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Old 02-18-2008, 07:16 AM   #1 (permalink)
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Default (new Ebay Fees To Kick In This Week)

(NEW EBAY FEES TO KICK IN THIS WEEK)

As promised new eBay fees kick in this week with some good and some bad news from the highly used auction site by hobbyists. The good news is Gallery will now be a free service instead of a .35 charge and most listing fees were reduced by as much as about 20-percent. For example, listing an item for 99-cents previously would cost .20. Beginning February 20 it will now be .15. Doesn't sound like much unless you are listing 1,000 items and then it adds up.

(Some sellers don't see new eBay fees as much of a gift.)

"The world is changing around us and that requires us to make change, change together and the changes are the start not the end and we think they are the right start," said new eBay CEO John Donahoe at an eBay conference in Washington. "Many of those changes are in response to the things you have been asking for, for years and we hope the whole package of changes is good enough."

There are other plus sides such as reductions in fixed price and eBay Store insertion fees. eBay Store listing fees are being slashed by about 50-percent. Fixed price listings and store listings however must now start at at least $1.00. There are going to be no more .01 listings. Sellers will often list items at a penny knowing they can charge $2 or more for shipping an item which isn't worth .25 but it's a way to sell the merchandise.

The other down side is the 20-percent increase in final valuation fees. This will effect every seller. Currently if you auction ends at $25 or less the seller pays a valuation fee to eBay of 5.25-percent of the sales price. Beginning this week this jumps to 8.75 percent for auction listings. In store listings will see the final valuation fee jump from 10-percent to 12-percent. In most cases the secondary jump (the amount over $25) will also jump a percentage point from say 7-percent to 8-percent.

(eBay President John Donahoe who at 46 is making nearly $800,000 annually, and looking at over $655,000 in bonuses and over $7 million in future stocks --- cutting and hiking fees.)

"We think the increase in final valuation fees will actually increase listings and will be offset by the decrease in listings fees," added Donahoe. "Our goal was to respond to what you have been asking for and that is to re balance pricing. The lower insertion fees reduces the risk of listing on eBay and easier for you to put up your best inventory or eBay."

The bottom line there should be more listings and those listings should be stronger. The elimination of sellers who start auctions at .01 will be a strong boost. The reduced listing fees will result in more items being listed. However, the increased valuation fees means the extra money saved in lower listings fees will be ultimately lost in the sale with the valuation fee.

For instance. Under the old rules if you placed a card in an auction starting the bidding at 9.99 it would cost you .40 plus the .35 for Gallery. If it sold for $30 the valuation fee would have been $1.47. Now it is $2.37. This is a loss of .90 for the item over previous fees. Add in the fact you saved .15 on the listing fee and another .35 by getting Gallery for free -- this means you only lost .40 over the previous rules. Large sellers listing 1000 auctions a month in this range would lose at least $400 per month in commissions to eBay.

eBay is hoping to increase listings by lowering the listing fees and this will help. It will also take home a better chunk of the change due to the increase valuation fees. In addition, PayPal is lifting the international restriction on "confirmed addresses" for shipping.

-The Brill Report
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