Wednesday, March 30, 2016

Let's talk about fees...Baby???


So you found a product for $1 and it looks like it is selling for $5 on Ebay!!!! OMFG!!!!! $4 bucks easy money….next Ebay millionaire…maybe not.  Ebay in a surprise business move has decided to charge people fees to sell on it…I know that it sounds crazy but it is what it is.  What does this mean for you?  That $4 mad profit could become a negative profit item…This=not good for business.  The other side of it hits you when you collect your payment…no one is paying you in beads and trinkets,  and someone is going to charge you a fee for taking your credit card payment.  That someone, for me, is Paypal!  I personally love Paypal, it just simplifies everything and has great reports and functions if you end up registering a business account.  The downside to all of that is that they will hit your money for 2.9% + .30 cents.  How do we avoid selling items that actually lose us money?


You need to know what your fees are!  As I said in the last paragraph, both sides of the transaction are going to hit you for fees, and you need these numbers to factor your profitability.  The simple breakdown is: 

Paypal: Paypal charges 2.9% of the total collected, +.30 cents.  An example of this on a $5 sale is .445 cents (2.9% of 5=.145 cents+.30 cents)  Not too shabby!

Ebay:  I have an Ebay store, which does get you a discount on final value fees.  My average final value fee is 9%, which sounds like a lot, and in the grand scheme it is.  That said, you would spend far more in advertising than that 9% to hit the size audience that you get on these massive sites.  There are also categories that have even lower fees than 9%, but I wont be getting into that in this post.  A simple search will give you those answers.  A typical $5 sale for me on Ebay would have a fee of .45 cents.  Combine that with the Paypal example given above and your total fees would be about .90 cents.  Obviously there are shipping charges etc…but this at least give you the gist.  Now you just take your selling price, minus your fees and your product cost and there is your profit!  (This also does not take taxes into account,  but I am not an accountant)


I hope this helps!

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