are eBay insertion fees getting out of control?
Last night I started thinking about my overall pricing strategy. Do I want to focus on cheaper items or more expensive items? What are the positives and negatives of each?
I want to grow sales dollars to continue getting increased incentives from my suppliers, but selling expensive items is so challenging on eBay because of the risk of losing a large insertion fee week after week.
On an item under $10, I’ll only be charged $0.40 per listing to put the item up in a fixed price format. Let’s say my net profit margin would be $2.00 on the item (after all of my fees, labor costs, postage etc.) if I sold it during the first listing… If it took me 4 weeks to sell the item, I would net $0.80 after losing 3 additional insertion fees at $0.40 each.
But, let’s say I was trying to sell an item that was over $50. I would be charged $2.40 for each time I list the item in a fixed price format. Let’s see my margin is $6.00 on this item if I sell it during the first week. Even though the margin is 3 times as much as the cheap item we just discussed, if it takes me 4 weeks to sell the item, my profit margin would be -$1.20!
This hardly seems like a good idea. With items that have high insertion fees, you have to make sure they move quickly, change something about your listing to make them move faster, or move them to store inventory.
But is this really the way to go for eBay? I have no gripes about eBay fees most of the time as I understand that they provide tremendous value for sellers by delivering a lot of traffic to our listings… but why do the insertion fees have to increase so much as we move up in price?
After all… eBay generates a good amount of revenue from final value fee credits on expensive items… so why discourage us from listing expensive items in fixed or auction because of the risk of loss on large eBay insertion fees?
What do you all think?
Corey Kossack is one of eBay’s “top sellers” through his eBay store, Koss DVD. He is also author of eBay Millionaire or Bust and creator of ProfitBuilder software that maximizes profits for eBay sellers.
March 26th, 2007 at 3:20 pm
GOOD READING I AM IN THE PROSESS OF SETTING UP A STORE AM I MAD
March 27th, 2007 at 12:56 am
"so why discourage us from listing expensive items in fixed or auction because of the risk of loss on large eBay insertion fees?"
I agree with you 100. But I look at it this way, if you can’t come out with a profit margin of at least $2.00 per item fora low cost item (after all fees) you should not sell it on eBay, some will try to make th money from the shipping cost (they’ll charge $2.99 in shipping fees but it would only cost then $1.50) unfortunately there has seen a few large sellers going out of business because of the high fees and the very low profit margins.
March 27th, 2007 at 9:53 am
What kinds of costs do you tell people to expect when they run their own off-eBay e-commerce website? What does it cost to setup? Maintain? Monthly fees? Transactional fees?
And how does anybody get to it? That takes marketing and advertising? What does that cost? How much did you work, and what was your time worth?
NOW how high are eBay fees?
Most of my clients tell me that while they’re not thrilled with eBay fees, they still feel that eBay fees are costing them less than promoting an off-eBay website costs.
When I analyse eBay sellers, I think they are bringing some of their fee problems upon themselves. I was looking at one yesterday with a 22 sell through rate, who had listed TENS of $500 items that didn’t sell. If he better understood how much demand there is and what days and times that demand tends to shop eBay for that product, he could streamline how he lists, save on fees, and see his success rate go up.
So whose fault is something like that?
March 27th, 2007 at 9:55 am
Sorry for some of the typos. It’s not quite 7am here!
March 28th, 2007 at 2:28 pm
I am an EX eBAY power seller. I do think the fees are a little on the high side, and the store fees a lot on the high side. Also the free marketplace (aka supply and demand) has lowered pricing on many items. I run two web sites right now, and the fixed monthly costs are low (compared to eBAY store prices and eBay listing fees) Startup cost was also lower than you would expect.
I used to sell books on eBAY, and am now doing Amazon instead. Amazon listing is much faster, the listings are fixed price (I prefer this), and the payments are handled automatically (no invoice sending, no shipping calculations) Importantly, the books sell on Amazon. A very nice system, and giving eBAY a run for its money in the book category.
April 2nd, 2007 at 11:30 pm
What about drop shipping companies? I almost jumped into this. I started hearing some bad things about the high fees. It seems like everyone that claims they want to help you, want to charge you some kind of fees to. If I can make money on EBay how would one find the right way of doing that without being taken. So many “FREE” books and CD’s out there on how to make it big on EBay, what should I do? Maybe run?
April 15th, 2007 at 10:44 pm
I got so fed up with ebays fee hikes and just the mass confusion at. I’m starting to move all my stuff to another site. The site allows me to avoid all the ebay fees and put more of the profit in my pockets. Its worked out well, I invite you all
http://www.onlineauctionexchange.com
They offer $1000 of credit just for signing up. Come help build an Alternative To Ebay. Get away from all the high fees and confusion. Open your own online store.