eBay’s Announced Pricing Changes Affects Sellers

eBay has announced some drastic price changes. While the message is “fees are lower”, some fees are actually higher. It’s a mixed bag of changes with some good and some not so good.

In this blog post, we will highlight the pertinent changes of the new fee structure and highlight the winners and losers.

The Store
For an eBay Store seller who has over 53 listings, the Store subscription can pay for itself in reduced insertion fees. The trick is finding the right subscription. We’ve added the chart below to assist you in determining the best option.

The downside is that other than the fees, there isn’t much of a difference between Store and Fixed Price listing. Store items will be treated the same as Fixed Price and other than a few Store features visible on listings; it’s not really a “Store”. Overall, eBay will end up with more subscriptions for Stores, and sellers can see reduced insertion fees.

It’s bad news for the small, occasional seller who does not list at least 53 items per month as their costs have risen quite dramatically. In addition, the concept of a “Store” has pretty much gone by the wayside and has really become a membership to get reduced prices versus providing a true eCommerce store such as those offered by Vendio (free) or Yahoo ($39.95 per month/plus 1.5% FVF). The ability to brand or promote any other non-eBay aspect of your business (e.g. separate online store) is very limited.

The Core
The Final Value Fees for Fixed Price items remains relatively the same, except on a category basis, where sellers face an increase for items over $50.00

Media sellers who used to pay 15% on the first $50.00 and 5% to $1,000 face a hefty increase on items over $50.00. For example, if I sell a media item for $150.00, my old price would be $12.50 (15% on the first $50, 5% on the next $100), the new price would be a flat 15% or $22.50 for an increase of $10.00. To be fair, many media sellers would not be affected as the prices typically are under $50.00 and they do have an extended special pricing available for a bit longer.

For Auctions, this again is a mixed bag. Insertion fees are lower, but Final Value Fees are higher. A seller can save significantly on items that are higher priced. There is also the ability to list up to 100 free items if you start the price at $0.99 or less. This strategy was fine years ago, but due to an influx of “low start-price, high shipping price” listing strategies, the risks of being burned selling an expensive item for a low amount has increased significantly. Sellers should carefully weigh the risks before they adopt this strategy. This also seems contradictory toward eBay’s push to have seller’s offer free shipping as it is difficult to offer free shipping on $0.99 items.

..and Auctions
For Auction Final Value Fees, it’s a price increase. The second tier was increased from $25 to $50, thus you are paying the full shot on items under $50. In the below charts, we looked at both the Standard and the Store subscription and in both cases fees were increased.

There is a large discrepancy between what a casual seller pays and what a seller with a Store pays as you get into the higher ticket items.

It’s curious that eBay is pushing hard for a subscription model. With a subscription model, eBay has less risk if an item does NOT sell as they are getting their dollars through subscriptions and thus would be unlikely to be too concerned if the site becomes saturated. (A definite possibility since there will be a flood of Store items on the Fixed Price market on March 30.)

The Good

  • Auction insertion fees are lower
  • Store inventory will be visible on the main site
  • Reduced insertion fee for Fixed Price with Store subscription

The Bad

  • Store Referral credits are being eliminated
  • The 5 Free Auctions per month are no longer available
  • CAUTION: Store Features, such as Subtitle will be charged full price if not removed by March 30
  • Barrier to entry is higher and the small casual seller is disadvantaged.
  • Auction Final Value Fees are higher

The Questionable

  • 100 Free Auction Format Listings when listing under $1.00
  • There is a small note in the FAQ about ending non-performing listings (Will eBay be ending items if they don’t sell for a set period of time?)
  • The impact on existing Fixed Price sellers from an influx of Store items

In a nutshell, the changes are very sweeping and it will take some time for sellers to determine their best course of action. You can view all of the proposed changes, effective March 30, 2010 here. eBay has a fee calculator to help you figure out what works best for your business.

Have questions? For it? Against it? Have tips or tactics to share? Drop a comment below.

6 Responses to “eBay’s Announced Pricing Changes Affects Sellers”

  1. Coop Says:

    This is quite simple: they are making it insanely more expensive for anyone who isn’t a “stores” subscriber to do business on eBay. The entire business model has changed from pay-as-you-go to pay every month regardless of how much you go. As mentioned in the article, there are now no other advantages to owning a “store” other than getting the “discounts.” If you really break it down it means that you have to pay eBay more upfront to get slightly less screwed by the significant fee increases. I am so sick and tired of eBay insulting our intelligence by trying to make it seem like they are doing us a favor while they are perpetually increasing their take rates with each “fee decrease.”

  2. Stan Says:

    This round of price hikes makes me wonder: Where is ebay going to find higher revenue after they’ve killed the golden goose and driven off most of their seller base?

    Surely the esteemed Bain crew has a plan that involves more than golden parachutes?

  3. Vendable » Blog Archive » eBay Fee Changes Generates Reactions Across the Web Says:

    [...] –>Fee Comparison Charts [...]

  4. YourPlace2 Says:

    Just to make sure every seller realizes (as I ahve not seen any articles or media platform point out yet): The 100 FREE AUCTION LISTINGS are not available to store owners. You only get the free listings if you are not a subscriber! There is no free anything to subscribers, and only increased fees, unless your core business model used auctions and fixed prices for a majority of your listings. Real APPLES TO APPLES comparison!

  5. komic_buyer Says:

    “The Store
    For an eBay Store seller who has over 53 listings, the Store subscription can pay for itself in reduced insertion fees. The trick is finding the right subscription. We’ve added the chart below to assist you in determining the best option.”
    http://imagehost.vendio.com/a/35000301/aphotoalbum/blog1022.jpg

    Mind-Bogglingly flawed comparison.

    You have missed the entire crux of the hypotenuse.

    The methodology employed is remarkably flawed.

    The chart compares OLD FIXED PRICE INSERTION FEES to NEW FIXED PRICE INSERTION FEES.

    This provides no value to an eBay Store seller.

    This only provides a cost comparison between current Fixed Price (core) listings and future Subscriprion Fixed Price (core) listings.

    That is useful, for such a party.

    However, the most important comparison is between current eBay Store Owners and future Subscriprion Fixed Price (core) sellers. Store owners are the parties being frog-marched down that path. Store owners are the parties most affected by the new fee changes.

    The fee comparison basis for those parties is between OLD STORE INSERTION FEES and NEW FIXED PRICE INSERTION FEES.

  6. Gabriele Saxton Says:

    If you have any faith at all in eBay’s phony feedback ratings you must believe in the tooth fairy. Just look at the number of 100% ratings given to so many vendors. It is simply impossible for any vendor to please every single one of thousands of customers. eBay makes it impossible to post negative ratings. I stopped using eBay several years ago as it is simply a scam.

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