Understanding eBay's Fees
If you're going to run a successful eBay business, you better
get used to paying eBay. That's because eBay gets its cut every time you list or
sell an item on the eBay site. Every time. It may
be a few pennies here and a few pennies there, but eBay's fees add up quite rapidlyand become a significant
expense if you're selling a lot of items each month.
For that reason, you need to understand the costs involved
before you put any items up for auction. eBay charges two main types of fees to
sellers:
-
Insertion fees (I prefer to
call them listing fees). These fees are what you
pay every time you list an item for sale on eBay. They are based on the minimum
bid or reserve price of the item listed. These fees are nonrefundable.
-
Final value fees (I prefer to
call them selling fees or commissions). These fees are what you pay when an item
is actually sold to a buyer. They are based on the item's final selling price
(the highest bid). If your item doesn't sell, you aren't charged a final value
fee.
Table 1.1 lists eBay's
current insertion fees (as of fall 2006); Table 1.2 lists the current final value fees.
Table 1.1. eBay Insertion Fees
|
Starting Bid Price |
Insertion Fee |
|
$0.01$0.99 |
$0.20 |
|
$1.00$9.99 |
$0.35 |
|
$10.00$24.99 |
$0.60 |
|
$25.00$49.99 |
$1.20 |
|
$50.00$199.99 |
$2.40 |
|
$200.00$499.99 |
$3.60 |
|
$500.00 or more |
$4.80 |
Table 1.2. eBay Final Value Fees
|
Final Selling Price |
Final Value Fee |
|
Item not sold |
No fee |
|
$0.01$25.00 |
5.25% of the final price |
|
$25.01$1,000.00 |
5.25% of the initial $25.00 ($1.31), plus 3% of the remaining
closing value balance |
|
$1,000.01 or more |
5.25% of the initial $25.00 ($1.31), plus 3% of the amount from
$25.00$1,000.00 ($29.25), plus 1.5% of the remaining
balance |
eBay also charges a variety of fees for
different types of listing enhancements, such as bold and highlight. And, as you
might expect, all manner of fine print is associated with these fees. The most
important things to keep in mind are that insertions are nonrefundable; you
won't be charged a final value fee if the item doesn't sell; and it doesn't
matter whether the buyer actually pays youyou still owe eBay the full final
value fee, even if you get stiffed.
Invoicing on your account occurs once a month, for the previous
month's activity. You'll get an invoice via email detailing your charges for the
month. If you've set up your account for automatic credit card billing or
checking account withdrawal, your account will be charged at that time. (If you
prefer to pay via check or regular credit card, now's the time to do it.)
Know, however, that these aren't the only costs you'll incur in
running an eBay auction. Most sellers opt to accept credit cards via eBay's
PayPal service, which charges its own fees. For the average small to mid-sized
seller, PayPal charges 2.9% of the total payment price, plus a flat $0.30 per
transaction. That's right in line with what a traditional retailer would pay to
a bank to handle its credit card payments.
As you can see, these fees start to add up. For most eBay
businesses, you can estimate paying 12% in fees for every successful sale you
make. This doesn't take into account the actual cost of the item you sell, nor
any other costs you incursuch as the costs of packing materials, labels,
Internet access, and the like. You'll need to factor all these costs into your
business model, just as you would factor in rent, credit card fees, and other
operating expenses if you were running a bricks-and-mortar business.
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