The real cost of selling on eBay

John Avis by | December 11, 2007 | eBay and PayPal

Selling inexpensive items on eBay can be real expensive, particularly if people pay by PayPal (an eBay company).

Let's have a look at the real cost of selling an example cheap item.

The example assumes you have a PayPal Premier/Business Account which they basically force you to do (see separate blog entry, "PayPal Issues").

This is a real world example. I list car magazines for 99c (and many of them don't reach a higher price) and a pre-paid postage envelope for these is $2.70 within Australia or $11.60 to countries like the USA.

Item sale price $0.99
Postage cost $2.70
Total $3.69

eBay/PayPal fees:

Listing fee $0.30
Final value fee $0.05
PayPal fee $0.39
Total fees $0.74

74c is 20% of the total amount received.

If you charged postage at cost then that would mean you made only 25c of your 99c sale price!

Now, imagine that the item was sold to someone overseas and the postage cost was closer to $11.60, keep in mind that PayPal fees are higher for other currenies. You really want to know? Read on for an example of a sale to a US buyer:

Item sale price $0.99
Postage cost $11.60
Total $12.59

Listing fee $0.30
Final value fee $0.05
PayPal fee $0.73
Total fees $1.08

You just made an 9c loss on your 99c sale!

eBay and PayPal fees don't sound too much when viewed separately but when you add them all up they make it very expensive to sell inexpensive items on eBay.

I suggest that you don't provide postage at cost. Always add a dollar or two as a handling charge to ensure that it pays your PayPal fee.

The following link is for a web site where you can calculate the PayPal fees for a transaction or do a reverse calaculation to work out how much you should charge to receive a specific amount:

PayPal Fee Calculator

And this link is for calculating eBay fees, and can also calculate combined eBay and PayPal fees:

eBay Fee Calculator

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Comments

by eBaySeller | December 12, 2007

Hi, nice commentary. Yeah, I've been having a serious look at all the fees lately, especially now that pretty much everyone chooses to use PayPal (due to the advertising and buyer protection like you said). Getting slugged twice surely is robbery. Being an eBay company (PayPal), there should be some sort of discount or an extended amount of free transactions for eBay sellers. This is really extortion. Especially since you can't even advertise a surcharge to the customer, even though stores have been doing this for Credit Card transactions for years, what's the difference??

Next year, I'll be increasing my postage charges.

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