Hey folks this is a guest post by a BRILLIANT business and eBay consultant named Jon Miller. I have known Jon for years now and he is a person I respect highly. Jon sent me an email about his findings on eBay’s announcements from January. I asked him if he would consider making a post of his thoughts, so here you go. Our first, but hopefully not the last, ColderICE.com post by Jon Miller, E-Commerce Business Consultant

eBay’s Hidden Fee Increases

In January, eBay announced some significant cuts to Insertion Fees for Fixed Price listings; there was a lot of hype surrounding the announcement, as fee cuts are big news on any marketplace, especially on eBay.  eBay announced that they would be dropping Insertion Fees on Fixed Price listings for eBay Store subscribers, down to as low as $0.03 per listing, depending on the Store subscription level.  eBay even offered a handy Fee Calculator to help eBay sellers determine which Store subscription level would be best for them.

The bonus included in eBay’s announcement was that they would eliminate the Store Format listing, and instead Store Listings would become Fixed Price listings, with all the great search exposure that comes along with Fixed Price listings.  This represents a big improvement for eBay Store sellers, since Store format listings were demoted to the end of search results – having that inventory get better exposure could be a big win for sellers.

But something that hasn’t gotten much press is the fact that a big fee INCREASE resides hidden between the lines of this announcement.  That fee increase comes in the form of higher Final Value Fees of Fixed Price listings when compared to the Store listing Final Value Fees.  For many eBay.com Store sellers, Final Value Fees have jumped as much as 32%; for eBay Motors Parts & Accessories Store sellers – where higher prices prevail anyways – the damage is even greater: Final Value Fees have jumped nearly 90% or more.

The bottom line is that merchants selling more expensive merchandise, who have adapted to the marketplace by utilizing Store Listings to the fullest, will now see their eBay fees skyrocket.  And although this change only affects sellers whose average sale price (ASP) is above $50, that still represents a significant number of eBay merchants.

It should be pointed out that lower Fixed Price Insertion Fees will partially offset these fee increases.  However, the average $50+ ASP merchant would have to be listing an enormous volume of listings in order for the insertion fee savings to fully offset the increases in Final Value fees.

Here is a quick look at a few price points and how the shift from Store listings to Fixed Price listings will impact their Final Value fees, for both eBay.com and eBay Motors:

One might ask, “What message does this unannounced fee increase send to merchants on eBay?”  Well, the obvious message is: either absorb the cost, or move that inventory elsewhere.

Here are a few recommendations for ColderICE.com readers who might be hit by these fee increases:

• Examine your eBay Store listings carefully, and determine how these Final Value fee increases will impact your business.
• Reposition your inventory.  Products which can absorb the fee increases can be kept on eBay as Fixed Price listings; the remainder of your inventory should be repositioned (e.g. bundled, sold in pairs/triplets, etc.) or moved off of eBay.
• Consider an alternative for those extra Final Value Fee dollars.  Shift that spending to an alternative form of marketing, drive the sale to your web site, and earn the lifetime value of that customer directly on your site.  For example, an eBay Motors Store seller with a $300 ASP will see an increase of $11.50 in fees per item sold.  Why not spend that $11.50 on pay per click advertising; those Google ads you’re running may appear at the bottom of eBay pages anyways (eBay is a Google Search Network partner).

The important point here for eBay Store sellers is to be aware of these hidden changes and how they will affect their business.  Adapt and thrive, or stagnate and pay higher Final Value fees – it’s up to you!

Editor’s note: You got comments on this, let Jon hear them. Please add your comments below to this discussion. We want to hear your position on this top.

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3. eBay Spring 2010 Fee Changes – The LONG version
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