How to make buyers pay for PayPal fees!

[rewelu]

Hi All!

I just became a Powersellers today and am very pleased. I ship a lot of different items around and was actually shocked to find that I made Powersellers.

I see that a lot of people complain about shipping and Paypal costs. First of all check to see that you currently are receiving Merchant Rates at Paypal. It is 0.5% lower than the Standard Rate.

Also, I have developed a calculator (Excel Based) that allows you to charge a shipping price that makes 100% sure that the buyer pays for the Paypal fees. It factors in eBay fees, actual shipping cost, extra marketing enhancements (bold, etc.) and any other percentage rate that gets applied to your final price (eg. AuctionWorks and other back-end sales managers). It took me about half a day to come up with the algebra, but it saves me a lot of money and avoids me guessing shipping prices.

This also allows me to charge fair shipping prices, yet still be competitive. For all you sellers that list in US$, it includes a exchange rate calculator with a real-time feed from www.xe.com.

If anyone is interested, give me an e-mail and I can send you a copy.

It really is very cool and would help you a lot in making future shipping decisions.

[amberwoodottawa]

I am almost 100% certain that it is against eBay policies to have customers pay your PayPal fees and eBay fees (eBay owns PayPal).

You had better check this out super fast or you could have your account suspended from selling and loose your PS status.

Go to the Seller regulations help area and read up. I dont think that I am wrong on this.

Malcolm

[amberwoodottawa]

Here is the eBay rule concerning this:

"Payment surcharges
Sellers may not charge eBay buyers an additional fee for their use of ordinary forms of payment, including acceptance of checks, money orders, electronic transfers or credit cards. Such costs should be built into the price of the item -- this policy reduces the potential for confusion among bidders about the true cost of an item. Further, some forms of payment surcharges, such as credit card surcharges, are forbidden by law."

Here is the link : http://pages.ebay.ca/help/sell/policies.html#surcharges

There is another section dealing with what is an acceptable shipping charge being the cost of the carrier plus a nominal amount for packaging etc.

Like all businesses, you must factor the cost of doing business into your selling price for your item. If your auctions start at $1 with no reserve, then you win some, you loose some but dont add your PayPal or other fees into your shipping costs or eBay wont have you around selling for very long.

Malcolm

[rewelu]

I appreciate all your advice and am happy to find out that it is not allowed. I will definitely change my ways of calculating shipping immediately.

I hope that no one reports me for this ... I was not aware of the legality issues behind this.

Sorry! Just trying to help!

[amberwoodottawa]

No problem
Being a Power Seller now (Congratulations) that is one of the good things about these forum boards where you can count on other Power Sellers for support and ocassionally some fun.

As a matter of fact, the board is probably the best thing about being a Power Seller.

Malcolm

[auctiondropnship]

Actually what you are doing is not wrong and is done by most sellers on Ebay . Generally we call it shipping and HANDLING fee

Everything you do is within the terms of Ebay rules . Howver you can not state in the auction . If you with paypal we will change 2.2% of the total sale

However you can say
If you pay with Cash we will give a 2.2% duduction of the total sale

[systemagic]

rewelu,

Your good intentions are well-recieved. I didn't know about the Paypal merchant rate. I just applied and was immediately accepted. Thank-you!

Marty

[jaymor8]

But, if we could do that...it occurs to me that the shipping fees would be monumental???? To cover all fees, both ebay, paypal, postage and supplies, I would think that my S/H would be up to about $14 USD. 😄

Criminy, folks complain enough with what I DO charge, I can't imagine having to deal with more whining and less business 🙂

Jackie...

[rewelu]

You would be surprised some times. The general trend I have found is that the Shipping and Handling fee, in US$ is about the same as what shipping costs in CAD$. For example, if the shipping cost me CA$20, the shipping and handling will be about US$20 depending on exchange rates.

None of my customers have EVER complained about shipping. However, I won't be doing this as it goes against eBay policy (SHUKS).

[amberwoodottawa]

rewelu
You are able to charge an amount for shipping and handling that covers your costs of packaging materials, time and delivery to the carrier you use and there may be enough room in that for you.

My listing fees and eBay and PayPal commissions that I pay are way to high due to the way that I list my items for sale and the average selling price of my items.

However I chare and amount exceeding actual shipping charges as I add packaging materials and at least 50% of the boxes that I use, I custom make/fit for what I am shipping.

Ideally you are hoping to recove ALL other expenses in the selling price for your book or you are running too thin a margin to have a profitable eBay business.

If you must depend on shipping charges to recover your costs and give you your profit then you should be looking for different items to sell.

Maloclm

[rewelu]

Hi Malcolm,

Thanks for your input. I have a very high profit margin actually, but remeber, I try to keep most of my expenses in the shipping charge, however still give an attractive shipping price.

I try not to factor it into my selling price as then I would be hit with higher final value fees and so my profit margin goes down.

I am very fair with shipping and am not the most expensive, but not the cheapest either. This way the buyer and I are happy and I can control costs.

Thanks,

Hendre

[mevans_dot_net]

With respect to the Paypal Merchant Rate, it’s great that it was mentioned again. I see it already helped someone else. Paypal doesn’t advertise this so people often find out through the PS boards. I was lucky enough to have another PS clue me in early on, otherwise who knows when it would have come up in conversation again here.

The issue of padding your shipping prices to cover fees is a tricky one. Sure you can add handling, most of us do. The amount varies with the packaging required and the market standard. For instance, Malcom can pad his prices quite a bit considering the difficulty of packing a musical instrument for safe delivery. But regardless of fact Ebay doesn’t condone anything more than reasonable increases to cover handling/packaging, it’s not something I’d recommend. Rewelu you’ve said you haven’t had any complaints, but you’re also fairly new at the game. Buyer’s find it VERY irritating to pay $8 for shipping and find postage reading $5.10 for a book you only had to slip in a padded envelope (my numbers are examples, I’m not sure how much you’re adding). The amount of irritation is also relative to the price of the item, so someone selling something for $250 and padding the shipping by $3 may not have a problem but if your prices are on the lower end it can be very different. I’ve seen sellers have an item go at $.99 when it was worth a lot more (they start bidding low to create interest) and then they have a shipping charge of $10. They got NEGS for this, even though the buyer got an item worth a lot more than the whole $10.99 they paid. If you use Canada Post’s OBC, buyers don’t see the postage but if you’re going to the counter, save yourself the grief. The additional FVF paid on the $3 is only something like $.15 right? Not worth a neg, IMHO.

[phoenix_top_drawer]

Hendre

Congratulations on becoming a power seller.

We do a lot of serious packing in our business. Usually we have to build houses for the items we ship. It takes a lot of time and packing material. Lately we have added a note on our shipping information letting people know that we have to overpack for their items to arrive alive. This cost has to be factored in to the shipping price. I find that as long as you communicate to your customers that you are willing to go that extra mile to see that their precious cargo is not going to break enroute, then they are happy to pay the extra.

Joanne

[mevans_dot_net]

Phoenix, that's true if you're charging extra for packaging and the buyer will see that extra work and care when their item arrives. The OP was referring to the addition of fees, ie. Paypal (as in thread title). A book takes much less creative packaging than shipping a lamp so the amount of legitimate padding on your shipping charges will vary with the item.

[shooger]

I make my buyers pay my PayPal fees. I charge $2 for shipping which pays for my stamp, eBay fees, and PayPal fees, unless the item costs more than $7 in which case I lose a small amount. It's true that increasing your shipping cost for larger items to pay for PayPal fees is against eBay rules, though. EBay owns PayPal and doesn't want sellers doing ANYTHING that will take anything away from the incestuous relationship between the two companies.

[shoplineca]

If each of us ran a full costing system you would realize that you are not truly recovering your eBay and PayPal fees in your postage or delivery charges.

Example in point, you must cost the expense of the envelopes, the time to purchase your envelopes, complete, print and attach mailing labels, time and expense to take packages to Post Office etc.

Similarly, your costs in time to list items, answer emails etc. If you were paying employees to do this, their hourly rate would be factored into the cost so that you could arrive at a true 'per envelope' mailing cost and true management costs in running the business.

You may be calculating what your eBay and PayPal fees are and allocate a shipping charge sufficient to recover those fees but you are writing off other costs (some hard costs, some soft such as your personal time) at the same time.

In the accounting world, marketing and finance costs (eBay and PayPal fees) should be something that you are covering in the selling price of your item. If you need to recover eBay and PayPal fees from shipping costs in order to make a profit from your selling price, then it is time to look for other items to sell, you are living on too tight a margin to make a buck unless selling hundreds of thousands of those items per month.

In the accounting world, you are supposed to charge GST on your shiping charges for goods sold within Canada, so ideally, subject to an audit, you could be liable for paying the Government 7% on that "padded" shipping amount that you charge your Canadian customers.

I just believe that you should always look at what you are selling and if you cant make a profit off of the selling price, move on and sell something different.

Just like in WorldCom or Northern Telecom, you can only play with the numbers so long before people realize that you arent making the profit you say you are.

In this case, we are only fooling ourselves by showing a profit from sales when we have to allocate some of the fees associated with selling the item to shipping charges.

Malcolm

[ospreylinks]

Okay I am confused..... at the initial post isn't rewelu just calculating all his costs including payment processing and factoring this into his selling price. The fact that he said he has found a way to make the customer pay Paypal fees is somewhat a misleading statement, instead he has devised a pricing system that ensures all his costs are covered with a reasonable profit margin.....

Gee, isn't that how any business sets their prices after taking all extraneous circumstances into account.

So instead of saying How to make buyers pay for Paypal fees, it should have been entitled I have a program to calculate pricing taking all into consideration...

Jeff

PS - I may be out of the loop on this and someone may have already responded similar to me as I just glanced through the thread.

[shoplineca]

Jeff,
No, he had been incorporating the fees into his shipping costs. The spreadsheet program he wrote factored into it the selling price of his item and then calculated the eBay and PayPal fees based on the % charged against the selling price plus listing fees plus postage cost.

My point was if, after correctly charging the eBay and PayPal fees against your selling price, you find that you are selling for less than cost, you should look at a new line of products to sell, regardless if you are able to recoup those fees in the shipping costs you charge your customer.

You dont play with financial numbers to fool yourself or you will end up the looser. If you can recover some costs or labour against shipping charges levied, great but that had better not be your only profit.

Malcolm

[ospreylinks]

I am going to have to read through this thread again.

Jeff

[rewelu]

Hi Malcolm,

My new product line, I make a return of 100%. Profit margin is definetly not of concern to me.

All I tried to do with this calculator was to cover my PayPal and eBay fees. At no time, did I mention or even imply that I was covering ALL of my costs. I try to factor in as much as I can, while still offering a VERY COMPETITIVE shipping price.

Check out my eBay item#8105930389. I had 9 of these to sell. They went within 23 hours. Check the shipping price. I covered all my eBay fees, PayPal fees, shipping costs and shipping materials.

This way the customer gets a HUGE deal and I maximize my profit margin. You mentioned factoring in time it takes, etc., but the profit that I make, definitely pays for the time I put in.

Thanks!

I appreciate everybody's imput and views!

Hendre