EcommerceBytes-Update, Number 139 - March 20, 2005 - ISSN 1528-6703     4 of 8

Commentary: Charging eBay Handling Fees, Legitimate or Lies?

By Michael A. Banks

Email This Story to a Friend

So you send an invoice to the winner of your latest eBay auction, informing her that her total for the DVD she won is $6.50 plus shipping of 83 cents, plus a $3.00 handling charge - which is not mentioned in your TOS (terms of sale). The customer replies. Why are you charging me $3.83, when the postage is only 83 cents? What kind of ripoff is this?

You write back and explain that boxes cost such-and-such, ditto packing material, and that you have other expenses, such as gasoline for your trips to the post office.

At this point, the customer either pays you and leaves a Neutral Feedback rating, or thumbs her nose at you and takes the NPB (non-paying bidder) hit and Negative Feedback.

Is she right?

Yes.

I would have the same reaction, for several reasons. First, you ambushed her with the three-dollar fee, and now she has to pay up or get an NPB strike. This is extortion. As a buyer, I would complain to eBay and probably get the strike removed.

But, you ask, would it have been extortion if you had mentioned the three-dollar handling fee in your TOS? Technically, no. But it would have been unethical as heck.

Why's that? Well, put yourself in the buyer's position. From her viewpoint you are raising her bid by nearly 50 percent whether you tell her in advance or not.

Right, right, you have expenses. But there is no way that packaging and driving a DVD to the post office is going to cost you $3. Remember, you're taking another dozen items to the post office with you. And you're stopping by the grocery store on the way back, and running a few other errands. If you pro-rate the post-office part of the trip, that part of your expense is a few cents. And some of you are having the Postal Service pick up your items at no cost.

In any event, your expenses are a cost of doing business, and they should be reflected in your prices. To add a surcharge for expenses is lying to the customer.

Sure, Victoria's Secret pulls the same gag on their customers, which is to say, Victoria's Secret is yanking their customers for some extra dollars, too. (And in some instances probably exempting the charge from sales tax, not unlike your adding a large handling fee exempts you from Final Value fees.)

Does your grocery store shake you down for an extra five bucks handling fee on your week's food supply, to pay for those bags and their clerks? No. The cost is built into the prices. (They pull the shakedown at that end.)

If your grocery store reduced the price of coffee, then added a handling charge because they have expenses related to bringing the coffee to you, you'd cry Foul! But too many people accept what is effectively the same practice on eBay simply because they haven't thought it through. The reason they haven't thought it through is because they are accustomed to this practice from mail-order companies.

It cost you something to obtain the items you're selling; why aren't you charging an acquisitions fee to cover that cost? And how about a living fee to pay for the electricity and food you consume while listing and packing items for shipment?

Right: Those costs are built into your prices - just as your packing and transportation costs should be.

In the end, a handling charge is a fiction, a means to dupe the customer into thinking she is paying less for an item. Or, to be more precise, it's a lie. It's the same as if you tacked on an acquisitions charge equal to what it cost you to obtain your merchandise, something you'd never get away with.

So, stop lying to your customers and build your cost into your minimum bids or fixed prices.

Do you agree? Disagree? Post your thoughts in the AuctionBytes Packing & Shipping forum: http://www.auctionbytes.com/forum/phpBB/viewforum.php?forum=13&0


About the author:

Michael A. Banks is the author of The eBay Survival Guide: How to Make Money and Avoid Losing Your Shirt (No Starch Press, 2005. ISBN: 1-59327-063-1). He has written 39 books and more than 3,000 magazine articles and short stories. A full-time freelance writer and editor since 1983, Banks has written for most major computer magazines, and has served as a Contributing Editor for such publications as Windows Magazine, Computer Shopper, Connect Magazine, and others. He began writing about computing for Popular Computing in 1981. In addition to writing for the computer press, Banks has contributed to a diverse range of magazines, including Writer's Digest, Science Digest, Analog Science Fiction, Cavalier, Grit, Visual Merchandising, Starlog, Modern People, Good Housekeeping, and many other special- and general-interest publications. His work has been reprinted in Japan and South America, and he has written features and columns for magazines in Japan and England. His latest book is How to Become a Full-Time Freelance Writer, published by The Writer Books. http://michaelabanks.com


You may quote up to 50 words of any article on the condition that you attribute the article to EcommerceBytes.com and either link to the original article or to www.EcommerceBytes.com.
All other use is prohibited.