The Good… the Bad… the Opportunity. Digesting The New eBay Fixed Price Fees.

What the fee change means to sellers and how it will change the eBay platform

This week’s fixed price selling format fee change will change more than just fees. It will have a dramatic impact on seller strategy and how sellers use eBay Stores.

Sellers have been agitating for lower (or no) listing fees for a long time. Listing fees constitute risk. You pay a fee whether something sells or not. eBay met sellers half way this week when they lowered listing fees for fixed price listings from a previous range of 35-cents to Four Dollars to a flat fee of 35-cents. Additionally eBay extended the listing duration for fixed price listings from 7-days (10-days with an extra charge) to 30-days. A further feature that will save sellers both time and money is that eBay sellers can now list multiple quantities of the same item in one listing. This is huge and I will be using that to good effect.

Instead of making their money on the upfront listing fees, eBay will instead increase the take on the back end by raising the final value fees. Let’s look at the listing fees first:

Unlike previous fee changes, this change is also category specific. Listing fees in Movies, Music, Books, DVDs and Video Games will only be 15-cents.  eBay announced a special promotion that lowers fees on these items to 5-cents from September 16 through the end of the year if sellers use the pre-filled item tool when they list their items. Here is a summary of the listing fees:

Movies, Music, Books, DVDs and Video Games                   $0.15

Holiday Promotion (9/16 thru 12/31)                                 0.05

All other categories                                                           0.35  

Final Value Fees

Final value fees are also category specific. The entire fee table is too complex to list here in the blog but you can see the complete fee schedule at this link.  Basically some highly competitive categories like Computers, Books, Movies, Music, DVDs and Video Games will have lower FV fees. Here are some examples:

The FV fee for computers and networking will actually drop from 8.75% to 6% in the first tranche and increase slightly from 3.5% to 3.75% in the second tranche. So this category will see an effective overall fee decrease. On the other hand, FV fees for Books, Music, DVDs & Movies and Video Games will increase from 8.75% to 15% in the $1.00 to $50 tranche where most of the sales occur.  As reference this is similar to what Amazon charges, however, Amazon does not charge listing fees.  I am a little surprised at this. eBay’s stated goal is to be competitive. This rate is certainly more competitive than the prior fees but a 12% – 14% FV fee in this category would have attracted more listings from Amazon.

Once you get out of the hot selling categories such as cameras, computers, Books, Music, Movies and video games, the FV fees jump to pretty steep levels.

Here is an example of how the new fees affect one of our leading products.  We sell a line of outdoor wood burning firepit grills.  Our fixed price BIN is $227.

Under the old fees, I would spend $3.00 per 7-day listing X 4 for the month = $12.00. The Final Value fee worked out to $10.56. This brings the total to $22.56.  Under the new system my listing fee for the full 30-days would be 35-cents. The final value fee works out to $21.93. Adding in the listing fee this brings the total selling cost to $22.28. This represents a savings of 28-cents.  Of course this assumes that only 1 out of 4 firepit listings sold under the old schedule. As it turns out, that is about right.  We have 10 different models. If I wanted to list all ten models for the entire month under the old system, the total listing fees would be $160.  When we did this, we found that about 1 out of 4 FP listings sold.

A lot of my readers recently purchased my latest eBook, How To Make Good Money Selling Used Books on eBay, Amazon and The Internet.  So let’s take a look at how the new fee schedule will affect those sellers.

When you list a book on Amazon, you pay no listing fee but you pay 15% + 99-cents. So if you were to sell a $15 book you would pay $3.24 (I am ignoring shipping in this example). On eBay you will pay 15-cents to list the book for 30-days. If the book sells, your final value fee is $2.25. This totals $2.60 – 64-cents less than Amazon. However, if the book doesn’t sell you will pay and additional 35-cents for another 30 days and so on.  So on a slow selling title, it may be advantageous to list the item on Amazon, but on titles that should sell quickly, eBay gives you a pricing advantage. The other advantage to selling on eBay is that buyers will get to see your title in the search results and you can rank higher if you have high DSR scores. On Amazon, if there is a new version of the book that listing will show first and buyers only see your listing if they click on the link to see all the titles and prices. 

So what will these changes mean for eBay and eBay sellers?

It is pretty clear that the competitive action is in the hot selling categories of Books, Computers, Movies, Music and Video Games.  And buyers in these categories have been trending to fixed price sales.  The new fees should bring some listings back to eBay in these categories and reclaim some of the market share that has been going to Amazon.  For sellers in other categories, it will reduce the risk and upfront costs and increase the selling cost slightly. When I look at the numbers for the products we sell this looks like a good deal. I may end up paying slightly more fees in the end, but the new features (30-day duration and multiple items for one price) should allow me to increase my sales overall so my total profits should increase.  The new fees go into effect on September 16th. I will look at my sales on November 17th and do an analysis to let you know what happened.

The downside for small sellers in the hot categories is that the listings will be more crowded and more competitive.  But in the other categories I don’t think that will be the case. In fact the changes to the eBay search engine (we will cover those later this week) may actually help smaller sellers in the categories that are not as crowded as book, music, movies and electronics.

So all in all I like the pricing changes.  I doubt if eBay will do so any time soon, but I am hopeful that they will do something similar in the traditional auction category. I would love to see some lower listing fees there as well even if they were offset by slightly higher FV fees.  This would reduce the risk and allow me to list more items.

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