People are up in arms about eBay’s latest move to increase its fees. Many people who don’t use eBay don’t realize how much the fees amount to for the privilege of using eBay’s auction listing service. I got a nice little email detailing the increase, but the reality doesn’t hit you until you break it down into real numbers.
See, eBay expects a taste at every part of the process. For example, let’s say you’re just a regular joe who wants to sell a Bruce Springsteen CD on eBay. You start the auction at $.01 for seven days. Right off the bat, you’re hit with a $.30 insertion fee (this is the first of many “insertions” you will enjoy from eBay) , which you’ll pay if you sell the item or not. If you want to add a photo or two you now owe them $.55. You leave the auction up there and someone wins the auction with a final bid of $4.00. This is probably about right for our hypothetical Springsteen CD. So, now you’re thinking, “Okay, cool I have $4.00 and I owe $.55 to eBay. So they get a 14% cut.” Wrong.
When the auction’s over the real pain begins. Now after all this, on top of all the up-front fees, which can amount to anywhere from $.30 to $90.55, it’s time to pay the piper in the form of the dreaded Final Value fee. The Final Value fee hurts. Of that $4.00 auction, eBay now wants an additional 5.25% or $.21. Not bad, but now instead of making $4.00 you’ve made $3.24. eBay made a nice little 19% off your sale. If you’re item sells for $25.01 you now owe them an 8% Final Value fee for a total of $2.55 in fees. Not a bad little business model, but you say, “Okay, I can live with that. eBay and I are now even.” Wrong again.
See, a few years ago eBay took over Paypal, the most popular payment gateway for online auctions, when their own payment system failed to overcome Paypal’s growth. Buying out Paypal gave them away to tax eBayers again. How so?
Here’s how: the overwhelming majority of eBay users do most of their business via Paypal, so if the buyer pays you for that CD via Paypal you get hit with yet another fee. The great part about this fee is that it applies to any incoming funds paid to you for any reason. Not just eBay auction payments. Smart move on their part. In our example, after we pay eBay all the fees from the auction we now have $3.24. When the buyer sends the payment via Paypal you get docked 2.9% PLUS $.30 leaving you with $2.85 of the original $4.00. eBay ends up getting a staggering 29% of your money and it can end up being a lot more.
eBay’s sellers are outraged, especially the “power sellers” whose livelihoods depend on their eBay auctions. One seller I spoke with predicted a change from $7 per $100 in sales to $13. A change of nearly double in total fees. This is a tax all users will find hard to swallow. With no new services proposed nor a timetable or committment not to raise fees again any time soon, many are looking for new alternatives to the de-facto eBay monopoly. One such is Wagglepop, which promises much lower fees than eBay.
There needs to be a real alternative to eBay. The increased fees do not just affect sellers. In the end, everyone will bear the cost of the fees. Buyers will be penalized by increased reserve fees and shipping costs. To adjust to the new fees, many sellers will just increase the shipping costs since eBay does not level the Final Value fee against income received as shipping charges. Thus, much of the cost will be passed to buyers.
We need someone new who wants our business, a company who realizes the essential value of its users and who knows that the company profit comes only through the value they bring.
Without the buyers and sellers, eBay is nothing.
I work for a company that publishes video games. It’s just expected that you spend some amount of time playing games and staying current, otherwise when everyone is talking about the latest thing they’re playing you won’t know what they’re talking about. You have to stay in context. 
