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Does An eBay Store Make Sense For You?

Note added March 2012: In the 2012 Spring Seller Update eBay changed two items relating to deciding on a store. The first change was to make pictures free for all users. This shouldn't effect your decision to open a store since you follow my advice and host your own pictures.

The second change was to raise the limit on final value fees on non store auctions. Since the 2011 changes eBay charged 9% of the buyer's cost up to a maximum of $100. This cap has been raised to $250. Store listings never had a cap on final value fees, but did have a sliding fee schedule.

EBay changed their fee structure in July 2011 to give lower final value fees to Stores. But it's not a given that all eBay sellers will have lower fees with a store. This article examines the fees with and without a store so sellers can decide if paying the store fees will result in lower fees overall.

EBay has a history of announcing fee changes as ways for sellers to save money when the changes are really designed to increase eBay revenue.

An example of this was dropping auction insertion fees while raising final value fees in 2009. Based on the math I did at the time any item that sold for more than $10, ended up with higher fees after the change than before the change.

In the most recent round of changes eBay started collecting final value fees on shipping and handling amounts, and changed the final value fees for eBay sellers who pay the store fee.

Prior to this change eBay sellers without stores paid a final value fee of 9% of the selling price up to a maximum per item of $50.

Now eBay sellers without stores pay 9% of the ending price plus shipping and handling up to a maximum fee of $100 per item. (This maximum raised to $250 in Spring 2012.)

But eBay has offered a way to reduce the final value fees. Just agree to pay $15.95 a month for an eBay store and rather than collecting a flat 9% of the buyer's cost for the item, eBay will charge you a sliding fee.

Store owners pay final value fees of 7.5% of the initial $50.00, plus 4.0% of the next $50.01-$1,000.00, plus 2.0% of the remaining balance. This means a $500 sale results in final value fees of $21.75 plus the % of shipping - still higher than a year ago, but in this case lower than without a store. There's also an insertion fee for store owners, that is waived for the first 50 items a month for sellers without stores.

To determine if a paying $15.95 a month for a store would lower my total eBay fees, I looked at six months of my fees before the changes went into effect and calculated the fees for everything I sold. I found that in every month my total fees - this includes insertion fees and the store fee - are lower if I sell as store.

But that doesn't mean everyone will save money by paying the store fee.

Here's some general guidelines based on running auctions with an opening bid of 99 cents and no reserve.

If you sell at least one item a month for over $475 having a store will result in lower overall eBay fees. This is where I fall into. The fee savings on the higher priced items more than cover the cost of the store and the insertion fees on the cheaper items.

If you sell NO ITEMS FOR MORE THAN $50, you need to sell 46 items a month with auctions for an average of $30 each including shipping, to cover the store fees. This is because even though the final value fees are lower, there are insertion fees and the $15.95 store fee.

If you sell items for $50 including shipping, you must sell 25 of them a month to cover the store fees.

If your average sale is $100 including shipping, you must sell more than five items a month to cover the store fees.

If you don't sell on eBay every month, the savings in the months you sell need to cover the store fees in the months when you don't sell. Just take the number of sales shown above and multiply by 12 then divide by the number of months you sell on eBay. So if your average sale is $100 and you sell 10 months a year, you need to sell 6 items a month to cover the store fees when you aren't selling.

Fixed Price Listings

So far I've only been looking at auctions. Another option is Fixed Price Listings. The final value fees for Fixed Price Listings are the same for store owners as regular sellers. The only difference is store owners pay a 30 cent lower insertion fee. If all you do are fixed price listings, you must do 54 listings a month to cover the $15.95 store fee. If having a store makes sense for you because of your auction listings, having a store will result in lower costs for your fixed priced items.

Reserve Fees

(Updated July 28, 2011) The reserve fees for store and non store listings are the same. EBay's store fees page doesn't show reserve fees for stores, but these fees are collected. See Do eBay Store Owners Pay Reserve Fees? for a transcript with an eBay representative about this question.

Remember, store owners pay insertion fees ranging between 10 cents and $2.00 for each auction, while others get the first fifty listings free. This means a store owner needs to sell 15 items a month with a $200 reserve to cover the additional store fees.

If having a store makes sense for you because of your auction listings without reserves, having a store will result in lower costs for your auctions listed with a reserve that sell for less than $3912. (The 2012 update removed this upper limit.)

eBay Listing Upgrades and options.

Buy It Now allows a seller to state a price he will sell the item for while bidding is still active. A buyer who chooses to pay the price ends the auction. Don't confuse this option with fixed price listings.

Buy It Now costs between 5 and 25 cents per listing for store owners, but is free for the first 50 listings for non-store owners. The free insertions are ONLY for the first 50 auction listings. This means if you list 50 items without the buy it now option, then list with the option, you pay the fee.

I only recommend using Buy It Now with reserve auctions. For example an auction with an opening bid of 99 cents, a reserve of $250, and a BIN of $275. In this case the BIN gives pricing information to bidders and improves the chances of meeting the reserve.

All the other upgrades and listing options cost the same for eBay stores and sellers without stores. See my article on Using eBay Listing Upgrades And Options Efficiently for more information.

eBay Picture Hosting

Photo Hosting is free for eBay stores, but costs extra for sellers without stores. (Changed in 2012 update to give free photos to all users.) I've written many times that you will get higher prices by hosting your own photos.

If you are currently hosting your own photos do not start using eBay's photo service if you sign up for a store.

If you are currently using eBay's photo service and opening a store makes sense for any other reason on this page, open a store and you will save money. Then go read my free report eBay Images Made Easy and start hosting your own photos so you will get higher selling prices in your auctions.

Additional Considerations

Final value fees are capped at $100 $250 for non store auction listings. There is no cap on final value fees for store listings. This means an item that sells for more than $3912 $11412.50 will result in higher FVF for a store owner.

If you sell items for signifigantly more than $3912 $11412.50 regularly, I recommend listing them using an eBay account not linked to a store. See my article on Setting Up A Second eBay Account.

Terry


Many of the articles and free reports here on IWantCollectibles were originally sent to readers of my Antiques and eBay Newsletter. Not all articles make it onto the website, and readers also get notices of free reports and special offers.

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