eBay’s “5 Free Insertion Fees Every 30 Days” “Discount” Costs Sellers More Money In Fees

12 May

What is the Promotion and Why is it Terrible?

The eBay fee promotion announced today is one of the most bizarre I have ever seen.  There have been plenty of bad promotions in the past, but this one takes the cake.  Starting June 16, 2009, EBay is offering sellers 5 free insertion fees every 30 days when they use the regular Sell Your Item form on eBay.com.  If you use a third-party listing solution like Auctiva, then you will not be able to participate in this promotion unless you list your first 5 items via the eBay site.  We know eBay doesn’t give anything away for free, so what’s the catch?  Oh, it’s a doozy.

The final value fee on these “free” listings is 8.75% regardless of what the item sells for.  Normally, eBay collects 8.75% of the first $25, 3.5% of the amount between $25.01-$1,000, and 1.5% of the amount above $1,000.  Let’s say you started a listing today at 99 cents and it sold for $100.  The insertion fee is 15 cents.  The final value fee breakdown would be $2.19 for the first $25 ($25 x .0875) + $2.63 for the remaining $75 ($75 x .035) + .15 insertion fee for a total of $4.97 or 4.97% of the selling price in total fees.  With this “promotion,” the final value fee of your “free” listing on June 16 would be $8.75 ($100 x .0875) or 8.75% of the selling price in total fees.  To save the 15 cent insertion fee, you pay eBay almost $4 more in final value fees.  Even if you started the listing at $100 and the insertion fee jumped to $2, you would still be paying eBay an additional $2 in total fees.  It’s like McDonald’s running a promotion for free hamburgers and then sending a bill for $10 a week later.  Like always, eBay is trying to trick sellers into thinking they’re doing them a favor, when in reality they’re trying to gouge unsuspecting people into paying more in fees.

How Do I Make This Whacky Promotion Work for Me?

It’s going to be hard for most sellers.  The final value fee you pay eBay on these “free” listings is 8.75% of the winning bid, or $20, whichever is lower.  The only way you could come out on top of this promotion is if you sold items where the insertion and final value fee would exceed $20 under normal conditions.  If you start your listings at 99 cents, the selling price of the item would have to exceed $530 (15 cent insertion fee + $19.87 final value fee = $20.02) in order to save money on fees.  If you started the listing at $200, your item would have to sell for $450 to save money on fees ($3 insertion fee+ $17.07 final value fee = $20.07).  This is going to be difficult for a lot of sellers who don’t have a lot of $1000 items laying around that they’re willing to risk selling on eBay.  The regular final value fee is 8.75% up to $25 which is the same as the promotional rate.  My suggestion would be to find 5 items that you think won’t sell for more than $25 and list those as your 5 “free” listings.  This way, you’ll end up paying the same amount in final value fees and you’ll save a whopping 15 or so cents per listing. Remember though, if the item sells for more than $25 you’re actually losing money in fees!  Otherwise, items that don’t sell still count towards the 5 free listings.  You could find 5 items that you know won’t sell for the price you list them at and do it that way. Bidders might think you’re crazy trying to sell a blank DVD-R for $1,000 though.  Not really worth the hassle is it?

This is another example of eBay using “promotions” and supposed “fee discounts” in an attempt to confuse sellers into paying higher fees.  The headline sounds great, but the catch always costs unsuspecting sellers a great deal of money.  Do your research and calculate what your fees would be with a fee calculator like eBay and Paypal Fee Calculator.  Be careful with this promotion.

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