Ebay’s Free Insertion Fees Could Cost Sellers More in Closing Fees By Robert Almares on Thursday, May 21, 2009 4:07 PM2 Comments | Add Comment

If you haven’t heard, Ebay announced it will be giving sellers five free auction insertion fees starting June 16th recurring every 30 days afterwards. Ebay is hoping that these free fees, which usually only cost a few cents to a dollar, will convince more users to start selling. So should you buy into to the hype and jump in head first? Only if you want to bust your head open on the concrete floor.

What Ebay is not heavily publicizing is the fact that these “free insertion fee” auctions will be partnered with unprecedented closing fees. Under Ebay’s current auction structure, sellers are charged “final value fees” of 8.75% on the first $25 of a sold item’s price and 3.5% on the remaining amount. In comparison, sellers who use Ebay’s free listings must pay 8.25% on the full amount of a sold item with fees capping off at $20, or a $229 sale. What this means is that a seller will be saving money, but only if their item sells for $25 or less. To show just how much more you may be charged by using Ebay’s free insertion fees, lets compare final value fees charged on an auction of $229 under both types of listings.

LISTING TYPE	FINAL VALUE FEES CHARGED ON $299 SALE
Free Insertion Fee Listing	$20
Regular Style Listing	$9.33
Total Difference	$10.67

A free insertion fee auction with a maximum charged fee of $20 would cost a seller $10.67 more than if they were to pay for the item’s listing. For further comparison, here is a chart showing how much an item would have to sell for in order to be charged $20 in total fees under normal paid circumstances:

AUCTION TYPE	PRICE OF SALE EQUAL TO $20 IN TOTAL FEES
$0.15 Listed Auction	$530
$0.25 Listed Auction	$527
$0.35 Listed Auction	$525
$1.00 Listed Auction	$505
$2.00 Listed Auction	$477
$3.00 Listed Auction	$448

Even under the most expensive types of auction listings, a seller wouldn’t be charged $20 in total fees until their item’s sales price reached an amount of almost twice that of a free auction listing.

What does this all mean?

If you plan on selling something that you know will sell for less than $25, then using Ebay’s free insertion fee listings would benefit you most. If you have items that are more expensive, make sure you list them after you have used up your free insertion fee listings. If you don’t have anything cheap to sell, then simply make auctions for things that probably wouldn’t sell at all, such as pencils or dirty napkins, in order to use up those five free listings. Even if they don’t sell, which they probably won’t, at least you’ll be saving yourself a price gouging courtesy of Ebay.