The Real Costs of Selling on eBay

When it comes to selling/reselling online, many people have a love/hate relationship with eBay.  When we first transitioned from part-time selling to full-time we doubled our sales in the very first month.  We worked long hours and put everything that we could back into the business to purchase more inventory, keeping out only enough for rent.  At the end of the month, we were hit with a $600 invoice from eBay…crap.  We hadn’t kept out the money to pay our fees!  While eBay didn’t leave us with any money for rent, they did leave us with lots of questions.  We thought we had a pretty thorough understanding of what we were paying eBay…but how much does eBay REALLY take?

Now that we’ve been around for longer, we understand that our situation was not unique.  Many first time sellers (or experienced sellers trying to expand their operations) are shocked by the amount that eBay charges for selling on their platform.  In order to fully understand eBay fees (and avoid suspensions, bans, etc.) we’ll need to pick through the nitty-gritty that isn’t on eBay’s front page.

It’s not surprising at all that eBay charges to sell on their platform.  If you are one of those special people who think that eBay should simply provide a cheaper (or free) service then you probably don’t understand what a magical unicorn eBay is.  Check out other platforms  (Amazon, Poshmark, etc.) and physical locations such as consignment stores and you’ll be hard-pressed to find someone that takes less than 20%.  And that is typically at a place with much less traffic, trust, and brand recognition than eBay.  So, assuming you’re one of those decent human beings who simply wants to understand fees rather than get around them, roll up your sleeves and lets get started!

OUR EXAMPLE:

Let’s start off by saying that eBay fees can vary slightly depending on what categories you sell in, your listing format, how long items take to sell, etc.  We’ll use one of our stores as the example, as it is pretty representative of what the average seller is doing on eBay:

Monthly Store Stats:Total sales for the month: $8,688.68Average Active Listings During the Month: 1510New Listings During the Month: 200ishSell-Through Rate: 34.4%Items Sold: 90% Clothing & ShoesFees Paid: $1,147.83 (We also had $36.83 in final value fees credited for returns)​FEES PAID:
​13.2%

SO HOW MUCH ARE EBAY FEES?

If you did the math from the above info, you can see that we end up paying significantly more than 10% per month to eBay.  The truth is: average fees for eBay sellers typically range between 13-16%.  On your Account Summary Page you can actually find an itemized breakdown of everything that contributed to your invoiced amount for fees over any given period.  So – now that we know how much eBay takes, let’s talk about why they’re taking it…

THE THINGS THAT MAKE UP YOUR EBAY FEES:

  • Store Subscription

We currently pay for a Premium Store on a monthly basis for this account.  Paying for a store at some level is nearly always advantageous for sellers who wish to lower their monthly fees.  Our store subscription gives us free listings every month, lower insertion fees, and lower final value fees.  We figure that (during the example month) having a store saved us over $600 (compared to having no store at all).  Check out how much eBay charges for each of their stores and how it’ll affect your fees here.

  • Final Value Fees
  • Listing Fees

When any item sells, you pay a final value fee which comes off of the combined total of purchase price + shipping. (Side Story: eBay started charging a final value fee on shipping as well to stop people from listing $150 items for $0.01 with $149.99 shipping to avoid paying fees).  This final value fee varies from 3.5-10% depending on the category (3.5-9.15% if you have a store).  For most sellers (eg. clothing sellers), the final value fee is right around 10%.  If the final value fee makes you leery of selling expensive items such as cars or houses on eBay, know that the final value fee is actually capped if you have a store.Every time you list something on eBay, you are charged an “Insertion Fee.”  Why eBay decided to call it that instead of “Listing Fee” I don’t know, but it’s not very catchy.  Our Premium level store provides us with 1,000 free fixed price listings and 500 free auction insertions per month, after which insertion fees are $0.10 apiece.  Without a store (or with a lower level store), insertion fees ramp up to $0.30 per item.  When people ask how much it costs to actually list something on eBay, this is technically what they’re asking about.  *Huge Note: Using Good ’til Canceled Listings does not get you around insertion fees.  eBay automatically relists those items for you every 30 days and (if you have no more free listings) charges you the appropriate insertion fee.

  • Promoted Listings

With the introduction of the Promoted Listings feature, eBay now has a way to charge extra fees to anyone who wants to help line their pockets!  It used to be that the very best listing would be shown at the top of search results and you could optimize your listings to increase your sales.  While this is still true to some extent, you now have the option to pay a greater final value fee to have your listing show up higher in searches in a “Promoted Listing” box.  If someone buys your item within 30 days of clicking on the promoted listing, you pay an additional fee.  The amount of this fee is determined by you (the seller) when you fill out the form to promote the listing.

HOW DO I PAY MY EBAY FEES? (AND WHAT HAPPENS IF I DON’T…)

eBay fees are invoiced at the end of every month.  In the first couple days of a new month, eBay will send you an invoice for the amount you owe for the previous selling month. However, you can pay them at any time of the month and the payment will go on your account as a credit towards the upcoming invoices.  To pay your fees, simply go to your Account Summary Page and click “Make a one-time payment.”  As much as we’d love it, having your fees taken out of each sale automatically is not an option.

If you do not pay your invoiced fees, eBay will try to take them out automatically from the payment method you have on file.  This typically happens for us on the 16th of the month, but this seems to vary from seller to seller.  If the payment is not successful, you will lose the ability to list new items or revise your current items.  You can still sell, ship, and perform other “administrative tasks” such as responding to emails.   If you add an automatic payment method, you can get back to listing items even if your fees aren’t yet paid.  If your fees aren’t paid by the next time you are invoiced, then the invoices are combined and you lose the ability to list anything until the entire invoice is 100% paid.  At this point, you are risking having your listings removed and your account suspended.  Although it may seem otherwise when you have a huge fee bill, eBay has no desire to ban you.  They simply want you to pay what you owe and continue selling on eBay (in other words, continue making them money).

5 WAYS TO STAY ON TOP OF YOUR EBAY FEES

The best way to avoid out of control eBay fees is to (*shocker*) control them.  This may sound a bit glib, but there are a number of things you can do to reduce the fees you have to pay.  The amount that eBay takes is not set in stone.  While the difference may not be huge, but a reduction of fees by 2% is a direct increase of your profits by the same 2%.  These are the 5 methods that have shown the biggest results in lowering our own fees:

  • Don’t Have Stale Inventory: Having inventory that sits on eBay for too long ends up accumulating fees because they eat up your free listings.  We have over 300 items that have been listed for over a year.  If we streamlined our store and kept our inventory moving, we could save an addition $30 a month on our fees.
  • ​Upgrade Your Store: Making sure you have the right level of store is a great way to save money.  Conversely, having the wrong store can also cost you extra money.  Check out the link to eBay’s Store Descriptions above to make sure you currently have the one that’s right for you.  Also, paying for your store on a yearly basis may cost more up front, but saves you a chunk of change in the long run.  If we paid for our store on a yearly basis, it would save us $15 a month.
  • Use Promotions Wisely: We don’t promote listings until they’ve been live for 30 days.  We find that, during that first 30 days, around 50% of our new items will sell whether they are promoted or not – so we choose to avoid paying the additional fee.  We reserve promoted listings for moving stale inventory or inventory that is in a saturated market.
  • Sell Items Locally: Selling locally can be a bit of a bummer if you’re addicted to increasing your 60 Day Total on eBay, but it pays off well in the long run.  Even if you have to take a bit less for it, selling an item locally means you don’t have to take as many pictures, pay a final value fee, pay for shipping material, spend the time shipping it, or worry about returns.  This is especially true for large or high-value items which may be damaged in transit or that rack up large final value fees.
  • Pay Fees Regularly:  Our fees don’t really get overwhelming unless we neglect them throughout the month.  It is part of our routine to simply pay our eBay fees daily after we’re done with shipping.  Other sellers pay their fees on a weekly basis.  The important thing is finding a schedule that works best for you to keep from getting overwhelmed!

SO IS IT WORTH IT TO SELL ON EBAY?

For us, yes.  Although there are downsides, eBay really does provide an amazing service.  If you have never tried to build your own website, you may take for granted how magical it is to be able to post your item somewhere and get tons of traffic.  If you want to get your feet wet selling online, we still maintain that eBay is the best place to do it.  Even though it seems that your fees may add up quickly, eBay’s fees are lower that several other similar marketplace platforms.  Now that you are aware of the true costs of selling on eBay, you can make the judgement for yourself.  Is it worth it?  Well ask yourself this, what are you losing by not selling on eBay?

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