eBay’s Fee Structure – An Unattractive Option for Casual Sellers

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On April 30, 2004, I officially joined the growing number of users on eBay. Initially the first few years my account wasn’t particularly active, and it was only to purchase random cheap stuff. At the age of 19, priorities certainly weren’t on purchasing old computer bits and pieces.

This decade though the account has been more active, both for buying and selling. The buying experience has generally been positive, with only the occasional hiccup along the way. There was a time I successfully bid on some enterprise level software, including an early version of Microsoft Exchange for the lowly amount of $1. The software was never received and the seller was not responding – I guess they felt it wasn’t worth it.

Recently my feelings towards eBay are heading in the same direction as this seller felt a few years earlier. Not because I’ve been selling computer parts for only $1. The issue for me has been what eBay has been lately deciding to charge sellers for using their service.

ebay-2An invoice was received for my transactions over the January 2018 period. Overall from selling five items, total sales were a modest $440.00 AUD. Based on the pie chart provided, this equates to 11.54% being directed straight to eBay’s pockets, or in dollar terms $50.79 including 10% of GST (Australia’s Goods & Services Tax). Not only that but PayPal dips in as well every time someone pays you on top of these charges. It’s a significant margin, and it would put me right off selling an item worth a few thousand dollars.

How the pricing is structured is that your first 40 items for private sellers each month can be listed for free. It’s a way to entice people to fill eBay of things to sell, and frequently mentioned in their marketing. After that it’s a $1.65 or $3.85 fee depending on which side of $100 the auction start price is at.

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eBay’s standard fees. Image source: https://sellercentre.ebay.com.au

My main concern is with the final value fees which not only comprises of the item, but also on the shipping costs. There was a time when I’d see some sellers sell an item ridiculously cheap, only to apply shipping costs at $200 when realistically it may have only costed $20. I would think eBay observed this originally as a loophole and began to include shipping in this fee. Whichever way I look at it though, it seems hard to justify taking away 10.9% as what is essentially sales commission. It’s worth pointing out that it’s limited to a maximum of $440 AUD, but that’s still a lot of coin if you start multiplying that. Credit card transactions on the other hand are typically only charging less than 2%. Whether an item sells for $10, or $1,000, it makes no difference in cost to host on eBay’s servers. I’m yet to see how this pricing was decided on.

eBay’s pricing structure as it stands favours those running a commercial business, not the sellers seeking a way to earn some supplementary income. If you’re a business customer selling a ‘Tier 1’ item which includes phones and video game consoles for over $250 AUD, then you’re able to reduce the percentage down to 6% excluding tax.

eBay nevertheless has been a handy location on the web, particularly to find items that may not necessarily be available locally. It will still be a place to purchase from, but for low volume sales it’s worth seeking alternatives.

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