let you relist it once for free.

There are six insertion fee levels that apply to different start-price ranges for auction listings, and four for fixed-price listings, depending on whether you have an eBay Stores subscription and at what tier. So a number of factors—such as how you price your items, what format you list in and whether you have a store or not—can play a big role in how much you ultimately pay in eBay fees.

For example, if you're a seller without an eBay Store, a 99-cent auction listing would cost nothing to list. That's right, free listing! This is a great deal for sellers who list 100 or fewer items a month. But start the same listing at $1 and you've crossed the threshold into the next fee bracket (25 cents). This means for just a penny more on your starting price, you'd end up paying an additional quarter in fees.

But there is a catch. To qualify for free listing, auctions must not use reserve pricing—a mechanism sellers can use to protect their item's value. Adding a reserve to your 99-cent listing will bump you up to a 10-cent insertion fee. On top of that, you'll be charged a $1 to use a reserve. So if you can't bear to let that collectible treasure go for a pittance, you'll need to weigh the risk against the additional $1.10 in front-end fees.

The good news is, insertion fees on eBay top out at $2, so these become less of a cost factor as the starting price of the item increases.

Store subscribers, meanwhile, pay 10 cents for each auction listing starting at 99 cents or less. Now, this may seem a bit unfair, as they also pay monthly fees for a storefront. But in return for higher fees at this pricing tier, store sellers can add up to 12 pictures for free with those auction listings, and pay lower final value fees on transactions up to $50.

For auctions starting at $1 or more, the same insertion fees apply to store owners as to non-store owners.

Store subscribers pay listing fees as low as 3 cents

Back-end fees

The greatest determinant of a seller's fees—and one over which you have no control in the auction setting—is the actual sale price. This is where eBay makes most of its money, in the form of Final Value Fees. These represent the commission eBay charges for the access to its vast audience of users and its auction platform and tools. In the case of auction listings, Final Value Fees are 9 percent of the item's selling price, but no more than $50.

It can make a seller swallow hard to hand over that much of her profits to eBay, but many experts consider this to be cheap rent for prime space in an all-hours global shopping mall.

The thing to note about Final Value Fees is you get charged when your listing ends with a winning bid—even if the buyer doesn't pay up. If you discover you are dealing with a deadbeat buyer, you can request a final value fee credit by opening an unpaid item case in eBay's Resolution Center. You can even automate the claim process before a problem occurs by enabling the Unpaid Item Assistant in your account settings.

Final Value Fees are not charged if there are no bids on your listing, or if your reserve price is not met. Different rules apply for eBay Motors and Real Estate.

The fixed-price incentive

If you'd rather not try your luck with a 99-cent auction, you can pay a bit more upfront and set a firm price on your item. There are no assurances it will sell at the price you set, but at least you won't risk much to find out. And it'll cost a lot less than posting a 99-cent reserve auction.

The fixed-price format has an entirely different cost structure than auctions. And once again, pricing differs depending on whether you have an eBay Store and your store subscription tier. But, whatever your selling level, insertion fees are the same for every listing you post, whether your start price is 99 cents or 99 bucks.

Fixed-price insertion fees start at 50 cents for "standard" listings—that is, listings posted by sellers who don't have an eBay Store—and they go down from there for store owners. The idea is that, to incentivize sellers to pay a monthly fee, eBay lets store subscribers list items at a lower cost. So if you sell in the fixed-price format, you have the opportunity to "buy down" your insertion fees either by subscribing to a store, or upgrading your subscription to the next store level.

Store subscribers pay listing fees of just 20 cents with a Basic store, 5 cents with a Premium store, or 3 cents with an Anchor store—and they can include up to 12 photos per listing for free. Contrast this with standard listings, where adding this many photos will cost up to $1 extra per listing, and you start to see how opening a store can pay off.

Where it gets tricky is when eBay takes its cut after your item sells. Final value fees for fixed-price listings range from 8 percent to 15 percent of the first $50, with an additional percentage sliced off for transactions exceeding this amount. The actual percentage varies depending on the product's category. And higher-volume sellers can receive discounts of up to 20 percent a month on these fees if they maintain excellent buyer satisfaction ratings.

Some listing enhancements are worth the expense, others not so much

Window dressing

Listing upgrades are those little extras that add flair to your titles and descriptions and help promote your item within eBay. Prices for these optional flourishes range from 10 cents to schedule a listing's start time to $74.95 to have an item featured on eBay's home page.

Some listing enhancements are worth the expense, others not so much—and the difference often depends on the item. Research tools such as HammerTap and Terapeak are designed to help sellers determine which ones make sense for their unique listings, though these may be too costly for casual or even part-time sellers. Perusing eBay's completed listings is a free and effective way to find out what generally works or doesn't work. It's also worth noting that certified eBay listing services like Auctiva provide some of these enhancements for no extra charge.

Free is always a nice price to pay, but as we noted earlier, certain eBay fees simply can't be escaped. It may be tempting to try, but fee avoidance is a punishable offense. Is saving a few bucks really worth losing your eBay privileges?

There are two common ways sellers try to get around eBay's fee structure. The first is by listing with a very low Buy It Now price and charging an unreasonably high shipping fee to recoup profits on the back end. The second is by privately contacting the high bidder and offering to sell the item off eBay. Both of these are blatant violations of the rules and will quickly get you banished from the playground.

Tips for reducing fees

One easy way to reduce selling fees is by listing multiple similar items in one fixed-price listing, using eBay's item variations option. Say you have 15 pairs of shoes to sell. Even if they're different sizes, colors, styles, prices, etc., eBay will let you combine them into one listing and save the insertion fees you would have paid for posting separate ads.

Another way to reduce your upfront cost is to list through a certified eBay partner. Tools like those provided by Auctiva offer professional-looking listing templates, scheduled listings and up to 24 photos per listing, with Supersizing, for no additional cost. eBay's fees for these extras quickly add up, so using the right listing service can easily pay for itself—and then some.

Still another kinder, gentler alternative is to register with eBay's Giving Works program. When you agree to donate 10 percent or more of your final sale price to a certified nonprofit organization, eBay will credit back the same percentage of your insertion and Final Value Fees (reserve and upgrade fees are on you). The minimum donation is $1 per transaction.

And whatever you amount you ultimately donate will probably qualify as a write off on your taxes. Everybody wins.

About the Author

Auctiva staff writers constantly monitor trends and best practices of those selling on eBay and elsewhere online. They attend relevant training seminars and trade shows and regularly discuss the market with PowerSellers and other market experts.

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