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.

[muminlaw]

Didn't turn me on! I'm not into pain and I thought it sounded purely painful -- it's all yours, biddie! You can have my share ...

[jaymor8]

And mine - I'm more a soft touch kinda gal 😉

J...

[shoplineca]

Hey gang its not a pretty picture thinking of a thorn up anyone's a$$.

Sorry to dissapoint some, but I am more of that softy romantic type preferring the palm trees, crashing surf, setting sun on the horizon, champagne chilling on ice, moon already in the background and not a thorn in site.

Or perhaps sitting HIGH and MIGHTY on a boat with some beautiful eBay lady and MY GANG sailing to different lands only to ward off an occasional pirate with a POT SHOT from my cannon.

Now that's romantic.

Malcolm

[jaymor8]

Now...that was worthy of Pulitzer 🙂

J...

[thebidwatcher]

Way to pull the plug on my wish list, Malcolm.

pffft.

Back to .com...

[rewelu]

WOW!

Hey ALL! My computer was down this weekend, so I was unable to visit and update this thread!

I couldn't believe how many e-mails I got, with people interested to have the spreadsheet! I will e-mail them out as soon as the computer's been restored to its previous state.

Thanks for all the input.

I think Malcolm has been of greatest interest as he has provided very insightful remarks throughout the thread.

This calculator is very nifty indeed, but remember it can also help you control your profit. Instead of guessing how much profit you're making or how much its costing you to ship an item, this is a much more accurate and easier way of calculating it.

As Malcolm said before, I am ready to expand, but without the correct mindset and accounting to go with it, the business is sure to be doomed.

I am very fortunate to be sitting on such a high margin; however, I don't want to minimize profit with unnecessary expenditures or over, or under, estimating shipping costs.

I was also thinking about Malcolm's comment about factoring in time spent doing everything associated with your eBay business. I believe that the profit should take care of that. This calculator, in essence, actually increases the profit, therefore you make more per hour/day, etc ...

I find quite amusing how the thread all of a sudden changes topic. I think "thorn up the A$$" was quite creative ... how long did you take to come up with that one?

I think this is a great topic to be discussed as it involves a lot of issues; however, can make life just that much easier and tantalizing.

Cheers,

Hendre

[muminlaw]

Hendre, this thread has, indeed, become tantalizing!! You're right, many threads have a way of taking strange turns before they find their way back to the original topic ... Jeff (ospreylinks) and I have a way of turning threads into golf discussions.

Malcolm, you almost had me until you started taking POT SHOTS! 😉 Jackie, I think DH Lawrence already got a Pulitzer for something very similar!! ]:)

Glenda

[shoplineca]

Hendre
when I spoke of measuring time to get envelopes, it was not directed to one's once in a month trip to Office Depot.

It was a generalization about all the time one devotes to their eBay business that sometimes can be taken for granted.

It is something that one must take into consideration if you are turning this business from a hobby into an income generating vehicle that you will eventually form some sort of financial dependancy on.

Clearly you have the right idea about tracking your hard costs and factoring them into your net proceeds from the sale of your products.

Just as you were shocked at how quickly you made Power Seller status, you could find your business taking off and to have, at the least, mentally prepared for its growth, you will be more assured of greater success and certainly able to avoid failure.

By considering your costs, you will easilt know where you are making your oney and where you are lossing money and be able to make adjustments accordingly.

Like I said earlier, from seeing your enthusiasm and your other posts, I think that you will be a great asset to this Board.

Malcolm

[shooger]

Hendre, you're amazing! You have an excellent grasp on economics, and your knowledge of programming is beyond reasonable. You've made about 40 friends overnight, and your business is prospering. Times are on the up and up, my friend, and I'm glad to count you as a fellow PowerSeller! Congratulations on everything!

I can't say the thorn in the ass thing was a turn on, but neither is the sun, moon, and surf. Soft and romantic? Hmmm... how about rough and frisky?

No? Okay, I need a cold shower, obviously. We had our second boy this week, so the cold showers have been frequent in the past 6 months or so. 😛

[*vforce*]

Well good evening to all... this is my very first visit to a PS Msg board... and it's been anything but boring!Toni (post 32)said it best... who needs Direct TV! Ultra Collection (post 34) brought up some good points, but I do disagree with one point... I'll cover in a moment. Jackie brought up a very good point and some wise suggestions for all to follow(post 37). I may be new to Ebay, but have "paid my dues" in general... if anyone wants me to share my points of view founded on 22+ years sales experience, combined with over 8 years management, most at a senior level... you may feel free to e-mail me as I don't feel I'll be investing too much of my time in these open forums. Back to post 37... Ultra made reference to "handling fees having to be a fixed rate"... Not So!!! Let me explain my take on all this... Here is Ebay's exact rule (important items to note are accented as >>_<<)...

"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.

Can a seller add a surcharge to the final price of an eBay item? >>>Yes, in three instances.<<<

Sellers may charge >>reasonable<< shipping and >>handling fee<< to the final price of their item, >>providing that this fee is disclosed up front in the listing.<< A shipping and handling fee can >>cover the seller's reasonable costs<< for mailing, packaging and >>handling the item<<. Shipping and handling fees >>cannot be listed as a percentage<< of the final sale price.


Sellers may pass along the costs associated with using a third party escrow service, if the buyer chooses to use an escrow service.


Sellers may choose to accept payment in a different currency than the currency listed on eBay. If the buyer chooses to take advantage of this optional payment method, the seller may pass along to the buyer any costs associated with the currency exchange, provided that the costs are disclosed and agreed to in advance by the buyer.
OK, so we all know we can't charge a premium for using Paypal... "Such costs should be built into the price of the item" ... hard, if not impossible to do on a low start no reserve auction right?... please follow me on this... Ebay clearly states "Sellers may charge reasonable shipping and >>handling fee<< to the final price of their item, >>providing that this fee is disclosed up front in the listing. ***BINGO***<< A shipping and handling fee can >>cover the seller's reasonable costs<< for mailing, packaging and >>handling the item... Did You Catch It??? "cover the seller's reasonable costs" for... "Handling Fees"... as per Webster's Dictionary>>> "Fees associated with Buying and Selling" WoW!!! Pinch me to be sure I'm not sleeping and dreaming! Ebay listing and final value fees, etc... ARE Reasonable Fees Associated With SELLING" ... therefore we are allowed to charge them as "Handling Fees" So Long As They Are "disclosed up front in the listing" Now check this limiting factor... "Shipping and handling fees >>cannot be listed as a percentage<< of the final sale price." ... however it is OK to state handling fees on items under $50 = X; items between $50 and let's say $250 = 2X; all items over $250= 3X... just an example!!! But before we all get excited over all this... Malcom and other's made some excelent points as to customer reaction to over inflated S&H fees... "Too high won't fly" ... you'll scare them towards other sellers. As well if you can't be making healthy profits on the items themselves, you'll need to be selling something different. The rule of extreme wealth would dictate "Double a dollar every month for just one year... you'll have turned it into $4096... do this once every two weeks rather than once per month and you'll have produced $16,777,216" ...Ebay is a licence to print money... if you don't truly believe it... just stick to having fun... for the rest... please visit my "AboutMe" page for some additional insight. Respectfully, Howard Brett

[shooger]

Are you, um, a motivational speaker? *somewhat paranoid glance to one side, then the other*

"Did You Catch It??? "cover the seller's reasonable costs" for... "Handling Fees"... as per Webster's Dictionary>>> "Fees associated with Buying and Selling" WoW!!! Pinch me to be sure I'm not sleeping and dreaming! Ebay listing and final value fees, etc... ARE Reasonable Fees Associated With SELLING" ... therefore we are allowed to charge them as "Handling Fees" So Long As They Are "disclosed up front in the listing" Now check this limiting factor... "Shipping and handling fees >>cannot be listed as a percentage<< of the final sale price." ... however it is OK to state handling fees on items under $50 = X; items between $50 and let's say $250 = 2X; all items over $250= 3X."

My dictionary's definition is "the process of packing and distributing merchandise". By that definition, eBay and PayPal fees aren't "handling". My interpretation of the eBay rule is that we can charge for the cost of shipping (the postage) as well as for the cost of packaging the item and a reasonable (ie: small) fee for our time and effort (the handling). Even if we use your dictionary's definition, and pay our PayPal fees and eBay fees with our shipping fee (which I basically already do), you hit the nail on the head - customers won't stand for it. The s/h fee is a farce, basically. I'd love to do away with it, except that by dropping my Buy it Now price and charging a shipping fee, I get away with a slightly lower Final Value Fee on my eBay bill. If you think about it, it's silly. My items range between a dollar and twenty-five dollars usually. My shipping fee for a single auction is two dollars. I COULD just say my $1 item is $3, and there's FREE SHIPPING! Wow. But buyers who search by price won't even look anywhere near my auctions. Some sellers do the opposite, and charge 1c for their product, and a $4 shipping fee. That really helps get around eBay fees, huh? $4 is crazy, though. I can buy an envelope, paper to protect my item, and a stamp to the US for $0.50. I charge $2 for shipping... that obviously covers more than the shipping and packing! $4 is plain stupid.

As for the idea of charging more shipping and handling for items that end higher, I have two problems with that. One, that's the same thing as charging a percentage. It just goes up only at certain increments, instead of at really small increments (like cents) if you were to calculate it as a direct % (like for example 8% of the final price). Two, buyers will bid "around" your pre-set increments. If they're going to have to pay $3 shipping for the item if it ends at $9 but $6 shipping if it ends at $10, guess where they'll bid? And once it's at $9, do you think you'll get another bid? Who wants to bid $1 more when they know it's going to actually cost them $4 more? I hope my point is clear to you, cuz it isn't to me. It's getting tired in here.

*passes out*

[shoplineca]

*vforce*
Welcome to posting on this board. The more people with their opinions is what helps all sellers. Whether you have 22+ years experience in retail or 5 minutes, one's experience, education or strictly common sense and entrepreneurial drive adds the twists and turns to these forums that assist us all.

The two things that sets this group out from other sellers on eBay is 1. We are Canadian (and yes there is a difference) and 2. we are Power Sellers (we have achieved and maintained a level of sucess in eBay's definition and are recognized as such).

Thats not a status thing, its a record of positive customer feedback and sales volume and clearly helps us to sell more.

There is an interesting thread on the US board recently started that parallels this one except it looks at shipping fees as a way of avoiding paying eBay fees.

The most extreme example of it right now is a US Power Seller selling Indian or Persian rugs at $0.01 start with no reserve but a shipping fee of $299.95.

He probably wont get customer complaints if people can purchase a $1,000 rug for under $300 delivered, but this is clearly fee avoidance. And there are many similar examples (purchasing airline points with $225 shipping and handling fees etc.).

So we now know that regardless of the rules which are there to provide fees to eBay and protect customers from misleading listings and getting hit with super high shipping costs, regardless of the description in the dictionaries, eBay apparently does not enforce its own rules.

So we get back to how to best market and sell our products so that the customer feels that overall they got a good deal from you and will leave positive FB and return to buy from you again, while making the most amount of profit that you can on eBay.

The one thing that we face every year is rising shipping costs that become very difficult to challenge. For that reason I prefer not to look at that area as being one to rely upon for profit or cost recovery for other areas in this business(in a long term business plan) and dont expect it to do much more for me than cover my true shipping costs which include packaging materials and time in packaging together with the carrier costs.

I suppose that coming from a manufacturing background, I prefer to know the areas that I can grow my business best down the road, those areas that I have some control over and certainly sourcing my inventories, negotiating with suppliers and obtaining volume discounts is the biggest area for reducing costs and increasing incomes.

There are fewer and fewer $0.01 no reserve auctions on eBay. Those days have come and gone. The bargains are there but not in the same quantities and most recently with padded and increasing shipping fees, its becoming cheaper to purchase the items locally in many instances.

eBay has been promoting sellers to open up their own "Stores" and while it will continue to host auctions, clearly shopping on eBay will become more of a "Shopping of Convenience" vehicle than its former "Unbelievably Cheap Deal Auction House".

Malcolm

[muminlaw]

"I can buy an envelope, paper to protect my item, and a stamp to the US for $0.50." ??

I don't know how you can protect your cards in a plain envelope with a sheet of paper. I sell postcards and use photo mailers at a cost of close to 50c each plus postage of 98c to Canada or $1.60 to the US. I figure the $2.10 I charge for P&H is just recovering costs with the Cdn buyers subsidizing the US. My handling fee comes out of the US exchange. Even when I sent them in a plain envelope with a couple of hunks of cardboard to protect them from rough handling and postal machine mangling, postage was sure more than $.50! What's your secret?

Glenda

[shoplineca]

Glenda
That's why if one doesnt pay attention to their costs, they assume they are making money when in fact they are not.

As a hobby I guess its not a big deal as so clearly pointed out in an earlier post, however the majority of Power Sellers want to make money and not just feed a hobby so costs are important.

That's why you and most other PSers know the true costs to package and send out your items.

Malcolm

[ultra-collections]

vforce, I can understand where you are trying to go, however you shouted "BINGO" to soon my friend.


Shooger is right, your method is the same thing as charging a percentage, only your percentage is hidden, you will have to have a formula to figure it out.

If 0-50.00 = a, and 50-100.00 = b

a will have to be a percentage of 50, even if you pull a figure form your head at let's say 8.00, well if your item sell for a buck + 800% in shipping, on the other hand you sell a ton of comics for 30.00, it will cost you 120.00 to ship them.

Unless you are always selling the same thing, it can not work.

25 000 dollar ring 3000.00 in shipping?

[shooger]

"I don't know how you can protect your cards in a plain envelope with a sheet of paper. I sell postcards and use photo mailers at a cost of close to 50c each plus postage of 98c to Canada or $1.60 to the US. I figure the $2.10 I charge for P&H is just recovering costs with the Cdn buyers subsidizing the US. My handling fee comes out of the US exchange. Even when I sent them in a plain envelope with a couple of hunks of cardboard to protect them from rough handling and postal machine mangling, postage was sure more than $.50! What's your secret?"

I apologize to the readers of this thread because I'm going a little off topic here.

Glenda, my "cards" are a collectible card game called Magic the Gathering, and they are about the size of playing cards. Buyers usually get 4 of each card in an auction (you can play up to 4 copies of a particular card in your deck). When I buy cases of the cards, inevitably many of them are useless for constucting a deck to play with. After sorting, I have tons of them set aside for "packing". They're completely worthless to sell. (Trust me, it's no loss - the cards that are worth selling can be worth as much as fifty bucks and up, each.) I swung past Staples yesterday and bought 1000 plain white envelopes for $15 including tax. That's 1c US per envelope. I buy the cheapest 8x11 blank paper when I find it on clearance, and have tons of it in my shipping closet. That works out to about .5c US a sheet after tax. I buy clear plastic sleeves by the box of 10,000 for $50 after tax, which works out to less than 0.5c US per sleeve. Stamps are 80c (to mail south of the border) and I buy them in rolls and don't pay tax, so they work out to about 50c US per stamp (considering some buyers are from Canada and only require a cheaper stamp). I take the cards the buyer purchased and put them between a couple of the useless packing cards, then slide all of them into a plastic sleeve. I write "thanks, please leave feedback" on the paper and fold it around the sleeved cards and slide it in the envelope. That's free packing cards, .5c sleeve, .5c paper, 1c envelope, and 50c stamp for a total of 52c US per auction to anywhere in US or Canada. Unless your cards are really heavy or wide, should they not be able to be mailed in a regular envelope with some thin cardboard on either side for protection? I've never had a complaint that my cards were damaged in shipment, and I've had about 4000 transactions. Some sellers that I've bought from shipped using hard plastic sleeves (expensive and heavy) sent inside large bubble envelopes, costing them probably $2 US in shipping fees and packing. My buyers are always happy to get my cards and I'm able to keep my shipping cost down to $2. That covers my 52c and the rest goes to eBay / PayPal fees which in reality are the bulk of the costs of doing busines here. My shipping cost is still on the low end of average in the Magic card market. For additional auctions paid for at the same time, I charge an extra 50c. Usually I'm able to ship them in the same envelope without extra postage or packing materials, so the 50c covers the extra eBay and PayPal fees incurred. While I generally don't make money on the shipping fee I charge, it does tend to cover the cost of all but the expensive (above $10) card auctions due to the higher eBay and PayPal fees of those auctions. I advise you to experiment with some other shipping methods, because that's where you can really cut down costs. If you're able to get your hands on some cheap lightweight cardboard, consider using my method of protecting your cards (between cardboard and paper - skip the plastic sleeve). Perhaps try this with a test batch. They should be shippable in either standard size or maybe greeting card size envelopes with just the normal 49c or 80c stamps. If it works, you'll probably be able to make your shipping cost more competitive and even cover more of your costs with it. If you try it, let me know how it works for you. If you were just challenging my claim to be able to ship so cheap, then poo on you! 😉 Just kidding about the poo. No poo.

ultra-collections, I agree. It's still a percentage, even if it's on a sliding scale of some sort. I don't think eBay would even enforce their own rules however, but that's a whole new ball game.

[muminlaw]

No challenge -- I was really curious because even when we did it the way you describe and yes, postcards do fit in a standard #10 envelope, the extra cardboard brought the postage rate up over the basic 30 gram rate, plus the time we spent scrounging for sturdy enough cardboard to be protective (not to mention the snide comments about dumpster-diving), and then cutting it to size -- it all seemed to me to be more trouble and time-consuming than it's worth! And you've been lucky with no damage and, trust me, when one is damaged it's never a $10 or under card! I guess one of the major differences is that a postcard that's not worth selling (and there are a lot of them) is also not sturdy enough to be worthwhile as protection. Anyhow, thanks for taking my question seriously -- I didn't realize that magic cards are that much sturdier card stock than postcards -- maybe I should be buying some of your unsaleable stock to use for packing material?? :^O ]:)

Glenda

[shooger]

Hehehe 🙂
Magic cards aren't that thick or sturdy. I guess it's the combination of one Magic card, one thin plastic sleeve, two thicknesses of paper, and one thickness of envelope (on both sides) that protects the cards in the middle. I've even had buyers email (or leave feedback) saying the "free bonus cards were perfect for my deck!" That gets me confused, cuz I only use junky cards for shipping - maybe they're not very good Magic players. 🙂 Anyway, you really should look for some cheap cardboard. Maybe you can get a large amount of it (not too heavy) for cheap. If you could spend half as much on stamps, and .5c instead of however much picture mailers cost, then some cheap cardboard would be worth it. And you're not diving into dumpsters, either. 😉