Figuring eBay Consignment Fees
In the first article we covered some Tips for Starting an eBay Consignment Business. This article covers setting eBay Consignment fees.
Types of eBay Consignment Fees
Let's start by looking at some common ways eBay consignment sellers charge for their services. There are two basic ways - flat fee or percentage fee.
Most eBay consignment fees are based on a percentage of the selling price. I've seen fees ranging from 10 percent to 50 percent with the average fee being about 30 percent.
There are also some flat rate eBay consignment businesses. These charge amounts between 10 and 20 dollars per auction. There are few of these flat rate consignment businesses because charging a percentage based fee is more profitable.
For some consignments you may be able to get a flat rate and a percentage of the selling price. Some eBay consignment sellers charge a listing fee and a percentage of the selling price. Some do this on all auctions, some charge the listing fee only on items with reserves. I charge a flat non-refundable fee of 5 or 10 dollars for auctions with reserves if the seller specifies the reserve. Sometimes for large collections requiring sorting and cleaning I also charge an hourly rate.
Some consignment sellers charge the percentage on the selling price, some charge after the eBay fees are deducted. I figure my commission on eBay consignment items from the ending price. For example, if an item sells for $100, I get $30, and pay the eBay and PayPal costs from my commission. This makes the math easier, and allows the owner of the item to more easily understand how much he'll receive when his item sells.
Setting eBay Consignment Fees
When I wrote my eBay Consignment Manual, my average eBay fees ran just under five percent. Now they are about 9% due to eBay fee increases. If you factor in Paypal fees the number will go up by about three percent.
Currently the maximum eBay fees are 9% percent of the selling price plus the listing insertion fee. The final value percentage goes down as the price increases for eBay store owners. I have a store and list consignments starting at 3.99, so the insertion fee is always 15 cents.
With a 30 percent consignment fee, I net about 21 percent of the ending price of each auction. This includes PayPal fees.
Don't Get Distracted By Consignment Fees
After saying all this, don't get caught up in the percentage. Focus on the amount earned per item or per hour. You don't spend percentages, you spend cash.
If you charge a 30 percent commission on a $70 item, you will gross $21.00 before selling costs. The eBay and PayPal fees run about 11% on average, so you will net about $13.30 on a $70.00 sale.
If you figure the time spent listing and packing is about 10 minutes per item, it works out to $85 per hour. Depending on what you sell, your time should run from between 5 and 15 minutes per item.
I use a 70 dollar item because this should be a good average selling price for eBay consignment sales of antiques and collectibles. Antiques and collectibles take more time to list and research. You need to restrict your consignment sales to items selling for higher prices. I suggest trying for a minimum selling price of 30 dollars.
If you are selling large quantities of items with the same listing and picture, you could possibly make a similar hourly dollar amount with a lower selling price. For example, I am considering selling an item for $9.99 each. If I can sell enough of these in fixed price listings, I can still make 30-50 dollars an hour selling them. It will be difficult to make 90 dollars an hour, but it would be a constant stream of income, not requiring finding new consignors.
eBay consignment selling is a great way to get started selling on eBay. Consignment sales allow you to make money while you learn.
In Signing Up People For Your eBay Consignment Services, we'll talk about finding and signing up clients for your services.
PS Also check out my eBay Consignment Manual for an in depth explanation of consignment sales.
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