eBay Mythbusters 2010 Price Change Challenge

On Tuesday January 26th eBay made announcements to price changes on the platform. The headline reads “Our Lowest Insertion Fees EVER…” So we decided to put that claim to the Mythbuster test. We all love to watch Adam and Jamie on the TV show drop and blow up stuff to see if it works, so I figure lets put this statement to the test!

The STATEMENT:

“I reject your reality and substitute my own” …Adam Savage (MythBusters)

Since the announcement, I have had the pleasure of seeing and hearing all the comments both for and against the claim, so I will put it to the test using the following criteria:

1) I will ONLY deal with data sets that are pertinent to MY PRODUCT CATEGORY of Clothing. (I refuse to speak about what I do not know about, those who do lose all credibility in my opinion.)

2) I will compare LIKE data sets (apples to apples).

3) My results are not scientific, factual, tested, sponsored by eBay, or even all that good for that matter, so just ignore everything and continue on with your life.

But seriously folks…what is important for you to take away is not so much my results, but HOW I came to these conclusions. What I hope is that you will learn to think, do and come to your own conclusions and then make good decisions about how to navigate your business with these new pricing changes on eBay.

Auctions

OK, here we go, lets start with Auction Style Listing Fees….

Above are screen shots SIDE BY SIDE of the old fees on eBay vs. the new fees for Auction Style Listings.

1) Lets start with $.01 – $.99 cent starting auctions. Old fee was .15 cents, the New fee is FREE*, and the details are in the *

• You get only 100 of those free per month, I have not found a price after that 100?!? However my guess is that it would be .10 cents each based on the fee structure of the store fee chart (which we will look at later in the post)

2) Insertions fees for New chart shows a decrease in fees for ALL levels of starting auction price.

Determination: This is so overtly OBVIOUS that I have no other choice but to stamp this part of the myth as CONFIRMED!

Next chart, lets take a look at the Final Value Fees (FVF) for auction items, which are the fees you pay when an item is sold on eBay…

1) The Old fees had a graduated pay scale based on the ending price of the action. At the lower end items sold up to $25.00 were charged 8.75% for the fees.

2) On the New plan, fees are no longer graduated. There is a FLAT FEE of 9% which is .25% HIGHER than before for items under $25.00 however for higher priced items it is a flat 9% fee and it is capped at no more than $50.00 for any item ever.

• for example in the OLD table, an item that would sell for $100 would get 8.75% for the first $25.00 of the sale and then 3.5% for the other $75 of that $100 item. The FVF fees for that would be $2.19 + $2.63 = $4.82
• Under the New fees you would now pay $9.00 that is an increase. However as you scale the ending prices UP the FVF fee will increase until you get to around the $2000 mark. After the $2000 level the prices actually are CHEAPER than they were before.

Determination: While most items on eBay will see an increase in FVF some higher priced items ($2000 and beyond) will see a decrease in FVF fees. Logically I could stamp this one as busted, but some fees will decrease ($2000 and up) so I must stamp this one as PLAUSIBLE, yet unlikely for many sellers!

Fixed Price

Next lets look at Fixed Price Fees…

Fixed price is the FASTEST growing segment of eBay and is the focus of the leadership at eBay as the growing darling of the platform.

1) The Old fees for Fixed price was a flat fee of .35 cents.

2) On the New structure eBay has set up some tiered prices based on:

• whether or not the seller operates an eBay store.
• what store subscription level the seller has with eBay.

Personal observations: I believe eBay is wanting ALL fixed price sellers on the platform to open stores and then eBay can move all of the inventory currently as fixed price into the store. This will allow sellers with fixed price models a nice landing spot for all their listings and buyers can “shop around” better with a single seller and their wares. Good move for ANY fixed price volume seller in my opinion.

Also eBay says it will be offering “store items” to be listed in search, that is really a play on words here. There will no longer be “store items” as we once knew them anyway. eBay has completely done away with items that are in store and “not in search”.

NOW all items in stores are FIXED PRICE so this is NOT an apple-to-apple comparison if you take store items of old and compare them to store items (fixed price listings) of today! You need to keep that in mind and I will revisit this later in the store section of this post.

Determination: Store owners will see a SUBSTANTIAL decrease in fees for fixed price listing. However sellers without store subscriptions will see an SUBSTANTIAL increase in fees. I again must stamp this scenario as HIGHLY PLAUSIBLE!

Next up is the Final Value Fees of the Fixe Price listings on eBay. I want to remind you of the parameters of this article once again…

— I will ONLY deal with data sets that are pertinent to MY PRODUCT CATEGORY of Clothing. (I refuse to speak about what I do not know about, those who do lose all credibility in my opinion.)

1) The chart for the Old fees had a 12% FVF fee for items under $50 and there is NO CHANGE in the New model. These fees remain the same.

2) In the Old fees items over $50 were charged 12% on the first $50 and then 9% for anything over $50 up to $1000. On the new chart items price at Fixed Price up to $1000 are now flat at 9%.

• Let take our example from before with an item priced at $100. Under the Old fees you would be charged $6.00 + $4.50 = $10.50
• Under the new flat rate of 9% you will now be charged $9.00 for the FVF of that same item.
• If the Fixed Price item is $1000 or more you are only paying 2% and even a public school drop out like myself can assess that is cheaper than before DUH!

Determination: This one is so blatantly obvious I feel almost juvenile having to say this but this one is ABSOLUTLY Confirmed!

Store Inventory Format

NEXT we move to the last of this study, the store items…

1) The fees for stores subscriptions remain unchanged! The eBay store fees are the same as they ever where. That part was easy right?!?

HERE IS WHERE THE “eBay tabloid bloggers” and the so called “eBay seller commentary” will try to trick you!!! Look at the comparison of Store Inventory Format below…

Do you see that? I am not sure if these “tabloid bloggers” are ignorant, or if they really are trying to be deceptive?!? However the TRUTH OF THE MATTER is there is nothing to compare it too. That additional format that was once available to store sellers called Store Inventory Format (SIF) has been removed in the new eBay changes. It NO LONGER EXISTS!

There will only be 2 listing formats on eBay now, Fixed Price or Auctions….that’s it! If you have a store you get different pricing (as we have discussed above) on these 2 formats, but there is no longer a 3rd format. Do you get it!!!!

Store Inventory Format (SIF) does NOT have a special format any longer. Store will only have the Auction or the Fixed Price PERIOD.

What happens if you do NOT understand this key point, then everything else will confuse you. Just remember that eBay simply REMOVED Store Inventory Format (SIF) completely, it is off the table, no longer an option, adios amigo. If you do that then you can better make a determination on if the eBay fee changes are an increase for you or a decrease.

So over all, does the initial statement from Dinesh Lathi of “Our Lowest Insertion Fees Ever…” live up to the myth? YES it does, absolutely and you know why? Because the first 100 auctions that start at .99 cents are FREE and dammit, there is nothing cheaper than free…DUH, unless eBay pays me to list.

I want to hear from YOU, what do you think about these un-scientific findings? Please leave your comments, we love to start the discussion.

Related posts:

1. eBay Spring 2010 Fee Changes – The LONG version
2. eBay’s Flat Rate International Shipping Broken for Me, How about You?