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.
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.
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