Being an eBay seller can be fun, flexible and of course highly lucrative. It’s the second most important online marketplace in the US and remains a popular shopping site for billions of users around the world.
Home to well-known brands and kitchen table enterprises, eBay attracts individuals and businesses because it remains one of the most accessible ecommerce platforms to start selling from.
There are no massive overheads to worry about; no rates to pay, typically no staff to employ and no utility bills to worry about. However, nothing comes entirely for free and, in return for access to a global audience of shoppers, eBay charges fees for you to advertise your products on its venue.
These fees must be taken into consideration for you to get the most out of the eBay marketplace, and of course, your success will come down to making a profit.
With this in mind, you must be equipped with a full understanding of the fees associated with your eBay seller account.
It’s also essential you understand how you can reduce your eBay seller fees and enjoy even more profitability.
The amounts charged depend on your product price, the category you choose to sell in, your listing format and any listing upgrades you decide to add. Your seller performance is also taken into consideration.
Let’s first look at the fees you are likely to be charged when selling on eBay.
Types of eBay Selling Fees
- Monthly account fee (eBay stores only)
- Insertion fee
- Listing upgrade fee
- Final value fee
- PayPal fee
Monthly Account Fee Applicable to eBay Stores Only
If you sell multiple types of product and want to make them accessible all in one place, you can open an eBay store. eBay offers its sellers six different store subscription options, and each comes with different seller benefits.
The packages are:
- Starter $7.95 per month or $4.95 per month paid annually
- Basic $27.95 per month or $21.95 per month paid annually
- Premium $74.95 per month or $59.95 per month paid annually
- Anchor $349.95 per month or $299.95 per month paid annually
- Enterprise $2999.95 per month paid annually only
The subscription you choose will depend on the volume and price of the products you sell through eBay.
Insertion Fee
The insertion fee, or listing fee as it is more commonly known, is payable every time you list a product on eBay and is due whether you sell your product or not.
It is calculated based on the category you have listed your product in so can vary although the current standard insertion fee is $0.35 per listing. This fee varies in some categories so you should always check before listing.
If you own an eBay store, depending on your store type, you will have a pre-allocated amount of zero insertion fee listings per month. These range from 250 free fixed-price listings with a starter package to 100,000 with an Enterprise store.
Listing Upgrade Fee
Listing upgrade fees are all optional. They are charged when you choose to add additional features to enhance your listing. For example; a bold title, additional gallery images, a subtitle, international site visibility, or you choose to use the listing designer.
Fees range from $0.10 to $6.00 depending on the upgrade you choose.
Final Value Fee
Each time you make a sale on eBay, you will be charged a final value fee. It’s calculated as a percentage of the total sale price including your shipping fee but excluding sales tax. Final value fees do vary; however, the standard fee is 10% up to a maximum fee of $750. In some categories, fees range between 2% and 12%.
PayPal Fee
This is not strictly an eBay fee; however, you will likely use PayPal for your eBay transactions, so it is worthy of a mention. If you have a PayPal Merchant account, you’ll be charged a fixed fee of 2.9% plus $0.30 for every transaction, so it’s essential to include this in your calculations.
Example of Typical eBay Selling Costs
If you put all of these costs together, a simplified example of your eBay selling costs would be as follows:
- Selling price: $20.00 + $5.00 shipping cost
- Insertion fee: £0.35
- Listing upgrade fee: $1.00 for using a subtitle
- Final value fee: 10% of $25.00 = $2.50
- PayPal fee: 2.9% = $0.30 = £1.03
- Total Fees: £4.88
You must also take into account your monthly account fee if you have an eBay store and of course the wholesale cost of your product and your shipping costs. Once you have deducted these costs and also misused your eBay fees, you will be left with your profit.
As you can see, your fees and other costs can soon add up, so you must understand and implement ways to reduce your seller fees so that you can ensure your eBay business is as profitable as can be.
7 Ways to Reduce Your eBay Seller Fees
1. Open an eBay Store and Pay an Annual Subscription
If you are already considering opening an eBay store, the minimum monthly fee you might pay will be $7.95 per month for the starter option.
However, if you instead pay the subscription fee as an annual amount, you’ll save overall. Paying monthly, over 12 months you’ll spend $95.40, but if you pay annually, you’ll spend $59.40 – a saving of $36.00.
This is a commitment, but it can also motivate you into making your eBay business the best it can be.
2. Take Advantage of Zero Insertion Fees
With six eBay store options and subscription costs, you must choose the subscription that suits your eBay business. To make an informed decision, you should look at your sales volume because each subscription comes with a different amount of zero insertion fee listings.
While you may automatically want to plump for the starter or basic package and receive up to 350 free listings, if you plan on listing more than 1000, it would be best to go for the premium package.
Although this will cost you more per month, you will save money overall as you’ll enjoy more free listings. So to reduce your fees, pick the store subscription that best correlates with the number of listings you’ll be adding each month.
3. Become a Top-Rated Seller (TRS)
This is one of the best things you can do when selling on eBay because you can reap some big rewards, including a discount on your final value fees.
To become a TRS, you must meet the following criteria:
- Have an active eBay account for at least 90 days
- Have at least 100 transactions and $1,000 in U.S. sales within the past year
- Comply with eBay’s selling practices policy
- Meet eBay’s requirements for transaction defect rate, cases closed without seller resolution and late shipment rate
This might sound like a lot of effort, but as a top-rated seller, you could receive a 10% discount on your final value fees.
If you average final value fees of $500 every month, you’ll save $50 per month – that’s $600 annually!
4. Reduce Your Optional Upgrades
It’s natural to want to enhance your listings and easy to add those optional upgrades but they all come at a cost. If you can’t make do without, choose wisely as some are more costly than others.
If the upgrade you want is costly – for example, $6 for bold, make sure you monitor its success and calculate your return on investment. There’s no point paying for an upgrade that doesn’t increase your bottom line.
5. Request Credits Due for Final Value Fees
When you sell a product on eBay, you will be charged a final value fee whether the sale completes or not. However, that doesn’t necessarily mean you have to pay that fee. In some cases, you will be eligible for a refund.
- If you have a non-paying buyer
- If you and your buyer agree to cancel the transaction
- If you provide a refund for a missing or returned item
- If you issue a voluntary refund due to a dispute overpayment
You will only have a certain amount of time to apply for the final value fee credit, so make sure you apply promptly to avoid losing out.
6. Claim Non-Paying Bidder Insertion Credits
In a similar vein, if you list your products as auction-style listings and your highest bidder doesn’t pay for their item, you will still be charged the insertion fee.
You can avoid paying a second insertion fee to relist the item as long as you relist it within 90 days of the original listing ending. It’s essential you don’t change any details and keep the starting price the same or lower than your original listing to qualify.
7. Make Sure you Have a PayPal Merchant Account
Again, whilst not strictly an eBay fee, PayPal is likely to be your payment method of choice when you sell on eBay. Instead of having a personal account with PayPal, you can switch to a premier or business account which can help minimize your fees – mainly if you sell more than $3000 worth of products per month.
All you need to do is register your business with PayPal. You’ll then be able to accept payments for the low fee of 2.9% plus $0.30 whilst operating under your business name, generate reports and even accept payments from customers who don’t have PayPal accounts.
Final Thoughts
Like any ecommerce business you will always need to take your costs into account, but knowing your numbers means that you can make a decent profit too.
It’s easy to get into the comfort zone of listing products without regularly analyzing and considering your profit. Understanding your eBay seller fees and learning how you can reduce them, will help you make a success of your eBay business.
This article was written for Business 2 Community by Chris Dunne.
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