How To Calculate The Exact Cost Of Selling Items On Ebay
Before you decide to start selling on eBay, one of the first things you will need to do is establish what the exact cost will be. This will help you make an informed decision regarding how much you will need to charge for the product you intend to sell. This is not something that eBay will tell you, in fact they put a lot of effort into hiding the exact cost, concealing the fees and trying to make it complicated so that people do not realize exactly how much money eBay is actually charging them. In this article we will give you an example and break down each and every cost involved in selling an item on eBay. We will also discuss some of the different options that eBay gives you, and compare the cost of auctions, buy it now listings and listing an item offering free shipping to buyers.
We will use the example of selling a T-shirt for a sale price of 20USD, with an auction ending at a sale price of 20USD, a buy it now listing selling for 20USD, as well as an item listed as "Free Shipping". In order to list an item as free to ship, we will need to add the cost of shipping to the sale price. So for this example we will list the T-shirt for 30USD with free shipping (20USD + 10USD for shipping). The idea of free shipping is something eBay has been promoting for a few years now, they encourage all sellers to include free shipping, and offer incentives to do so. Unfortunately shipping is not free, and somebody has to pay for it. We will look at exactly how much this will cost sellers.
This is the fee that eBay will charge you to place an item up for sale, you will be charged regardless of whether the item sells. Statistically approximately 60% of eBay items end without a sale. Listing fees may vary depending on category, and in some cased eBay offers promotions on listing fees. Below is an estimated average cost for listing an item that will sell for 20USD.
Fixed Price: $0.50
Free Shipping: $0.50
FINAL VALUE FEES
This is eBay's sales commission, based on a percentage of the sale price. These fees are only applied to items that are sold, however fees are applied before the customer pays for the item, and in the event that the customer does not pay, you will have to go through the unpaid item reporting process in order to recover your final value fees. Below are the exact costs of final value fees for an item sold for 20USD.
Fixed Price: $2.40
Free Shipping: $3.60
This is a cost that is often left out when calculating the cost of selling items on eBay. Receiving money with Paypal is not free, the cost can varie depending the account type, the average cost is approximately between 3-5% of the entire amount (this includes shipping charges). For this example we will calculate this cost as 4% on average. Below we have given an estimate of the Paypal fees for accepting payment of an eBay item sold for 20USD.
Fixed Price: $1.20
Free Shipping: $1.20
CURRENCY CONVERSION FEES
These fees may only apply to some eBay sellers, those who accept payment in a currency other than the currency they will withdraw to their bank account. This includes all sellers that sell on eBay.com in USD, and withdraw the funds in another currency. Paypal will charge an additional 2.5% above the going rate for converting your funds into another currency. Below is an estimated cost of currency conversion for an item sold on eBay for 20USD.
Fixed Price: $0.75
Free Shipping: $0.75
All businesses are faced with the reality of charge backs and returns from customers that may not be satisfied with the product, or items that may have been delivered to the wrong address or lost in the mail.
Sellers on eBay will be accountable for any problems with delivery, and will be forced to refund buyers who report items as not delivered. If a customer is not satisfied with an item, the seller may have to refund the buyer in order to remain in good standing with eBay. Based on our research we estimate that 5% of the sale price will be lost to charge backs and returns. Below is the estimated cost lost to charge backs for items sold on eBay for a sale price of 20USD
Fixed Price: $1.50
Free Shipping: $1.50
LISTING FEES FOR UNSOLD ITEMS
Sellers will also need to take into account that they will not sell every item they list. Based on the eBay average that only 40% of items listed end in a sale, we will calculate that sellers will lose 60% of all insertion fees. Below is the amount of insertion fees the average seller will lose based on percentages.
Fixed Price: $0.28
Free Shipping: $0.28
Well after calculating all the costs involved with selling items on eBay, you might be surprised at how the numbers add up. This should give you an idea of how much you need to charge in order to make a reasonable profit from selling your items on eBay. You might simply find that the fees are too high, and it may not be profitable to sell on eBay at all. These numbers are based on fees applied to sellers without a power sellers discount. Power sellers may pay significantly lower fees than other sellers. Below is the total estimated cost of all fees included in selling items on eBay for a sale price of 20usd.
Auction: $7.03 = 35%
Fixed Price: $7.63 = 38%
Free Shipping: $8.83 = 44%
EBAY - THE WORLD'S BIGGEST ONLINE CRIME RING
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