eBay to Raise Fees
Posted in Patch Collecting by John E. Pannell on January 30th, 2008 at 4:35 am It takes chutzpah to call a price increase a price cut. That’s what eBay has recently done. They’re spinning the facts of this increase with more skill than a US presidential candidate!
Here is what eBay has to say about the recent price changes:
Seller Update: Fees, Rewards & Standards
eBay buyers want value and selection from sellers they can trust–and good sellers deserve rewards for delivering great customer service. That’s why we’re making a number of important changes that may affect you:
- Reduced Listing Fees
You asked, we listened. We’re reducing Insertion Fees and adjusting Final Value Fees to lower your up-front cost to sell on eBay. You wanted free Gallery, now you’ve got it–plus more feature discounts.- Rewards for great sellers
There will be discounts and incentives for those who satisfy customers best. Who decides who gets rewarded? Customers do, by giving sellers high Detailed Seller Ratings (DSRs).Feedback Changes
Significant changes coming soon will increase buyer confidence and showcase good sellers.
- Buyers will only be able to receive positive Feedback.
- Positive repeat customer Feedback will count and Feedback more than 12 months old won’t.
- Negative and neutral Feedback left by the buyer will be removed for transactions in which a buyer doesn’t respond to the Unpaid Item (UPI) or if the member is suspended.
For more details on how these changes may affect you, attend a special Seller Webinar at 10:00 a.m. this Friday, February 1. You may also see announcements from eBay executives on the Announcement Board.
You will notice they left out the most significant part of the pricing change. Sure, they will be lowering listing fees and dropping charges for some underused features but the other main cost of selling on eBay, the final value fee, will increase. Here is a comparison of the fees for auction style and fixed price listings.
| Closing Price | Final Value Fee | Final Value Fee (effective 02/20/2008) |
eBay’s complete fee schedule can be found at http://pages.ebay.com/sell/update08/basic/index.html?ov=004KO.
What does this mean to sellers? Here’s some comparisons:
| Closing Price |
Current Fee | New Fee | % Increase |
| $5 | $0.66 | $0.79 | 19.70% |
| $25 | $2.51 | $3.19 | 27.09% |
| $50 | $4.53 | $5.06 | 11.70% |
| $100 | $6.15 | $6.81 | 10.73% |
| $500 | $21.55 | $22.81 | 5.85% |
| $1000 | $37.80 | $40.31 | 6.64% |
| Percentage errors due to rounding | |||
(Bad math in original table corrected at 3pm 1/30/08. The original table shows the danger of trying to put mathematical figures in a blog in the middle of the night!)
Another very odd change I notice one of the forthcoming changes to eBay’s feedback system. Buyers will only be able to receive positive feedback! That would appear to take away from sellers the one tool they have to let other sellers know about deadbeat buyers. This appears to follow the falacious adage, “The customer is always right.” Customers can only be “good”. Sellers will not know if they’re dealing with a potential deadbeat until it’s too late. I cannot imagine how this might be in sellers’ best interests.
Defending this change, eBay states, “Focusing on customer service includes doing everything we can to grow customer confidence in our sellers.” What about growing seller confidence in eBay buyers!?
The increased fees should not be a surprise to those who have been following the news about this company. Before Ms. Whitman’s recent resignation as CEO her successor, John Donahoe, made it clear he intended to reduce the company’s reliance on listing fees for its revenue and shift the balance more towards final value fees. This certainly does that!
However, it was also reported that eBay would introduce a new pricing structure that would motivate sellers to list more items. I do not believe that a steep price increase on item sales will motivate sellers to sell more on eBay.
I expect sellers will not just absorb these higher costs. Look for sellers to recoup the additional fees in various ways such as increased shipping and handling charges or nonacceptance of PayPal. Some might choose to increase their opening bids, but that could prove to be a poor business decision.
Will there be any fallout? Will sellers start looking to their own websites or other alternatives to sell their wares? Is eBay’s brand name strong enough to warrant these fee increases? What do you all think?
Oops! Apparently my math might be bad. I’ll take a look at it after I wake up and correct the chart if needed…
Still the increases are big.
John,
I’ll let you correct the math in the tables.
I agree the price has gone up on completed sales.
A specific example, at the $25 price point, the old Final Value Fee (only) would be $1.31; now the new FVF would be $2.19.
The only ‘winner’ is the seller who routinely uses Gallery; and paid $0.35 for it; since it is now free. But only a ‘winner’ if the item does not sell.
In the example above if the item was listed at $9.99 and sold for $25.00. The old fees were Listing $0.40, Gallery $0.35 and FVF $1.31; a total of $2.06. If unsold the fees were $0.75.
With the new structure, if unsold, the fee would be $0.35 and if sold Listing $0.35 and FVF $2.19 for a total of $2.54.
Better check my math too!
One enterprising eBay seller took a more direct line to his protest by creating an auction entitled “seller relief.” The product was called “Lubri-gel.” The description said that sellers will need it, and eBay won’t be supplying it.
The auction was ended early by the seller, and as of 1:15pm PST today the auction listing was no longer visible. Apparenlty eBay does not have a sense of humour, especially when someone so graphically points out what they are doing.
I got out a little ahead of the curve and back in December started building my own off eBay site to sell Scout memorabilia. The software and hosting service are owned by eBay but this is a stand alone store not connected to the normal eBay operation. You can find it at http://www.santeeswapper.com I wonder if other sellers will try and find alternatives given that as John states the climate on eBay is much more “buyer friendly” and it is terribly hard to make a living selling $5 OA flaps and $3 csps on eBay. I think this move (its been coming) is going to spark some sellers to abandon selling on eBay. I could run some statistics but typically less than 50% of auction listings attract a buyer at the minimum bid and given the time and effort it takes to scan, list, and mail items it might not be worth it especially to people who have real jobs and precious little time to spend on this hobby. The last time eBay jacked fees I saw some sellers drop out (fridayafternoontrading is one example) or only sell when they had their once very couple of months 1/2 price listing fee day (fridayafternoontrading is one seller who did this). You wonder when a critical mass is reached…a tipping point…when some credible alternative to eBay for our hobby will come along. Some have tried it…maybe others have plans?? Check out a similar discussion at the http://www.patchblanket.com if you like this topic and talking about eBay and our Scout collecting hobby.