It's incredible how much misunderstanding there is about P&P charges on eBay. Whilst a small minority of sellers, clearly use it as a way to extort extra cash out of buyers, the many sellers probably undercharge. It's only at the end of the year and you realise that you've made little/no money from selling, that you look to all the charges and realise that you've been charging too little!
Recently, we cut most of our P&P charges, to a) try and give a better/fairer service and b) to comply with the new DSR (detailed seller ratings), whereas there are benefits for sellers who score well in the DSRs. However, as a) we're losing money on some transactions and b) no-one seems to realise that our P&P is very fair, or even too low?
Please allow me to explain:
We are required to accept payment by PayPal (in our field of video games). To comply with PayPal's Seller Protection Policy, all items must be sent by an online trackable means of postage, at a minimum recorded delivery for UK deliveries and international signed-for internationally. This adds 72p or £3.50 respectively on top of the actual postage cost. Furthermore, as a VAT registered UK Limited Company, we must pay 17.5% of the P&P charge collected to HMRC (the VAT man). There is this common myth that there is no VAT on postage. It's true that there is no VAT on the cost of buying stamps/postage, however, any charge collected by us (or any VAT registered body) for postage/shipping, counts as a service provided which is VAT-able. We are providing the service of sending the item to you, the buyer.
So, not only do we 'lose' 17.5% of the cost of the P&P charge, but we also must pay a percentage to PayPal for their fees on the P&P charge. At present we charge 2.99 P&P for most video games, out of this we have to pay 45p in VAT, 72p for Recorded Delivery and around 15p to PayPal. So before we've bought any packing materials/envelopes, printed labels/packing slips or purchased the actual postage for the time, we have lost around 1.32 from our 2.99. Worse still, none of the postage costs we pay can be offset against our VAT bill, as there's no VAT to claim back from the postage we buy.
For transactions to EU countries, the situation is much worse, the actual postage cost is much higher in the first place, then we must add 3.50 to cover the cost of international signed for, there is an additional premium on PayPal for accepting foreign currency transactions, and of course 17.5% VAT on everything. Our 8.49 typical P&P charge for a video game is reduced by around 1.26 by the VAT, 3.50 for the signed for, 51p for PayPal, meaning we only have just over £3 remaining to cover the actual postage and packing costs, which if anything is a tighter margin than for UK transactions.
I would like to see some sort of system in place on eBay, whereas all prices shown include the standard shipping cost to that country. So if you are in the UK, all video games from UK sellers show the delivered price (as with some other websites), which would a) provide a fairer buying experience for the buyer and b) detract unfair scrutiny away from P&P charges. Some buyers still expect the P&P charge to equal the actual postage cost of the item!! With this sort of system in place, unfair sellers would not be able to charge excessive P&P amounts, as all that would be shown would be a 'delivered price' for the item. Obviously eBay would need to make changes to the way it operates, which would include a reduction in their fees to take into account the inclusive delivery price, but it must be possible?