April 19th 2011 - eBay takes aim at a long existing loop hole. The habit of eBay users to shift part of the item price into the shipping to avoid paying higher final value fees. However in the same move to recapture this "loss", eBay in effect is taking aim at the popular price that helped build it's auctioning empire - the 99 cent starting price.
The Flop
So here is the low down on the change of fees.
First, there is now one flat final value fee of 9% for all auction listings. The catch? They now include the shipping price in determining their 9% cut. Second, the number of listings you can do for free has been sliced in half! Gone are the days of listing 100 things free in any given month, now only 50. Third, they are keeping the variable final value fees on fixed price listings while eliminating the insertion fees on auction style listings up to the first 50 in a month.
The Turn
So how will this turn of events in the eBay saga play out? Really only time will tell. But here is a brief overview of the immediate effects. 9% - Final Value Fee - You're thinking "Hey awesome! I use to have to pay 12-15%!" Well slow your horses down because your shipping prices will now be included in that 9% percent. So say you're selling something for 99 cents with $3.99 shipping, under the old system your final value fee would be 12-15% or 12-15 cents. Under the new system where your shipping is included, 9% would be 45 cents. That is a 200% increase!
But there is hope yet, as long as your item sells for at least 200% over the shipping costs then you will pay as much, if not less than you did, for the final value fee. For example, if your shipping is $4.00 then you will have to sell your item at $12.00 or more to match the old final value fees. If you don't, then you can expect the new final value fee to be 10-200% more than what you use to pay.
The River
This is not just a profitable move for eBay, it is a historic one. With the combined cost of shipping and the new hiked fees, you can expect a lot of those 99 cent starting prices to disappear on items that are not guaranteed to sell for more. Plus the added motivation of free auction style listings at any price will drive sellers to list their items at higher starting prices. It seems that as eBay turns it's more favored attention to their eStores, eClassifieds, and bulk sellers that they are become more the eRetailer than the auction site they use to be.
The end result will be a farewell to the long cherished phrase, "I won this for less than a buck on eBay."