Free Postage - Friend or Foe?

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One of the areas of greatest contention on eBay is that of postage costs. Buyers for some inexplicable reason believe that free postage is the holy grail of distance selling when the reality is nothing could be further from the truth. Whilst eBay is very robust in its promotion of free postage it has its own reasons and that is not in the interests of either the buyer or seller.

There are some simple examples of how postage costs effect eBay, buyers and sellers. I have used the example of a video game that from the sale of which a private seller wishes to make £2.00 after eBay, Paypal and postage costs (Please be aware figures are approximate and for illustrative purposes only).

Example 1 with Free postage

Selling Value - £3.52
Postage Charged - Free Postage
Total payable by buyer = £3.52

eBay Listing Fee - £0.10
eBay FSF fees (10% of selling Value) - £0.35
Paypal Fees (20p + 3.4%) - £0.32
Actual cost of postage - £0.75
Amount retained by seller: £2.00

The key facts of this scenario are
Buyer Pays £3.52
eBay + Paypal Receives: £0.77
Royal Mail Receives: £0.75
Seller receives: £2

Example No. 2 - with maximum postage

Selling Value - £0.62
Postage Charged - £2.50
Total payable by buyer = £3.12

eBay Listing Fee - (Free)
eBay FSF fees (10% of selling Value) - £0.06
Paypal Fees (20p + 3.4%) - £0.31
Actual cost of postage - £0.75
Amount retained by seller: £2.00

The key facts of this scenario are
Buyer Pays £3.12
eBay + Paypal Receives: £0.37
Royal Mail Receives: £0.75
Seller receives: £2

Most buyers would praise the free postage option under example 1 and complain about the cost of postage under example 2. However what is evidenced is that it is actually in the interest of the buyer for sellers to charge higher postage as it means that the total amount payable by the seller is less. As both a buyer and a seller myself I understand how important it is to get the best possible deal - but in my opinion that is not always the free postage option. The bottom line is value for money - it isn't how the bid price and postage is split but what the total cost of the item is - would you rather pay £3.52 for an item that comes with free postage or £3.12 for an item which doesn't?




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