By: e.alleg On: Thu Feb 07, 2008 9:25 pm
Ebay just jacked the fees up again, here's an example: "selling a purse at auction for $25 would have cost the seller $1.91, including 60 cents for listing the item plus eBay’s commission of $1.31. Under the new structure, the seller would pay $2.74, including 55 cents to list the item plus a higher commission of $2.19." The "final value fee" or commission is 8.75% of the end price, the listing fee averages around $1., more if you have extra pictures or use any of the ebay extra features. If an item doesn't sell you get one free try-again, after that you pay to relist it. Paypal takes another 4% chunk, on low dollar items it's much more. So say you sell that purse for $25 and had to relist it 3 times before it sold (based on an average sell through rate of 33%, which is very good) .55x3 = $1.65 + $2.19 = $3.84 ebay fees. It doesn't end there. You take paypal, the buyer pays shipping so say $10 shipping. The buyer pays Paypal $35, PayPal takes .30 plus 2.9%, so out of that $35 you keep $33.68 minus the ebay fees = $29.84 minus the $10 shipping and you have $19.84 in your pocket on a purse you sold for $25. That's better than 20% taken by Ebay and paypal (the same company BTW). Now if you paid $5 for the purse at a wholesaler to resell you are down to $14.84. It gets worse, if you have to buy a box and some bubble wrap and a roll of tape at the post office say goodbye to another $7, drive to the post office to mail it and there goes $3 in gas. With your $5 profit you can buy a coke and a bag of chips while downtown at the post office. Net profit: zero. Now the buyer is upset because the purse had a lipstick spot on the inside that wasn't described, they file a complaint with Paypal and Paypal issues a refund. Now you are minus the $35 they paid PLUS all the packaging and Ebay fees (paypal fees are refunded) and the return shipping, so when they don't like it you lose $60.
Store items are cheaper to keep listed, about 6 cents a month to list them and ~10% when they sell plus the $25 a month store rent. Most sellers pad the shipping a little to pay the ebay fees, competition pretty much eliminates that angle.
Add in all the expenses of running a legit business and the average ebayer probably makes $5 an hour or less, even though cash flow is high.