Education & Training

Before the Auction: Controlling Costs continued ...

Choosy Sellers Choose Fees Wisely

Of course, this isn't to say that all fees are inherently evil and detrimental to your eventual profit. Just as it makes perfect sense to pay reasonable fees for site and service usage, it's just as prudent to occasionally make use of features and enhancements when the situation calls for it. For example:

Reserve Prices: You may hate to pay the reserve surcharge, but do the math between putting a $200 reserve price on your item versus listing it with an opening bid of $200. At eBay, you'll find listing an item with a $9.99 opening bid and a reserve of $200 costs $1.30. If you opt for the opening bid of $200, sans reserve, the same listing will cost you $3.30. But don't be penny-wise and pound-foolish: If you need the reserve to protect you from losing on your investment, then by all means use it.

Opening Bids: Of course, if current demand for your item easily will gain you your target price without the use of a reserve, then list in the lowest fee bracket and let the bidders work their magic.

Relisting: Well, it's typically free (at eBay, you're refunded listing fees if you get a sale), and the benefit is that you can make changes to the item title, description, and category to find your buyer on the site's dime. Take advantage of that.

Online Payment: Some sellers might not be happy that fees are levied by online payment sites, but remember that buyers who can pay with credit cards (via services like PayPal and Billpoint) will invariably spend more than if they must surrender their cash on hand. If your items sell at good prices, make it easier for your buyers to pay by offering the online payment opportunity, then collect their higher bids at the relatively low cost to you. (Some sellers even go so far as to insist that if a buyer wants to pay through an online payment service, then he or she--and the not seller--will have to fork over the necessary fees. Obviously, such a practice will cause some bidders to say thanks but no thanks. It's also against eBay's rules.)

No Sale and Additional Opportunities

Just when you thought sniping was the reigning king of online auction controversy, along comes "fee avoidance," the frowned-upon act of manipulating auctions and luring bidders off the venue to make a sale without paying site fees and commissions. But just as the venues are in the business of making money, well, so are you. Read the site's terms of service carefully on this issue; however, to date there's still no infraction assessed if you're contacted by a buyer who inquires about an item that fails to meet the reserve or possibly asks if you have more of the same to sell. It's a fine line, though: If the seller initiates offline transactions or additional sales, a swift site warning could be forthcoming, as well as possible suspension since such actions are considered acts of fee avoidance.

But keep this in mind: In the interest of your sales and overall profit-to-cost ratio, be sure buyers easily can contact you (provide an email or Web site link in your item description) to assist them with any inquiries they may have, informational or otherwise. If they initiate a potential transaction, then that's just simply good for business and could save you some operating costs in the process. And, if you're operating your business well and faithfully serving the customers you attract, buyers might elect to deal with you directly--and any savvy businessperson will assert it's much cheaper to keep the customers you already have, any day of the week.

Dennis Prince is the author of Vendio's Official Guide to Online Buying and Selling and Online Auctions at eBay: Bid With Confidence, Sell With Success. He has been an active buyer and seller at various online auction sites since 1995. Send him email at dlprince@bigfoot.com.

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