eBay Auction Vs Fixed Price Fee Structure – The Best Way to List

3 Jun

Other than opening an eBay store and using store inventory listings, there are two ways to list on eBay.  The first is the standard online auction listing with a set starting price, duration of one to ten days, and an optional reserve or “Buy It Now” price.  The second way to list is using the fixed price format.  With fixed price, you set the price you want to sell the item, decide how long you want the listing to last
(between 3 days and forever), choose the quantity available, and decide whether or not you want to accept “Best Offers.”  For my guide on deciding what starting price to set for your eBay item and other considerations about auction and fixed price formats, see my guide on pricing strategies.  This guide will focus on the eBay fee structure and which method will be cheaper to list.

There are two types of fees on eBay.  The first type is added at the time of listing.  These fees include the listing fee based on the starting price and optional fees like listing designer, subtitle, and scheduled listing.  These fees are set and will be stated before submitting your listing to eBay. The second type is the final value fee.  Final value fees are based on the price the item sells for and are added after the listing ends.  Final value fees vary greatly between auction and fixed price listings and within different categories within fixed price as well.  Deciding which format you want to sell with can be a complex decision.  You have to take into account the item’s popularity, how many like items you have, what price you want to get for the item, how quickly you want to sell the item, and how much the eBay fees will be.  Here’s how eBay’s fee structure can impact that decision.

EBay fees have changed dramatically over the years.  Now, the fee structure for auctions and fixed price listings are significantly different.  Fees for online auctions are front loaded, meaning the insertion fees are higher and the final value fees are lower.  Fixed price listings are back loaded, meaning the insertion fees are lower and the final value fees are higher.  EBay went to this format about two years ago with the rationale that insertion costs were too high for fixed price items that weren’t selling. The story that was picked up by the media was that fees on eBay were going down because the upfront cost of fixed price listings decreased. In reality, the total fees went up in almost all situations. To see the full list of eBay fees, visit eBay Listing Fees. There are also fee calculators that can help you figure out how much it will cost to list and sell an item, including Paypal fees and listing upgrades.  I recommend, eBay Fee Calculator.

For the sake of argument and ease of calculation, let’s assume your auction ends at $100 and your fixed price item is also listed at $100.  The fee breakdown for auctions is:

eBay Auction Listing Fees

eBay Auction Final Value Fee

If you start your listing at 99 cents and it sells for $100, the insertion fee would be 15 cents and the final value fee would be $4.82 ($2.19 for the first $25 +.035 * the remaining $75) for a total of $4.97 in eBay fees.  If you started the listing at $100 and it sold for $100, your insertion fee would be $2.00 and your final value fee would be the same $4.82, for a total eBay fee of $6.82.  You can add a “Buy It Now” price on your auction to give buyers an opportunity to purchase the item immediately, just like a Fixed Price listing.  The cost for the But It Now is 25 cents and you pay final value fees based on auction listings rather than fixed price, making the “Buy It Now” option an attractive investment. You get all of the benefits of selling the item at the price you want and you pay much less in final value fees compared to the Fixed Price format.  If you run an auction meant for a specific bidder, you should start the item at 99 cents and add a Buy It Now for the price you want to sell the item for you and you will save a significant amount on fees compared to what you would pay if you created a Fixed Price listing with the same selling price.

The fees for fixed price are a bit more complicated and vary depending on what category you list in.  They look like this:

eBay Fixed Price Insertion Fee

eBay Fixed Price Final Value Fee

eBay Fixed Price Final Value Fee 2

eBay Fixed Price Final Value Fee 3

As you can see, the listing fee is either 10 cents or 35 cents depending on the category.  In an attempt to keep video game, book, CD, and other similar sellers listing on eBay, eBay lowered the listing fees in that category and runs constant promotions trying to compete with Amazon.  EBay makes up for the slightly lower listing fee by charging the highest final value fee of any category.  Notice that the fees drop 10% for amounts over $50 in video games, DVDs, and music. This is significantly more than the drop in other categories where the reduction is only three or so percent.  EBay knows that most video games and DVDs will sell for $50 or less, so they have a much lower fee for amounts exceeding $50 to make it appear as though the fee is reduced, even though most sales won’t benefit from the drop.  Listing fees are lower in the computers and photography sections because those items usually have much higher prices.  If eBay was charging the 9% they charge in clothing for amounts over $50 in computers, then the final value fee on a $1000 laptop would exceed $100, which is excessive even for eBay standards.  EBay might get slammed for ridiculous policies and hating sellers, but you have to give them credit for being particularly good at setting and collecting fees.

For our fee breakdown, let’s first assume you’re selling a $100 pair of pants.  The insertion fee would be 35 cents and the final value fee would be $10.50 ($50 * .12 + $50 * .09) for a total fee of $10.85.  Notice that this is more than twice as expensive as the fee for auction listings.

Next, let’s assume you’re selling an item in the cheapest fixed price category, computers and networking.  Your $100 item would cost 35 cents to list and $4.88 ($50 * .06 + $50 * .0375) in final value fees for a total fee of $5.23.  This fee is slightly more than the auction that started at 99 cents and less than the fee had you started the auction at $100.

Finally, let’s assume you’re selling a DVD box set for $100.  The insertion fee would be 15 cents and it would be an additional $10 (.15 * $50 + .05 * $50) in final value fees for a total fee of $10.15.

For a $50 item, the total fee at auction would be between $3.22 and $5.07, in fixed price computers and networking it would be $3.35, in clothing it would be $6.35, and in video games it would be $7.65.  Combined with the Paypal fee, a sale of $50 in video games will only bring in $40 for the seller after fees.  When sellers complain about the high fees on eBay, this is what they are talking about.

So to recap, the total fees for a $100 item at auction is between $4.97 and $6.82 depending on the starting price, fixed price computers and networking is $5.23, video games and music is $10.10, and clothing and accessories is $10.85. For a $50 item, the online auction fee is between $3.22 and $5.07, $3.35 in fixed price computers and networking, $6.35 in clothing, and a whopping $7.65 in video games. 

Keep in mind that relisting fees can begin to add up if you try to list your item at auction with a high starting price and it doesn’t sell. There are many other considerations to take into account when deciding how to list as well. Be sure to read the pricing strategy guide linked at the beginning of this article. Just because the fees are higher on fixed price doesn’t necessarily mean that fixed price listings are never the best way to list. With fixed price you have more control over the selling price of the item. With an auction you have much less control over what the selling price will be. If your item would sell at auction for $50, but would sell for $100 in a fixed price listing then the $50 different greatly exceeds the extra fees. Nonetheless, it’s important to be aware of how eBay calculates fees and it will be helpful to keep track of the fees you’re paying so you can make more informed decisions in the future.

2 Responses to “eBay Auction Vs Fixed Price Fee Structure – The Best Way to List”

  1. HF4Evah 07. Jun, 2009 at 1:21 am #

    I have
    Not seen a better blog
    For eBay tips and strategies
    In the
    Nine plus years
    I’ve been going
    To
    Ebay.
    4 everyone reading, you should listen
    2 Josh – he’s an excellent resource!

  2. JG 22. Jun, 2009 at 1:04 am #

    Thanks for the useful tips. Any insights wrt store inventory versus fixed price formats?

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