HANDLING FEES: PRO or CON?

[momcqueen]

There is probably no more divisive topic on ebay than the issue of charging handling fees with shipping. You will find members either fully in favour or fully opposed. I am creating a new thread for this because I, among others, have strong feelings one way or another and they are threatening to overtake another member's innocent question. (See: http://community.ebay.ca/t5/Seller-Central/Ebay-charging-the-buyer-more-for-shipping-than-it-is-cost....)

So let's have it out here. 

Handling fees? Do you use them? Do you not? What amount do you set and how do your buyer feel about that? Are you a buyer? What's your limit or expectation for the amount of handling fee that you are willing to knowingly pay?

For the record, here is what ebay has to say about Handling Fees as policy and procedure. A search for the term 'handling fee' leads me directly to the answer 'excessive shipping cost' which already sounds biased and says: 

Sellers are allowed to:

• Charge actual shipping costs
• Include the cost of packaging materials, insurance, and delivery
• Include delivery confirmation or extra services in the handling cost

Sellers aren't allowed to:

• Charge more than the maximum shipping costs in categories with shipping caps
• Charge a separate fee for insurance
• Charge for business-related fees such as employee wages or gas mileage
• Include contradictory or confusing shipping terms in the listing

http://pages.ebay.ca/help/sell/reasonable-shipping.html

http://pages.ebay.ca/sellerinformation/seller-protection/best-practices.html

Can anyone chime in with additional links? I'm looking for one I remember seeing a long time ago that specifically prohibits excessive shipping and handling fees but does not specify what actual amount is deemed excessive. It was part of the old Help pages and many have been replaced since. I wonder if it still exists. It may have been tailored to a buyer's perspective. 

Let's have at 'er. 

[ricarmic]

Hmm it depends I guess on how one defines handling fees.

I do not charge anything that I refer to as or that the buyer sees referred to as handling fees.

Most of my items shipping to North America are "free shipping". Some of the shipping charges to international locations are a bit higher than the actual postage on the envelope (the difference is 50c), but I don't recall the last time someone mentioned that. If they do, I have a prewritten thing that explains that insurance (self) is included and if I were to insure from the PO it would be much more.....

However, I have to recover the cost of supplies, "cookie jar insurance" etc, so the amount I "add" to the price covers the postage, and these other various things.

The buyers don't know the components of the "free shipping price" but it includes things that can be considered handling fees. 

What I mean is if I buy something and I need to get $X for the item to recover my margins, after that I add another amount on top of that to cover postage and handling fees, ie $X + $HFetc = final item price.

I've developed this since the "eBay days" began. In the pre-internet world, everything I sold was "free shipping". When eBay etc came along, shipping was originally separated out and I began to think of it differently (only online, I've always sold stuff non-online shipping included). I've evolved it over time since the free shipping era came along so while I think of shipping etc fees differently, all these cost have always been recovered, perhaps not as consciously as now but they've been recovered.

So there you go, do I charge handling fees or don't I??

[pjcdn2005]

That was basically my point in the other thread. You and I might not have a separate amount stated as a handling fee but ultimately it is the buyer paying for those expensive whether the cost is in with the shipping cost, the item price or as a separate handling fee. It all comes out the same in the end for the seller although the buyer may perceive it differently if it is set up as a separate fee.

[rose-dee]

With the emphasis practically everywhere on free shipping (whether actual or built into the item price), handling charges have become more or less poisonous, both from a buyer's viewpoint and for a seller's bottom line.  

The online market has changed radically in the past 5 years.  EBay sellers need to stop thinking they can continue to operate as if it were still 2010.  Consumers on the whole are sick of add-on fees (including taxes) generally, evidenced by the many HST-free and fee-free or interest-free promotions run by big retailers.  At worst, it's better to charge a dollar or two more for an item than to tack on a handling charge as a visible extra.  I feel the same applies to "restocking fees".  As a buyer, I'd avoid purchasing from a seller who would charge me extra for returning an item.  Just because eBay permits both types of fees, doesn't mean they are good choices for business. 

I have subsidized my buyers' shipping costs for about 5 years now on eBay.  As a result I lose money on almost every sale due to shipping costs, but can do it thanks largely to the U.S./Canadian exchange differential.  It was different in earlier years when the $CDN was at par, but then I was getting my raw materials and supplies from the U.S. at par.  I've been in this for the long run, and it all comes out in the wash.  I have more respect for my buyers than to try and fleece them for every nickle and dime I'm permitted to charge.  Ultimately I believe that will just lose me the repeat buyers I value so much, and the new, uncertain buyers who are comparing me to my competitors.  

I guess I'm on the side of no added fees, eh?

[momcqueen]

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@pjcdn2005 wrote:

That was basically my point in the other thread. You and I might not have a separate amount stated as a handling fee but ultimately it is the buyer paying for those expensive whether the cost is in with the shipping cost, the item price or as a separate handling fee. It all comes out the same in the end for the seller although the buyer may perceive it differently if it is set up as a separate fee.

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Right. And I agree with you and rccarmic on this as far as I add any fees I require for 'handling' into my asking price where they are unlikely to cause offence.

But for ebay purposes, that handling fee is added to postage. As in Shipping and Handling. 

I abhor handling fees as a buyer and relate it to a mandatory gratuity in advance on what may likely be poor to mediocre service. 

This is the reason I trumpet 'no handling fees' in my own listings and undercharge for postage so that I can take whatever I might need to cover packaging materials from my already-ample asking price. This is the same price-setting analysis that I use to factor cost of listing, FVFs fees, hydro electricity and whatever else I need to expense before I see profit on an item sale. 

Handling fees have a bad name. I avoid them at all cost. Had I not been insulted two dozen times by USA sellers when I was primarily a buyer here, I would not feel this way. Paying $14 USD handling on a $12 item where postage was already $13 USD is 'excessive' to my mind and no amount of 'it takes me three minutes longer to complete a Customs form and besides that I don't like selling to you nasty Canadians' is going to change that. 

As a buyer, this is how I see handling fees. Let's say I have $50 to spend online getting a cast-iron frying pan. I search. My top three choices are:

Option A. $50 cast-iron frying pan FREE SHIPPING

Option B. $30 cast-iron frying pan and $20 shipping

Option C. $20 cast-iron frying pan and $30 shipping

Apples to apples, right? Each costs me $50 and badda boom, I have a new frying pan with which to cook or clobber people.

Not to my mind.

I'm going to assume Option A has a built-in shipping of about $20 since it appears to be the median value of postageon an item of this size and weight. But then I really have no way to know that and it's just a guess, also does that mean I'll be getting a frying pan that's worth $20 or $30 in quality? Also, I may assume that Option C is adding $10 USD handling to compensate for the lower asking price which I don't think does him any favours since it makes his product suspiciously cheap to my mind. Most likely, I would choose Option B and assume that $20 is the actual cost of postage on a medium-grade frying pan.

Now let's say that I go with Option B and get a decent frying pan but see that postage only cost $15 and there was a $5 handling fee built into that. Will I be upset? Not over $5 most likely but if I see that postage really only cost $5 and there was a $15 handling fee I will feel as if I have been tricked into buying something that has now not met my expectations. Maybe Option A would have been a better choice, or perhaps I unfairly judged the seller of Option C who had a really great frying pan but legitimately higher postage costs because they are rural or remote and I unfairly misjudged their offer.

Because Handling fees are 'hidden' they breed to me mistrust. I don't like not knowing exactly what I am paying for. This is online shopping, we have to make assumptions if we are to buy things sight unseen so the more upfront information about something, the better. 

But that's me. I probably spend more time thinking about it than most buyers. 

[pjcdn2005]

I guess I'm not really sure either what you mean when you write about handling fees as even if a seller has a separate handling fee, the buyer would be unaware of that as it isn't shown separately. All they can do us compare the cost of postage on the package to the amount they paid.  Are you calling that difference the handling fee?  

Looking at one of your listings, your TP USA price is lower than your cost so you must be absorbing that extra amount as well as shipping supplies into the price of your items?  I think that's what many of us do.  For example I may charge $4.99 for shipping that is going to cost me $8+ but I do take that into account when figuring out what to charge.   I  don't specifically  add on $x to the price because my shipping is lower but the total cost + shipping is based on total expenses and how much I want my margin to be on that item. I'm probably not explaining that well.

[momcqueen]

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@pjcdn2005 wrote:

I guess I'm not really sure either what you mean when you write about handling fees as even if a seller has a separate handling fee, the buyer would be unaware of that as it isn't shown separately. All they can do us compare the cost of postage on the package to the amount they paid.  Are you calling that difference the handling fee?  

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Yes. 

That's the same thing as what ebay considers a handling fee, is it not? Cost charged to the buyer above the actual cost of postage. But lumped in with the Shipping charges. Like a seller sees done when they set up their listing to sell.

[momcqueen]

[momcqueen]

Sellers have to do their own math if they want to charge a Handling Fee with flat-rate shipping. 

[momcqueen]

Displayed as thus to the buyer on their invoice. Shipping and Handling:

[pjcdn2005]

I was typing while you basically answered the question I was typing about.  I don't think I have ever noticed a $5 or $10 handling charge on eBay.  When you brought up the handling charge issue we were talking about another sellers concern about charging more for postage than what they paid because of the PayPal discount.  For me that is rarely more than $2 or $3 and I don't think that is an unreasonable handling charge,  those are the amounts I thought that you were referring to.  I don't think much more than that is a good idea, 

[pjcdn2005]

Yes I know how to set it up and how it works.  My point was that the buyer sees it only as shipping and handling,  not as 2 separate numbers.  

[momcqueen]

Right-o. Like I said, a handling charge of a buck or two won't get my knickers into a knot this same way that a handling charge of $15 will. But there are buyers for whom even an extra $2 may seem like an insult, especially if they already feel the amount displayed for Actual postage cost is too high. They might be new to buying online to just grumpy in general. Or blissfully unaware of the cost of using Canadian postage in comparison to cheap China shipping or domestic USA

With the previous poster on that other thread who is fairly new to selling, I do see why he or she may be concerned that ebay is displaying a higher cost for postage than he is paying when he prints the label. If he's only had a few feedbacks, he cannot absorb low DSRs as easily as many of us sellers with a higher count. Even though those DSRs don't count for defects anymore, they still do display to potential buyers and act as either a lure or turn-off. 

[momcqueen]

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@pjcdn2005 wrote:

.... My point was that the buyer sees it only as shipping and handling,  not as 2 separate numbers. 

Until they receive their parcel and see the postage paid stamped right on the top corner and get angry it cost the seller less than they paid as the buyer and then think the seller is pulling some kind of fast-one. Or check it online themselves with the dimensions and weight handily ready for them to do so. 

I would actually agree with the latter: two separate numbers shown to the buyer, one for postage and the other for handling with a subtotal for both. That way, nothing is hidden and everyone can make an educated choice as to whether that is the right amount for them. But it would require ebay to be able to calculate actual cost of that postage service based on the available paypal discount, and I don't think the programming is capable. 

[lucitabby]

As a seller, I do not charge a handling fee.  This is fine for me as I do not have store fees, electric or gas fees that are increased by what I do on eBay.  Packing supplies - boxes, envelopes, etc., I get for free from various sources and friends.  I do buy tape from Costco.

As a buyer, if I see a handling fee or exorbitant postage, I move on.  There is nothing I need or want badly enough to be annoyed with a transaction before it even happens.

If I offer free shipping or reduced shipping, I usually add a dollar or two to the item price.  (unless I have had the item for years and just want it gone, then it is a reduced item price and free shipping - just take it!)

[recped]

There is probably no more divisive topic

Who leaves feedback first takes that prize!

I`m an online seller, I sell goods and I sell services, I like to make money on anything I sell and that includes services like shipping.

I price my shipping pretty much like I price my goods, competitive with the current market. just as I make an effort to obtain my goods at the lowest possible cost I use my skills to ensure that I pay less for shipping than many other sellers. This enables me to be competitive AND make a reasonable profit.

Of course sometimes I will take a loss on shipping just as I will take a loss on an item in order to make a sale, I might even subsidize shipping 100%

What my cost for the item or what I paid for shipping is not relevant to buyers, their only concern is what THEY are being charged and is it a competitive price.

Before fees on shipping eBay had a legitimate right to place some (unenforceable) restrictions on shipping and handling as it was a clear method of fee avoidance (and unfair to shipping included sellers). Since fees on shipping were introduced that particular issue was dealt with and this left only search manipulation as a reason to have controls, even that is limited as Best Match considers total price and buyers have the option to sort search results by total price.

Now here`s where I differ a bit with those who make this subject `divisive`, splitting up your revenue sources is a matter of individual choice based on your business plan and your marketing plan so there is no right there is no wrong, there is no ethical there is no unethical. There is only what works best for you.

My business plan calls for a minimum 75% gross margin on goods and a 30% gross margin on shipping, my marketing plan calls for shipping charges to be listed as a separate line item and to be middle of the pack or less than what other sellers charge.

Personally as a buyer I shop total price, I could care less how you split it up.

[momcqueen]

Too true. Next week, tune in for a discussion on 'Who Leaves Feedback First?' Same time, same channel.

[i.am.vivian]

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@lucitabby wrote:

There is nothing I need or want badly enough to be annoyed with a transaction before it even happens.

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LOL!  Well said!   🙂  

[marnotom!]

The way I see it as an occasional buyer and pretty much retired-seller is that shipping is a commodified service offered by the seller, and as such the seller is fit to charge whatever they feel that service is worth.  Whether it has any relationship to the actual costs of that service is irrelevant.

Like other sellers posting to this thread, sometimes my wife and I have charged less than actual cost on shipping, while sometimes we've charged a bit more.  

[sylviebee]

When I first started on eBay when handling fees were common, I asked a seller if he had handling fees and his response was:   "If I don't handle the item, I don't sell it,"  and that has stuck with me because he nailed it.

What exactly is a handling fee?

Is it a surcharge that's added to the bill to compensate sellers for handling the item after it's sold? 

or............

Is it the seller's total profit and all the handling that goes into a sale from start to finish.

That is:  Does a 'handling fee" compensate sellers for a select portion of the work that goes into selling an item, or is it really total profit?

Everyone has handling fees, but calling profit a handling fee always hits a nerve so why do it?