topic Re: Selling Fees in Selling

Selling Fees

surfsunrise — Thu, 18 Dec 2014 06:49:55 GMT

Just wondering if sellers use a general mark up on products to cover ebay/paypal fees. All seems a bit confusing to me?

Re: Selling Fees

i-love-my-sheep — Thu, 18 Dec 2014 07:02:44 GMT

Most sellers that understand the fee structure add the amount, or at least part of the amount into their sale price. Same with postage. Some buyers get miffed if postage costs any more than what's on the label, so sellers add it into either their buy it now price or their starting amount for auctions. I charge $8 for small parcel rate parcels, which covers the fees on postage.

We sometimes see new sellers in here that follow the ridiculous eBay recommendation and start their auctions at 99c, then have $7.20 for postage. Their item sells for 99c and then they are hit with the FVF's on postage as well, so they are actually losing money by listing. It worries me how many DON'T come into the forums and don't realise they are losing money until they get their eBay bill.

Re: Selling Fees

chameleon54 — Thu, 18 Dec 2014 07:17:13 GMT

There is a range of factors you need to acount for when setting the price of items. In my case ebay and paypal combined take close enough to 18 % of my total gross income (total sales price ). I add the FVF on postage to my postage cost and also add a bit extra to postage to cover items lost in the mail etc. On top of this you need to think about holding costs if the item will sit as a BIN for awhile. If you have substantial stock holdings you need to cover interest on the money invested, stock loss or devaluation for slow selling items that eventually need to be discounted to move and factor in that some items may never sell etc. You then need to decide how much profit you need to cover your time spent listing, packing etc.

There are plenty of ebayers who are probably working for a few dollars an hour if they have not done their maths properly. Personally I need to sell items with a mark up of 200 -300% to make the job pay. You may be able to accept lower profit margins if you are selling higher value items.

example- If you sell an item that costs you $50 for $100 ( 100% mark up ) you will pay around $20 in costs leaving $30 profit ( or 60% )

If you buy an item for $5 and sell for $15 ( 200% mark up ) you will pay around $3 in fees for a profit of $7 ( 140 % profit ) but it will probably take just as long to list, pack, answer questions etc. as the higher value item. You need to sell around 4.5 cheaper $15 items to make the same profit as one $100 item. Clearly you can accept lower profit margins and still make more money per hour, selling higher value items.

Re: Selling Fees

queenslander-one — Thu, 18 Dec 2014 07:26:12 GMT

Just checked last months invoice Fees are costing sellers too much.

Total monthly fees
19.17%

Re: Selling Fees

van_werkhoven — Thu, 18 Dec 2014 10:09:50 GMT

Yup. My listing price is definitely not my profit. Now I am very fortunate, my stock costs me very little. I'm not sure I could do this if it cost me a considerable percentage to buy the items in the first place.

I'm bored so lets do some math here.

My most frequent sale would be women's blouses, which average $10, plus $2.50 postage. So lets use that. That item, to photograph and list, then package later, takes me about 10 minutes per item.

For an item which I charge $10, plus $2.50 postage for, lets look at the breakdown

50c - Item cost

20c - Envelope and return sticker, this is a guess. There's also paper and ink to consider as marginal costs.

$2.10 - Actual stamp cost

60c - Paypal Fee

95c - Ebay FVF

24c - Ebay Postage FVF

25c - Store fee (I sell approximately 80 items a month, so each item accounts for about 25c of my subscription)

So of that $12.50 I received, with the listing price of $10, I pocket $7.66. Not too bad a profit. And yes, I build that in. When I list an item I know my profit will be around $2-$3 less than listing price. (also, for the record, if I send something as a 500g satchel I charge $8, not $7.20, which covers the FVF on the postage). I sell some items at a lower margin, like baby clothes for $5, but in those cases generally the stock has only cost me about 10c and the percentage fees are of course lower, so while the dollar amount is small there is still a profit. I also frequently sell $16 items and occasionally sell $20-$30 items which balances it out.

--------------------------------

Now lets go a little deeper into it. I list about 200 items a month, and generally sell about 80 per month (both old and new stock thanks to free relistings). So for every 5 items I list each month, I sell two. My time for each sold item is about 10 minutes, and for each unsold item (so no packaging time etc) is about 6 minutes. That means 5 items, two of which sell, take me about 40 minutes including a little extra time. I am guessing here, but I would say my average profit across all my items is somewhere around $8. $16 for 40 minutes work, which equates to $24 an hour. That is pure profit after stock purchases etc. For me, this is quite worthwhile, I am a stay at home mum who works on ebay around 8-10 hours a week, making right around $200-$250 a week in actual profit.

But, it would definitely be a very different story if my stock costs wern't so low. If I needed to take another $4 an item out of that to purchase the stock the model wouldn't be sustrainable (having said that, if you're buying new stock your salethrough rate might be better than 2 of every 5 listings, and your per-item time spent is much less since you are not doing unique listings for every individual piece but rather might be able to sell 100s of items from one listing, so it's an entirely different ballgame and one I have no math for.)

Re: Selling Fees

surfsunrise — Fri, 19 Dec 2014 01:56:12 GMT

Thanks, useful info.

Re: Selling Fees

surfsunrise — Fri, 19 Dec 2014 01:56:42 GMT

Thanks for reply, gives me more insight.

Re: Selling Fees

surfsunrise — Fri, 19 Dec 2014 01:58:06 GMT

yep me similar although first month selling seriously so will be learning and trying to better that.

Re: Selling Fees

surfsunrise — Fri, 19 Dec 2014 01:59:07 GMT

Thanks. Pretty detailed reply and I appreciate it. Great info.

Re: Selling Fees

surfsunrise — Fri, 19 Dec 2014 02:02:39 GMT

Also, if someone is looking at doing this as a legit business when you take into account all the fees then having to pay tax etc it seems like a hard way to make a buck. The markets sounds good to me.

Re: Selling Fees

clarry100 — Fri, 19 Dec 2014 06:21:07 GMT

There are other costs that you may incur if you are working at home as a business rather than a hobby seller.

You would have a certain amount of the floor space (as a percentage of your whole house) dedicated to your ebay business.

This means that this percentage can be a tax deduction (if you are declaring your sales income to the tax man).

These are costs such as:

rent/mortgage interest (Interest only component if you have a mortgage)

Electricity

Telephones

Other utilities

Internet

Insurance

Council Rates

There may also be other things that are claimable too.

Storage bins/shelving etc.

Computers (depreciation)

Camera

Desks/tables & furniture you use

Cost of other relevant assets.

And if you use your car to go to the PO every day keep a vehicle log as that expense is also deductible.

Stock value at year end and new tax year beginning is also required. Hence the need for annual stock-take.

It's not too hard to collect all this info. Your tax agent will be able to give detailed advice.

Re: Selling Fees

goodchinagalore — Fri, 19 Dec 2014 06:41:52 GMT

If considering claiming a percentage of mortgage interest based on floor area as a tax deduction for a home office / study, one should first do the sums to calculate whether it is financially worthwhile or not, as claiming a proprtion of the mortgage interest paif for the family home automatically means that one will be liable for capital gains tax on that proprtion of the floor area claimed, when the family home is finally sold. If it is calculated to be financially advantageous to claim it as a tax deduction with the ATO, then it is advisable to get a registered valuer to value the family home before the claim is first submitted to the ATO, to provide a "capital base" for calculation of the capital gains tax due when the family home is sold. If a proprtion of the mortgage interest is not claimed, then the family home is of course completely exempt from CGT when sold.

Also, one needs to be aware of the "letter of the law", in that if a percentage of the mortgage interest is claimed, the home officce/study for which it is claimed should be used exclusively for business purposes and not used for any other 'non-busineess' purposes (e.g. as a guest bedroom), although the chances of being audited & detected for doing so are of course very low. if randomly audited by the ATO, however, it would be a good idea to remove the fold out bed (& any boarders in residence!) from the office / study before the ATO man visits! Same sort of rules as for investment properties, which if negatively geared should not be used as a family holiday home...

Re: Selling Fees

clarry100 — Fri, 19 Dec 2014 07:25:48 GMT

What you say is all very true.

The CGT we could be subjected to some time into the future will be offset by a fairly large capital loss incurred and on ATO record as a left-over from the 2008 GFC crash. That holds in perpetuity. So if we ever had to invoke it then the loss would be put to good use in that way at least.

Yes the floor area claimed used must be used exclusively for any business. In our case we have set up what was the garage of our house and it will never have a car in it. That space is 100% for our ebay use exclusively.