How to Lower Your eBay Seller Fees for Maximum Profit

The first step is to be aware of what it costs to sell on eBay

eBay Introduces Boxing Weekend On Dec. 26 and 27. Credit: Steve Jennings / Stringer / Getty Images

The economy is tight, shoppers are hesitant, and sellers everywhere—not just on eBay—are feeling downward pressure. In times like these, minimizing seller fees can mean the difference between a good month and a bad one, between business viability and business collapse.

Here are some things you can do to ensure you're not eaten alive by eBay fees.

Start Auction Listings at Minimum Prices

If you're selling in auction format, higher starting bids mean higher fees.

 If you can, start your auction format listings at $0.99. This will help you in two important ways. First, starting your listings below a dollar places you in the lowest insertion fee category, meaning that you'll only pay cents, not dollars, to list your item for sale.

Because you're starting an auction low, you're actually allowing the market to set the price for you in cases like these, meaning that you'll almost certainly sell your item. That, in turn, means fewer “wasted” listings and corresponding fees.

Of course, this also means that you may have to accept smaller margins or even a loss on some of your inventory, but it's better than paying for unsold items. Be sure to use the longest auction durations possible to give ample opportunity for bids.

Switch Formats to Minimize Final Value Fees

With eBay's shifting emphasis toward fixed-price listings, the site has attempted to make fixed-price formats more attractive to sellers in some circumstances.

These fixed-priced listings offer their own advantages. They enjoy fixed insertion fees measured in cents rather than in dollars, no matter the value of the item. If you're listing auctions with high minimum bids and many of them are going unsold or are being sold with little or any increase, you'll save money by switching to fixed-price.

In contrast to auction-format listings, with fixed-price listings you'll pay the same low price for longer durations. You can select 30-day or “Good 'Til Canceled” listings without penalty, meaning a better chance of ultimately selling your item if you're pricing at the limit of market value.

Final value fees are charged as a percentage of item sale prices, but the percentage rate charged for final value fees is actually lower for fixed-price auctions in the case of electronics and computer items of all kinds (including photography equipment, video game systems, and telephony) than it is for auction-format listings, again meaning lower fees in the end for the same sale price.

At the same time, some types of items—most notably clothing, books, movies, and actual video games—impose a heavy final value fee penalty when you're selling fixed-price. In these cases, it may be useful to consider using auction format listings if you're not already doing so.

If you routinely list multiple items for sale with the same listing, be aware of the disparity between the two formats for multiple item listings as well.

Believe it or not, there are other angles through which to examine your eBay fees as well.

While listing formats and listing fees are the most obvious considerations to take into account when selling on eBay, in some cases other fees and fee-related issues may come to influence your bottom line with greater force, so don't stop monitoring your numbers at the listing fees stage.

Don't Undercharge for Shipping, Handling

If you're routinely undercharging for shipping in ways that don't give you marketing benefits, you're paying fees that you don't have to pay.

The simplest way to ensure that this doesn't happen is to invest in a small scale and streamline your shipping process so that you can accurately calculate shipping costs rather than guessing at them. As you do this, don't forget to also include an allowance for handling, if necessary— the cost of packing materials, printing materials, paper for receipts, etc., as well as the labor time involved in boxing and shipping. All of these are legitimate expenses that should be rolled into a listing's shipping costs so that they don't figure into Final Value Fee calculations.

Reconsider PayPal If You're Growing Fast

If you're doing a high volume and paying PayPal its percentage as well, you may find that you can increase your net revenue by switching to a direct credit card merchant account instead, perhaps leveraging an auction manager for online payment solutions.

At the same time, be aware that for small purchases, in particular, many eBay shoppers prefer PayPal. If your sales are primarily in low-value items for which there is a great deal of competition, you may find that a switch away from PayPal can actually hurt business.

For larger ticket items, on the other hand, many consumers actually prefer and will pay a premium for a direct credit card transaction with no intermediary.

Track Your Fees Using a Spreadsheet or Ledger

Don't just track what you are paying so that you know where your big fee expenses are, but also do calculations on what you would have paid had you used other options, for example, fixed-price listings instead of auction format, or a merchant account instead of PayPal.

To make hard calculations like this, pay close attention to eBay's official table of fees and also to PayPal's fee schedule.

Once you've actually done the calculations for a number of weeks, you should have a clearer picture of whether a series of switches makes sense in your case or not, and you'll gain both a confidence that you're keeping your expenses to a minimum and a clarity about the state of your business and your business model that will help you to maintain an edge in coping with market conditions.

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