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Thu Jan 31 2008 20:51:52

eBay Fee Calculator Now Live

By: Ina Steiner

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The changes to eBay's fee structure are complex and I received a number of spreadsheets from sellers to calculate the numbers. Long-time seller Andrew sent me an amazing spreadsheet that allows anyone to enter in a Starting Price, Ending Price and have it calculate exactly what your fees would be under the new plan. You can then calculate your monthly fees based on your average sales under the old fee structure and the new fee structure. This is a phenomenal chart, and Andrew gave us permission to post it on our site.

I'm including Andrew's letter, with caveats. Please read it, and then click on the link below to go to his spreadsheet, which we are calling the eBay Fee Calculator. We will be publishing a survey soon to ask sellers how the new fee structure affects them.

Ina,

Long time listener and 11 year eBay vet. Trying to view fee changes objectively (without noise of feedback changes), I created this simple template to view the impact on two levels: 1) Individual items and, more importantly, 2) overall monthly impact. Also included the new DSR rating discounts (again, leaving any commentary out)

Thought you might want to share with Auctionbytes readers and I give you full permission. Members can change the values in the orange shaded cells to view the impact.

Members should focus on the big picture and hopefully have a sense of the # of items they list a month and their sell through rate. They can also see how this would affect them if their sell-through rate increases.

It's a simple model, and assumes everything starts at the same listing price and sells at the same end price, but members can run this model 2, 3, or 4 times if they try different pricing models.

Here are some observations which I respectfully request you corroborate before posting:

1) The KEY determinant of whether the reduced listing fees vs. the increased FVF fees is the Sell through Rate. I know most people think it is # of sales ("low volume vs. high volume sellers") or starting price/ending price ("small ticket items vs luxury items"), but folks can plug in their numbers to help dispel some generalizations. To sum up, if you have a sell through rate of 50% of less, your fees (as a % of your sales) are very likely to stay relatively flat (1% or less) or even LESS than under the old fee structure.

No, really!

Best way to illustrate is this: if you list 100 items at $9.95 (with Gallery), under the old fee system, you paid $0.75/listing ($0.40 insertion + $0.35 gallery). The new system is $0.35/listing ($0.35 insertion + $0 gallery), a savings of $0.40/listing, or $40

If you sell 50% of your items at $50 each, that is $2,500 (50 widgets x $50). The old FVF fees would be $2.00 vs. new FVF of $3.06, an increase of $1.06/item

The key is that you save $0.40 on EVERY listing, but pay the additional $1.06 FVF only on SOLD listings.

So in the end, your fee goes from $174.88 to $188.25, a $13.38 increase for listing 100 items a month and selling 50 for $50 - that's a 7.6% fee increase, but represents only a 0.5% increase in fees as a % of total sales

If you list 200 items at the same level, and still only sell 50 items, that is a sell-through rate of 25%. Under this system, you actually SAVE $26.63 in fees, a -10.7% decrease in overall fees, and -1.1% decrease in fees as % of total sales

If you benefit from the DSR ratings discount, these numbers get even better

2) One critical thing to make sure readers understand - this model compares your EXISTING sales structure under the 2 fee plans. So you only save money in the above example if you are ALREADY listing 200 items with a 25% sell through rate. Members cannot reduce their fees by going from listing 100 items to 200 items - that would double their insertion fees!

This model was NOT built to measure how a NEW pricing strategy would work (though someone could use it that way if they are comfortable), only to compare an existing strategy across the two fee structures. Just want to make sure this is clear!

Also, this model assumes that Gallery was chosen as an option under the old pricing - most sellers use, but those who do not (e.g. periodicals, media, etc) will not see as much gains - they can zero out the Gallery option to see the results

3) A *very* blanket statement is that the fee structure most benefits sellers who currently are high volume LISTERS (not necessarily sales) - if they keep the same auction listing volumes, they benefit the most. This does not *necessarily* mean that the market will be flooded with high volume listers with crappy products, but certainly it is a barometer of that possible shift and all the problems that can come with it.

Final thought: - the one piece which has been overshadowed is this VERY intruiging "Powerseller Expanded Seller Protection" - we all beat on eBay, usually for very valid reasons, but I would love to see you spotlight this as this could be a very substantial change in the Seller protection from unreasonable buyers.

Finally, a belated thank you for all your work over the years. My personal favorite moment? When I discovered that a submission I was reading in one of the Auctionbytes newsletters was actually from actress/dancer Leslie Caron - made me smile!

Sorry for the long missive, but you can tell we are committed to educating ourselves and everyone. Even if you don't distribute the model, hopefully there are some ideas for topics for future newsletters.

Andrew (Powerseller, with eBay since 1997, annual sales around $175,000)

Give the spreadsheet a workout (click on the Hyperlinked text below), and please let us know what you think. And thanks to Andrew for this outstanding tool!

eBay Fee Calculator

 

 




Comments (25) | Permalink

Readers Comments

eBay Fee Calculator Now Live   eBay Fee Calculator Now Live

by: laura

Thu Jan 31 21:31:16 2008

Nice spreadsheet. Wish I had it yesterday before I created my own!

eBay Fee Calculator Now Live   eBay Fee Calculator Now Live

by: jason

Thu Jan 31 21:44:41 2008

Wow! thanks for this great spreadsheet! Ive been wired all day about the changes. according to this I'll save about $200 a month at my current level and now be able to offer even more items and probobly increase my sales!  I hope some ebayers really take the time to look at the whole scope of things. aside from the feedback change. This seems to work for me ! thanks again ,jason

eBay Fee Calculator Now Live   eBay Fee Calculator Now Live

This user has validated their user name. by: Ina

Thu Jan 31 23:23:05 2008

Jason, without getting into the specifics, can you tell me your average sell-through rate? Some have said people with low sell-through rates will benefit the most.
Ina

eBay Fee Calculator Now Live   eBay Fee Calculator Now Live

by: Billoment

Fri Feb 1 02:06:47 2008

I stayed up late Tuesday night and was running some numbers from previous months. We run items on core for the sole purpose to get them to our store. When they buy something they are then re-directed to our web site to check out.
When I ran the numbers we will save on an average 10% in fees to eBay including the PS discount of %5 (our shipping is only 4.7 and the rest is 4.9). Our listing fees are down but we do not run much in core and primarily sell from our store on eBay so the savings on the listings get eaten up on the FVF but we still save.
Where we go from here is to probably take that $60 to $70 we save each month and run some more core listings to attract more buyers in our store and on our web site. The one thing that I do not know and bothers me right now is that eBay is still a sizable chunk of our over all monthly business (about 35%) and how is the feedback changes going to affect our business. We have a very good feedback of almost 100% but you can not please all of the people all of the time now that a customer will not have to worry about retaliation (which we never do any way). Earlier last year we were actually thinking of fasing out our eBay business but then we were able to do the re-direct which is an excellant way to get customers and way far better than doing PPC's because we also make money before they come to our site.

Bill

eBay Fee Calculator Now Live   eBay Fee Calculator Now Live

by: jason

Fri Feb 1 10:14:11 2008

Sure .. glad your interested.. I list mostly books and magazines.. based On current averages..starting 600 auctions monthly at 99c with gallery..avg sale price of $7.75 and a sell through rate of 35%.. The low sell through rate actually makes it so I do save money.. I was very upset with changes until I did the ''reaL'' math.. STill not pleased with the ''feedback'' idea but.. anyway. bestwishes, jason

eBay Fee Calculator Now Live   eBay Fee Calculator Now Live

by: jason

Fri Feb 1 10:18:38 2008

oh that does not include any discount based on 4.6 or 4.8 dsr scores because THERES NO WAY THAT this would be possible to maintain under the new system.. thanks again, jason

eBay Fee Calculator Now Live   eBay Fee Calculator Now Live

by: Jim Moskowitz

Fri Feb 1 10:44:21 2008

Thanks very much for the calculator, Andrew and Ina... even if it does mean bad news.

It looks like (depending on my DSR ratings) my $210/month is going up to wither $250, $270, or (if I really get some bad feedbacks) $280. That's because I'm in the 'sour spot' of these increases: I currently list without gallery; my items tend to sell for $10-$12; and I have a 90% sell-through rate.

What I really don't get is the overall logic in charging less for items that don't sell and more for those that do - isn't rewarding failure this way going to push eBay in the direction of having more and more listings that end without a buyer -- i.e., that *nobody wants*?

-Jim the obscure-classical-CD seller

eBay Fee Calculator Now Live   eBay Fee Calculator Now Live

by: jason

Fri Feb 1 11:37:18 2008

Jim, In response to the ''nobody wants'' item..please keep in my with ebays drop in market share, neg press and upstart new auction sites ie criagslist etc..the number of people looking for a certain item in a 3-5-7 days span greatly dropped in the last few years it seems..(basically this items does have $ value . just not the hits) I think ebay wants the items to be out there and available to compete with sites that offer ''free listings'' until sold...This is just a guess but someone like me who is way backed stocked on product could offer more if My risk is less to offer the product. its all about volume to me..and I'm guessing this is where ebay is going... They want item count to go back up and have more to offer to the general community ....its not about quality but quanity.. please dont take this as a love for ebay.. we have a VERY love HATE relationship.. and the new feedback idea is about as smart as putting your hand in a blender.. But for some it will work. so people with high sell ratio's it probobly means they are going to loose in both areas.. more negatives mean lower sale prices. lower sell through ratios and will result in a loss to ebay and paypal I believe overall..I'll stop my rant and wish you all the best of luck.. jason

eBay Fee Calculator Now Live   eBay Fee Calculator Now Live

by: exit_strategy

Fri Feb 1 18:45:49 2008

I thought the focus of ebay's ''tweeking'' was to gain more listings?

I thought John Donahue thought the site looked like a flea market, and he was going to fix that?

But, it's always the fees, isn't it??

An actual price ''increase'' for 50% of the sellers is not going to make sellers want to list more product.

I really think they are trying to force sellers off of the site, I really do! They must have chinese companies pumping up the listings, that are ebay owned and then ends back in ebays pocket.

It seems they are setting the site up to eventually push every seller off eventually. When they get stronger, they'll push some more off, just pinch a little harder next time.

I have a fundemental problem with ebays pricing structures over the years and this is more of the same complicated carp.

It is so complex, always nickle and dimes, and % until they take $600 out of your account each month.

How is any sane person supposed to figure out if ebay's bill is correct or not?? The DSR system doesn't show 4.8, 4.7, 4.6, 4.5 to begin with.

It's just like an IRS form, it's made complex, and complicated on purpose so noboby can figure it out - ''purposely''. God forbid you need to figure out your ebay bill, WTF?

Ask Mr. Donahue if the ''overall fees'' ebay will take in goes up?? He won't want to answer that question, as he'd have to tell you the truth - ''YES''.

Oh, the devious will prosper. What else is new? A complicated formula that can easily be tightened 1% at a time. 1% ain't much!! The 1/10% difference between a 4.8 and a 4.7 is a 10% discount off your fees though. But, I didn't understand that though because I'm not a math wizard.

My auction prices on ebay must not be complex enough, can I charge $59.59 + 9.74% for my item, then make the shipping $14.78 + 3.86% if you pay within 3 days! But hey dummy you get a free mailing envelope with the deal!! What a deal, let me p@ss my pants!!

Let me pay ebay 1st before I flush!

Exit right.......

eBay Fee Calculator Now Live   eBay Fee Calculator Now Live

by: Andrew

Fri Feb 1 22:31:03 2008

Ebay is chosing volume over vibrancy  in its marketplace and that will be its downfall. Chasing off the very sellers who made ebay a destination website.

You can find chinese junk anyplace but try finding your high school yearbook for sale. 10 years ago you looked on ebay. Now google can find it for sale anywhere on the internet.

Enjoy your super size chinese fleamarket JD. Bye bye.

eBay Fee Calculator Now Live   eBay Fee Calculator Now Live

by: thebidkahuna

Sun Feb 3 08:22:23 2008

Wow the spreadsheet settles my nerves on the 50 or so items I list everyweek.  What I am still concerned about is what happens to STORE LISTINGS which I have 850 different low dollar items and list auctions only to drive folks to the store, what will those items cost to sell at the end of the day?  Now as far as the DSR'S are concerned and that will change for the worse when sellers can't leave any feedback other than +  with that said I have a 4.9, 4.9. 4.8. and a 4.6 will an average of these be used to calculate the discount??? It's amazing that using STEALTH POSTAGE and REASONABLE handling fees that I have a low number in that catagory.... So do I say free shipping and add a couple of bucks to the item (and give eBay more money) or jack up the shipping and say the hell with the feedback system???  The feedback changes are STUPID?  Sellers and buyers should be looked at for what they really are, it is very simple to review transactions and see who is in the wrong... I guess a spreadsheet to allow us to see what happens to STORE SALES would be great...

eBay Fee Calculator Now Live   eBay Fee Calculator Now Live

by: Peter Leeflang/CEO Leeflang Archives Corp.

Sun Feb 3 16:01:13 2008

Ina, thanks for the calculator. The resukts were devastating though. We may as well close since Ebay is going to take another 2.5-3.5% of our entire sales on top of whjat they already take. Our results:

Impact for our company:
1) store listings with gallery (if no discount): +33.5%
2) store listings with gallery (if only 5% discount): +29.3%
3) store listings with gallery (if 15% discount): +19.9%
4) fixed/auction items, no gallery (if no discount): +66.7%
5) fixed/auction items, no gallery (if only 5% discount): +35.0%
6) fixed/auction items, no gallery (if 15% discount): +26.3%

eBay Fee Calculator Now Live   eBay Fee Calculator Now Live

by: Ric Williams

Sun Feb 3 16:18:17 2008

Thank you Jason this is very helpful.

eBay Fee Calculator Now Live   eBay Fee Calculator Now Live

by: Appalled

Mon Feb 4 07:53:34 2008

Quite frankly Andrew I am not impressed with you at all.

I was appalled to see that you would use the word ''NOISE'' (without noise of feedback changes), the very word that Donahoe used to describe sellers feedback to the changes being made.
Of course, we are not allowed to give negative feedback.

Donahoe used ''NOISE'' to show his contempt for sellers.

Apparently, you view that word ''NOISE'' as being an acceptable description of how Donahoe views  sellers comments.

eBay Fee Calculator Now Live   eBay Fee Calculator Now Live

by: Kathi

Mon Feb 4 12:19:25 2008

Thank you so much for sharing your fee calculator. I tend to be math challenged and was having a hard time figuring out how these changes would effect my business.  Now I can do a correct analysis of the new fee changes. Props to you!

eBay Fee Calculator Now Live   eBay Fee Calculator Now Live

by: Isa

Mon Feb 4 15:46:03 2008

I thought we were going to save a little, but according to the calculator, we are going to be paying more.  It's hard for me to get accurate data though, because we start all items at $19.99 and they sell for anywhere between $19.99 and $5,000 with 91-94% sell-through.  

All our items are charity items, so we eventually (after about six weeks) get the insertion and FVF refunded as long as the item sells and we use eBay Giving Works/MissionFish.  

eBay Fee Calculator Now Live   eBay Fee Calculator Now Live

by: Karen

Tue Feb 5 00:34:16 2008

I understand that ebay needs to raise more funds so they can go and buy out other related companies to limit competition. I can deal with the increase one way or another. However, of bigger concern is the feedback changes that effect every seller, big and small. Effectively eBay has cut the sellers throats with this new feedback deal. Buyers have already started to run amuck, leaving negs and neutrals when they are not deserved by good hard working sellers. See for yourself by visiting almost any discussion board. The horror is just beginning!

eBay Fee Calculator Now Live   eBay Fee Calculator Now Live

by: Mechelle

Tue Feb 5 08:00:07 2008

I'm confused-hopefully someone can clarify
the wat I read the powerseller dsr "discount" is the seller would benefit from 5%- 4.6 up and 15% 4.8 up-with each dsr meeting the rating requirement not an average of the four scores- the discount percentage is to be calculated as 5% of the final value FEE not the final value of the item final selling price.

So- my question is - does the discount apply to the final value price of the sell or to the final value fee?

FVP= 12 x 5% or FVF x 5%?

eBay Fee Calculator Now Live   eBay Fee Calculator Now Live

by: Mark Isaacs

Wed Feb 6 04:22:25 2008

Will there be a UK calculator available?

eBay Fee Calculator Now Live   eBay Fee Calculator Now Live

by: Agitprop

Thu Feb 21 16:50:22 2008

There is a revised eBay fee calculator for the new Feb 20, 2008 fee schedule here - http://auctionfeecalculator.com/uk_ebay_fee_calc2.html
Likewise for the revised US, Canada, Ireland, Holland, Swiss and German fees too.

Hope this helps!

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