AW Daily - Tips & Tactics - Before the Auction: Understanding Fees

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Read any online auction site's user agreement and you're bound to encounter the disclaimer that the site is ''only a venue.'' But it costs money to use that venue. Buyers might not have to pay anything to browse and place bids, but sellers have to deal with several different costs that come with the territory. Our tip covers the various fees and seller options to know and understand.

Insertion Fees
This is what you pay to list an item, or items, on an auction site. Also known as listing fees, insertion fees usually vary depending on the amount of your minimum bid. In general, sites break down the range in dollar increments. For example, eBay's insertion fee structure is as follows:

1 cent to $0.99: 30 cents

$1 to $9.99: 35 cents

$10 to $24.99: 60 cents

$25 to $49.99: $1.20

$50 to $199.99: $2.40

$200 to $499.99: $3.60

$500 and up: $4.80

(Note that eBay charges a flat insertion fee for certain items, such as cars, trucks, and real estate.)

Compared to some other fees, insertion fees won't cost you that much, that is, unless you are a high-volume seller--in which case, all those listings quickly can add up. Besides insertion fees, sites also charge relisting fees, if you decide to list your item again when it fails to elicit a bid the first time around.

Listing Enhancements
Want to make your listings stand out from the online auction masses? Lots of sellers opt for the various listing enhancements that auction sites offer. The most common types of enhancements include featured placement on the main page and category pages. Less expensive enhancements include bold and italics. You'll pay more for a main page feature listing, but it definitely gives your auction more visibility and less of a chance of getting lost among the scores of listings out there, especially on the larger general service sites.

A main page featured auction on eBay or Amazon.com Auctions may cost you anywhere from $39.95 to $99.95 depending on the number of items in the listing. FairMarket sites (such as MSN Auctions) charge half that at $49.95, while Auctions.com charges $24.95 and Gold's Auction $19.95. A featured auction listing on boxLot is a very affordable $2. Yahoo Auctions offers a novel approach: Sellers bid against one another for higher placement in the site's featured auction lists on the categories page.

To save money, some sellers recommend doing bold listings or using capital letters in auction titles instead of paying for featured listings. It's best to experiment and see what works best for you. Run a few featured auction listings for your more expensive and promising items and see whether the added visibility generates more traffic and bidding.

Another money-saving tip: Time your auctions so that they'll appear in the new listings or closing soon areas of a site at high-traffic times, such as Sunday evenings. That way you'll get a little "free" visibility. (For more information, see our timing auctions tip.) Lastly, listing enhancements are more common to person-to-person sites than business-to-consumer and business-to-business sites.

Final Value Fees
Like insertion fees, final value fees (also known as commission fees) are not derived from a fixed amount. The amount is determined as a percentage of the final sale price: The higher the price, the lower the percentage you'll pay. Although sites can vary slightly in what they charge, the standard structure for final value fees is as follows:

$0 to $25: 5.25%

$25 to $1,000: 5.25% of the initial $25 ($1.31), plus 2.75% of the remaining closing value balance ($25.01 to $1,000)

Over $1,000: 5.25% of the initial $25 ($1.31), plus 2.75% of the initial $25 - $1000 ($26.81), plus 1.50% of the remaining closing value balance ($1000.01 - closing value)

The amounts are then combined. So, for example, if you sell on eBay and your item sold for $55, you'd first pay 5 percent of $25 ($1.25). Next you'd pay 2.5 percent of the additional $30 (75 cents), making for a total of $2 in final value fees. Final value fees are not charged if your auction closes without a winning bid.

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