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eBay PowerSeller Nick Sevino (a pseudonym) answers questions about buying and selling on eBay.
In the last issue, Roxy asked, "What is the correct amount of shipping a seller should charge, and what constitutes gouging?" I received a good number of letters from readers, some agreeing and some disagreeing with my answer.
Another controversy is whether you should include credit card fees, eBay fees and other costs of doing business in the handling charge, so I thought I would tackle that question here. (Next time, I'll be answering the question, "What do I do when my spouse drives me crazy when I'm trying to get work done in my home office?" I would love to hear your stories and solutions.)
eBay says you should not include credit card fees, eBay fees and other costs of doing business in the handling charge.
"Sellers may charge reasonable shipping and handling fee to the final price of their item, providing that this fee is disclosed up front in the listing. A shipping and handling fee can cover the seller's reasonable costs for mailing, packaging and handling the item. Shipping and handling fees cannot be listed as a percentage of the final sale price."
http://pages.ebay.com/help/policies/listing-shipping.html
Nick stands on the sidelines and says there is a case for both sides. Just don't forget that these are real costs of doing business. If you can't get it in the price, you better make it elsewhere. Or you won't be selling on eBay for long!
I often see buyers on the message boards griping about excessive shipping costs. Do these buyers represent the majority or are they the vocal minority? The truth probably lies in between. Many buyers add the S&H to the price and consider the total cost before bidding.
But a low starting price and higher shipping has the advantage of making your item the first one they may click on, and if they see stellar feedback, they may go no further. On the other hand, if it's too excessive and it's perceived as out of line, buyers may be offended and you lose the sale.
It's upsetting for the buyer to find that the deal of the century may not be such a great deal after all. But he just might come back when he finds that your total landed cost is the best around. Gauging buyer psychology is pretty tough sometime.
In strictly monetary terms, lower sales price with a higher S&H makes sense. Listing fees are lower for items with lower starting prices, and eBay does not charge commissions on S&H.
eBay charges 30 cents to list an item with a starting price of $9.99, but it charges 55 cents for an item with a starting price of $19.99. And if an item sells for $10 with $14 S&H, FVF (Final Value Fees) are 53 cents; if an item sells for $19 with $5 S&H, FVF are $1. Around half! The buyer pays the same $24 in either case, but in the first scenario, the seller pays 82 cents versus $1.60 total in the second scenario. I don't know about you, but shaving my eBay bill in half sounds really attractive. The figures are even further skewed if your items have a low sell-through ratio.
Tricky Nicky Tip: There are certain pivotal points where eBay listing fees change. For example, an item posted at $24.99 will have a listing fee of 55 cents. Post it at $25, and it jumps to $1.10. Adjust your pricing strategy accordingly.
Now let's get into the gray area. Doing business on eBay is expensive. eBay takes at least 8 to 10% in fees. Then add Credit Card and PayPal fees of 3%. Don't forget all the extra fees such as Auction Management Services.
eBay specifically prohibits adding their commissions into the handling, and the credit card companies do not allow you to charge extra for receiving credit card payments. But it's common knowledge that eBay has turned a blind eye to the companies doing this, unless your S&H charges are truly outrageous and someone makes a real stink. eBay has a laissez-faire attitude towards S&H. They also understand that everyone has a different cost structure and different products have different associated costs.
The bottom line is that sellers should clearly state their S&H charges, and buyers should make sure to read and understand those fees before bidding. This way, the buyer ultimately decides which approach wins.
To comment on this letter, post a message in the forums at
http://www.auctionbytes.com/forum/phpBB/viewtopic.php?t=3801.
If you have a question you'd like Nick to consider for a future issue of "Dear Nick," send it to nick@auctionbytes.com.
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