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 Work at Home Moms > Online Auctions Resources & Information > Increase Your Auction Profits by Reducing Your eBay Fees

Increase Your Auction Profits by Reducing Your eBay Fees

Recommended: Start your own eBay Business - Moms Talk Biz Guide to Making Money with eBay

Part 1 - Standard auction fees
Is eBay making more money on your auctions than you are? The fee schedule on eBay is broken up into so many little increments – a little here, a little there, and if you are not paying attention, those fees add up really quickly. Let’s look at eBay's auction fees and try to keep more of your profits in your pockets, and less in eBay’s pockets.

In Part 1 we'll look at the ways you can reduce the basic fees that are charged on all auctions. Part 2 will look at the optional, extra feature fees.
 

 

Insertion Fees – Insertion fees are non-refundable (with the exception of re-listed items that sell the second time around) and cannot be avoided, but by pricing your items wisely you can keep the insertion fee to a minimum, thus maximizing your profit.
I consistently see sellers start an auction at $10.00. The insertion fee for a $9.99 starting bid is $0.35 and the insertion fee for a $10.00 starting bid is $0.60. By starting your auction at $10.00, you immediately lose $0.25. That might not sound like very much, but if you run 100 auctions at a starting bid of $10.00, you will lose $25.00 right off the bat.

If you have a particular item that you sell in large quantities, it might be a good idea to do a Dutch auction or fixed price listing, either of which will allow you to list a quantity of identical items at once. With both types of listings, the insertion fee is determined by the opening price or fixed price multiplied by the quantity of items.

Here, you probably want to get the most bang for your buck. For example, the insertion fee for items priced from $25.00 to $49.99 is $1.20, and for items from $50.00 to $199.99 it's $2.40. If you have ten $5.00 items to sell and you list them all for a fixed price of $5.00 each, your insertion fee is going to be $2.40. But if you list all ten of them for $4.99 each, your insertion fee is only $1.20. The net result of reducing your starting bid by a penny is an additional $1.10 in your pocket ($1.20 saved in fees minus the total of $.10 from reducing the starting bid).

I cannot stress enough how careful you have to be with reserve price auctions. The insertion fee for a reserve price auction is based not on the starting price, but on the reserve price for your item. When you list a reserve price auction, you want to keep the same pricing guidelines in mind as with the other types of listings. In addition to the insertion fee, reserve price auctions carry a nominal fee, which is refundable, but only if the item sells. The reserve price fee for a starting bid up to $49.99 is $1.00, but if you list twenty items in this price range with a reserve price, and only ten of them sell, you have just lost $10.00.

Final Value Fee - EBay assesses a final value fee that is a percentage of the selling price of the item. The fee is 5.25% of the closing value on the first $25 of the final price with additional, incremental percentages charged for closing bids over $25. When you are pricing your item, keep in mind what you expect the final value fee to be and be sure to factor that into the cost of the item.

EBay Picture Services Fees – If you are only selling a little here and a little there on eBay, it is fine to use eBay’s photo hosting. There are a few upgrades you can use with eBay’s hosting, but for basic photos, the first picture is free and you can have up to five additional photos at $0.15 per image.

If you are selling in high volume, you should consider using your own hosting. If you don’t have this capability, there are many third party hosting companies that are very competitively priced. The upside of eBay’s hosting is that it is very user friendly and is reasonably priced if you are selling on a smaller scale. The downside is that it could get rather pricey if you sell in any kind of volume, and it does not allow you to control where your images are placed within the auction listing.

These are a few of the many free or low cost image hosting services:

PayPal Fees – You can choose to accept PayPal, which is not a bad idea because a lot of people who shop on eBay will bypass auctions entirely if they have to bother with a money order. There are a couple of online payment services that charge the buyer instead of the seller, but I suggest caution here - as a buyer, I would be irritated if I was expected to cover the payment processing fees. The same is true with money orders; most buyers are not going to want to bother with having to sign up for yet another service. If you decide not to accept PayPal, you are likely to drastically reduce the number of buyers that will consider your auctions.

PayPal offers a free personal account, intended to be used to pay for purchases and receive money from family or friends. There is a monthly limit on how much money you can receive with a personal account. A premier or business account allows you to accept credit cards and does not have a limit on receiving, but there are fees for receiving payments. Many sellers will use two PayPal accounts and request that PayPal balance and bank transfer payments be sent to the personal account and that credit card payments be sent to their premier or business account. I do not recommend this because it is not honest/ethical, and it also seems to me like it would be a bit of a hassle to keep up with.

This covers the basic fees that are requisite for any eBay auction listing. Use these tips to reduce your fees and increase your profit. Remember to take into consideration exactly how much each eBay listing is costing you, so you can be sure to factor that amount into determining your profit margin.

Part 2 of this article, reviews the fees for some of the optional add-on features eBay offers.

Click here for a detailed breakdown of eBay’s fees.
___________
Bonnie Large is a single mother of two who owns Alpha Pet Products and regularly sells on eBay. Visit her eBay store.

2004 This article was written exclusively for Internet Based Moms™ and may not be
re-published or copied without permission from Internet Based Moms™, except to print one copy for personal use. Any questions regarding use of this article should be directed to
Linda Stacy. Comments and general questions about the article's content can be directed to the author.

Recommended: Start your own eBay Business - Moms Talk Biz Guide to Making Money with eBay

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