EBay's New "Lower" Fees Aren't Such a Great Deal

The new selling pricing structure eBay announced in January 2008 was widely reported in the media as a drop in listing fees and an overall good move for both eBay and their sellers.

However, a closer look at the pricing structure will reveal that eBay has made the initial fees for listing an item for auction slightly cheaper, but the final value fee - the fee charged if your item sells - is not only higher, it is much higher, wiping out any savings on listing fees. It follows a long pattern of eBay continuing to raise fees as they continue to dominate the online auction market while failing to address customer concerns.

EBay's listing fees has been a source of complaints by users who consider them excessive, considering the millions of items being listed on eBay on a weekly basis. Fees are based on the starting price you set for your item. Under the old pricing structure, fees could be as low as 20 cents for an item with a starting bid of 99 cents or less, or as high as $4.80 for items with a starting bid of $500 or more. Several times over the past year, eBay has held one-day promotional events in which listing fees are lowered, usually to 20 cents per auction, which was well received by sellers of more expensive items.

The new pricing structure lowers rates five cents for auctions starting out with an opening bid of under $25. For items with a higher starting bid, sellers will save anywhere from 20 cents to 80 cents per item. New rates are the same for fixed rate listings, which are becoming a larger part of eBay sales. In addition, eBay is also making Gallery pictures free, a savings of 35 cents. There are also discounts on other Gallery items, which are all concessions on eBay's part and true savings for sellers. However, eBay has run a number of free Gallery listings over the past year, and many eBay followers have said the auction site has not done well with their Gallery feature, so making it free or discounted will not cost eBay much.

The downside of the new pricing structure comes when you look at eBay's final value fees, or the rates charged if you sell an item. These are much like the "buyer's premium" you see with auction houses, and are a nice source of profit for eBay. Herein lies the problem with Bay's new pricing structure. Any nickels and dimes you may save with listing or gallery fees you lose if your item actually sells, because final value fees take a huge jump.

Items that sell for $25 or less used to be charged a final value fee of 5.25%. They will now be charged an 8.75% final value fee. That means an item that sells for $20 used to cost the seller $1.05 in final value fees (not including listing fees). Now, that same item will earn a final value fee of $1.75, which more than covers the nickel you saved in listing fees and even the 35 cents you saved on gallery fees, if you used it. In addition, items that sell for more than $25 incur the same 8.75% fee, as well as an additional 3.5% on any sales amounts over $25 and below $1000. Any sales amounts over $1000 will earn a third fee of 1.5% of the remaining balance. This is also a slight raise from previous amounts. Final sales fees on fixed price listings are also going up, from 10% to 12% plus additional charges for sales amounts over $25.

While eBay may have succeeded in getting some positive press from media outlets who merely recounted their press release, they are already experiencing a backlash from sellers who feel betrayed that what was represented as a drop in fees is actually a sharp rise, and another slap in the face to those who have supported them.