eBay's New 33% Fees Discount Really Means 43% Increase!

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eBay's New 33% Fees Discount Really Means 43% Increase!
In an announcement worthy and reminiscent of George Brown as UK Chancellor of the Exchequer, eBay's recent proclamation about reduced listing fees, which come into force on 20th February 2008...

"Reducing risk: up to 33% off Insertion Fees
We’re reducing the upfront cost of listing an item by reducing Insertion Fees by up to a third."
"Instead, the majority of fees will now be payable as a Final Value Fee, only when an item sells, aligning your total fees much more closely to your selling success."


A message from Mark Lewis, eBay
eBay is delighted to announce a series of substantial new benefits for sellers on eBay.co.uk, including a reduction in Insertion Fees of up to 33% and volume discounts of up to 40% on revised Final Value Fees.

...Actually equates to an increase of up to 43%!

The 33% reduction is in the basic listing fee which, for items with a starting price of 99 pence or less, goes down from 15 pence to 10 pence. The listing fees go up in 6 steps, and the highest one drops from £2 to £1.30, for items with a starting price of £100 or more. This last one is actually a reduction of 35%, so eBay have stated the maximum saving incorrectly, but the the £1 to £5 starting price fee only drops from 20 pence to 15 pence, which is only a 25% reduction.

What's the Catch?
According to eBay "We will balance the new Insertion Fee reductions by raising Final Value Fees so that your total fees better reflect your selling success."
They omit to tell you that the Final Value Fee increase is 43% on the first £30, which to our mind overbalances the headline grabbing saving. You will only be better of on items selling for under £4.50; for anything else you will pay much higher charges.

Here are a few examples of old and new FSV (Final Selling Value) Fees:
Item Sold For             Old Fee         New Fee        Increase    %
£30                    £1.58            £2.25            £0.68        42.9%
£100                    £3.85            £5.40            £1.55        40.3%
£600                    £20.10            £27.90            £7.80        38.8%
£1,000                    £27.18            £35.50            £8.33        30.6%        

The headline-grabbing reductions and discounts turn out to be eBaySpeak for hefty increases. Balance translates as overbalance, as the increases far outweigh any reductions.

Who is Affected?
Almost all UK and Eire sellers will be affected by these changes, and we assume that similar price hikes disguised as reductions will or have been rolled out over most eBay sites, depending on the existence of any local competition.
Some of the discounts mentioned will only apply to "Power-Sellers" (anybody who sells a lot, and pays high fees). The current levels for PowerSeller Status are:
                                                   Bronze          Silver          Gold          Platinum      Titanium
Gross Merchandise Volume Monthly            £750             £1,500     £6,000     £15,000     £95,000
or Quantity of Items Sold Monthly            100             300         1,000         2,500         5,000

The Newly Introduced Discount Levels are:
Volume of Sales                              PowerSeller Discount      Seller Discount
Titanium                                     40%                         20%
Platinum                                     35%                         20%
Gold                                         30%                         20%
Silver                                         25%                         20%
Bronze                                     20%                         20%
Less than Bronze PowerSeller level         0%                             0%

PowerSellers Rewarded
From this, it can be seen that the higher levels of PowerSeller can get discounts or rebates, of up to 40%. We have read the eBay information releases through, and still cannot work out exactly what one has to do to qualify for exactly which discount, but there are two prongs to the attack. One is level of turnover, the other is the recently introduced
Detailed Seller Ratings (DSR), which were added to the Feedback System. A minimum level of 4.6 (out of 5) in all four DSR categories is necessary to obtain any discounts. Unlike Positive and Negative Feedback, the DSR ratings given by buyers to sellers are anonymous, and cannot be seen by the vendor.
One result of this is that the system will be so complex that it will be almost impossible for most sellers to know whether their monthly billing invoice from eBay is correct, and it is known, but kept very quiet by eBay, that there have been numerous faults in its billing systems over the years.

Private Sellers Hardest Hit
Small, private sellers will be most badly affected by the new increases, as they will almost certainly not be able to benefit from most of the discounts which may be available. We, as a company should rejoice as it reinforces our position that as bullion dealers, investors and collectors can often sell to us for more than they could get on eBay, and buy at lower prices than from eBay, and all with less time, effort and risk.

Our Company?
Our company usually has a monthly sales value which places it in the Platinum PowerSeller band, so perhaps we ought to be happy about the "favourable" treatment. Actually, we took a view early in our eBay activity that it was dangerous to place reliance on eBay as a selling medium, mainly because of the questionable quality of its management, and its relations, or lack of them, for its members. The more we see of eBay, the more certain we become that our view was correct. The average transaction on eBay requires double the amount of administrative effort compared with our direct business, some require much more. We have already written much on our websites (which we are not allowed to mention on eBay - the thought police might be watching), and in numerous eBay guides, explaining why we believe this is so. If eBay were more like Google than Microsoft, it could complete its world domination by love and respect rather than by force.
eBay's new incentives to sell more will have little effect on us, as we intend to maintain our existing policy of severely restricting the proportion of our offering and sales which are channelled through eBay, 2% will be more than enough.

Old Fashioned Values
As a relatively long established business, selling high value goods at slim margins, many of the items we sell on eBay make us targets for fraudsters. Also on many of the items we sell, eBay commissions are more than our profit margins. We necessarily have a conservative policy on things like cheque clearance. This does not help us when buyers come to allocate us a rating for speed of dispatch time. Sellers with many low-cost, high profit-margin goods have an advantage over us here, (an example would be the numerous traders selling gold plated replicas as rare pattern coins), in that there is little risk in shipping immediately, margins are high enough to absorb credit card and PayPal charges, and if the seller is a newcomer who is 100% reliant on eBay, it is likely that he can respond to e-mails 24 hours a day, 7 days a week. We make no apology for giving our direct customers, and those who telephone us, priority over our eBay customers, and those who rely on e-mails. Perhaps we are slightly old-fashioned, but hey, it works.

Back to the Point
We seem to have rambled and digressed more than usual in this guide, and perhaps we should edit it severely, but we do have view and opinions, and are always happy to try to share these with interested listeners. Regular surfers will presumably have found the thousands of information and advice pages on our websites. One other thing we notice is missing on eBay is a fees ready reckoner or calculator. We have seen a few of these on independent websites, and always targeted at American fees on eBay.com; is it short sighted of eBay to fail to provide one as part of its service to its millions of UK and Eire customers, or is it that they don't want sellers to be able to work out how much it's costing them to sell, perhaps they want to make it difficult for vendors to check the accuracy of their monthly bills. We have created several spreadsheets to allow us to estimate our own eBay selling fees. When we get a spare hour, we will put one into tabular form, and publish it. Unfortunately, we will not be able to include it in a eBay Guide, as their is a restriction on HTML, and table do not format neatly in these guides. It will have to go on a page of one of our own websites.

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Author & Copyright Notice
Any images shown are our own copyright images. Our text and description is also copyright, Lawrence Chard of Chard Coins.

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