posted on September 15, 2000 07:45:43 AM
When the laws in most states were enacted to protect the credit card business by not allowing merchants to charge a fee for card use, the cost got spread over each and every item sold instead. (the consumer always pays all costs for goods).
So, credit card costs are hidden and built into every single thing that you purchase whether you use a credit card or not. It's done invisibly, so no one complains.
Unfortunately, with online auctions, most Sellers can't "hide" those fees, even though we are bound to abide by state laws preventing us from recouping our costs as all other businesses do. Is that fair?
posted on September 15, 2000 08:00:42 AM
I think that for most of us, that potential cost is figured into our cost for the item, which is reflected in the starting bid. So it is "hidden". I know that some think it is unfair that non-CC users "subsidize" the CC users, but as you point out, we're all doing that every time we make a purchase in the brick and mortar establishments.
posted on September 15, 2000 08:38:33 AM
At least for me it has nothing to do with paying Ebay fees on another dollar for the opening bid, as most of my items start at $5.00 to $6.50. It has to do with raising another dollar to opening bid would mean 50% less people looking at what I have to sell. Maybe even more. With all the people out there selling LP's, Jewelry, and nearly every other small item for as low as $.01 it's hard enough to get buyers now.
posted on September 15, 2000 08:42:18 AM
Adding a dollar to the opening bid won't work. If you up your minimum bid price, that's certainly no guarantee that your item will close a dollar higher. In fact, in some cases, the higher the minimum bid, the lower the final bid. That is one rule that doesn't translate from retail sales.
In my case, I sell a lot of low-price items. My minimum bid hovers around $9.99. If I set the minimum bid higher than that, it doubles my initial listing fee. I have to think carefully about that, and sometimes items that should sell for more go cheap because I list them at $9.99 and not $14.99.
Because I sell a high volume of items (about 100 per week), I absolutely must recover all my expenses. If I'm losing even a nickel per auction, it becomes significant ($250 per year). I pass on all expenses to the customer, and charge handling to boot because of the amount of bookkeeping involved. Most customers don't mind because they are still getting their items at a fraction of the retail cost.
There is a small but vocal minority that scream about even a $.50 cent charge for packaging, etc. I've been selling at eBay for three years and have come to my own conclusions about what is fair and what is good business. I don't worry about competition. My business is strong enough. I do worry about selling myself short because I want to give my customers the best possible deal.
posted on September 15, 2000 08:47:30 AM
I guess what it all boils down to is how you distribute your costs. I sell mostly "low priced" items also, but my minimum bid almost always covers all my costs plus a small profit, so the ending price doesn't make a difference except for increasing my profit. In this way, I don't have to charge handling fees, etc., which keeps my auctions competitive in terms of total cost to the buyer, because there's not so much additional cost tacked onto the bid price.
posted on September 15, 2000 08:53:22 AMAdding a dollar to the opening bid won't work. If you up your minimum bid price, that's certainly no guarantee that your item will close a dollar higher. In fact, in some cases, the higher the minimum bid, the lower the final bid. That is one rule that doesn't translate from retail sales.
If your opening bid is the minimum you will accept for the item and you add a dollar to it to cover your costs, if sold at the opening price you're covered. Everything else is gravy.
posted on September 15, 2000 09:06:39 AM
>>"When the laws in most states were enacted to protect the credit card business by not allowing merchants to charge a fee for card use"<<
This must not be a law in our state. Arco stations have a cash price and a credit price at the pump. They also charge a $.25 fee for using a debit card.
[ edited by feistyone on Sep 15, 2000 09:08 AM ]
posted on September 15, 2000 09:39:56 AM
eBay recommends that you start your auction a little below what you'd like to get for your item. Even so, there are also the following considerations:
1) The final price you'd like to get
2) The absolute rock-bottom price you will accept
3) A minimum bid that is low enough to maybe encourage more bidding (aka, "gambling"
4) What the item is really "worth"
It's not quite so cut and dry, because the items I sell are mostly inexpensive (CDs) and hover around that point where the listing fees double. As I wrote before, I rely on volume sales to make up for a low profit per item.
If you sell only a few items, or sell expensive items, maybe you can afford to cover an extra buck for credit card transactions or whatever. Maybe you can chuckle over an extra couple hundred bucks per month to Paypal. However, a lot of sellers have pointed out that we are being nickeled-and-dimed to death and I agree with that. Between postage, packaging, insurance, credit card fees, listing fees, optional listing features, etc., it does add up and takes a big bite out of a five dollar profit.
I agree with Borillar that costs ultimately need to be passed on to the customer. However you choose to do that is fine. It has been my experience that most customers understand the cost of doing business and are willing to pay a fair price. It is not necessary to "hide" fees. I find it convenient to separate the auction bidding and final bid price from the flat fees that each item incurs.
posted on September 15, 2000 10:14:34 AM
feistyone:
Many/most/all states have the cash/credit gas price difference. However, if you ask the owner, he will (if he wants to follow the letter of the law) tell you that the credit price (the higher one) is the "normal" price, but you get a discount for paying with cash.
So, you see, you aren't *really* paying more for using a credit card, you are paying less for using cash. Wink wink.
You can see the same kind of price structure elsewhere, for example, low-end mail order computer system sellers, where prices quoted often "reflect a 3% cash discount". Amazingly, the 3% exactly equals the fee they pay the credit card company, but nope, you aren't paying a credit card fee, that would be illegal...
edited to say I don't know about the debit card fee, but I assume that debit cards aren't covered under the credit card laws, so extra fees might be fair game.
[ edited by captainkirk on Sep 15, 2000 10:16 AM ]
