REALITY vs PERCEPTION - Your eBay/PayPal fees as a % of sales. TOO HIGH?

[lina-mallows]

According to the rules* posted in the Sales Summary area-
I am rounding DOWN the percentages provided- so these are NOT the true numbers.

FOR US- and US alone-
THIS IS AN APROXIMATION OF WHAT THE FEES/SALES REALITY IS:
Net eBay fees, as a % of sales
for MARCH:23%
for APRIL: 19%
for MAY: 12%
Net PayPal fees, as a % of sales
for MARCH: 5%
for APRIL: 6%
for MAY:4%

WHAT IS YOUR REALITY?

Now just for fun- our repeat buyer %s over three months (also rounded down):
55% 21% 31%



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* THE RULES: "This information is provided to you for your personal information and use only. You may not sell or distribute it to any other person or entity, whether for commercial purposes or otherwise. Unauthorized use of this information will result in the termination of your use of the Sales Reports Service. eBay makes no representation that the information contained in this report reflects all current transactions. Please consult the Sales Reports Service End User License Agreement for complete terms and conditions."

[lina-mallows]

I am not asking what anyone's DOLLAR value for sales are.
I am just curious what the relationship is between the fees we pay, and the sales we generate.

Whether your sales are $1,000, or $10,000- these percentages are always discussed in generalities here on the boards- eBAY FEES ARE TOO HIGH !!!!!
PayPal FEES ARE TOO HIGH !!!!!

Well, let's put some numbers here- and see if the perception and reality really are the same.

There are several sellers who post here with HIGH ticket items, and several with LOW ticket items. How do our ACTUAL eBay/PayPal PERCENTAGES vary?

[pierrelebel]

What is "too high"?

On average, eBay now collects about 11% on the selling price in various fees (listing, optional features, FVF, etc...).

Some sellers will pay less than the average, some will pay the average and some pay more than the average.

Typically, sellers selling mostly low price items will pay a higher percentage than those selling higher price items.

Is 11% too high? Obviously not since sellers keep on listing on eBay. Anyone with experience in retail sales management or mail order business knows 11% is relatively low when compared to other options.

Are PayPal fees "too high"?

I do not think so. Have you checked how much your local bank would charge you for accepting credit card payments for online transactions? Is your bank cheaper than PayPal? I do not think so.

Established sellers still have the option not to accept PayPal if they feel the fees paid PayPal are not worth it for their business. .

[bare_bright]

Pierre Wrote

"Established sellers still have the option not to accept PayPal if they feel the fees paid PayPal are not worth it for their business."

I thought the rules had Changed or will be soon That sellers Must accept paypal as a form of payment.

Tell me if I am wrong

:)

[pierrelebel]

That is incorrect. In North America, the PayPal requirement only applies to new sellers.

They have made the change in Australia and the UK, not here. .

[pierrelebel]

By the way, based on the information in my monthly sales report, eBay fees as a percentage of eBay sales for the last three months:

April : 13.2%

May : 9.2%

June : 10.8% .

[lina-mallows]

Thank you Pierre for adding some numbers to this exercise.

Everyone will be different. That is a given.
However- we all likely understand that the numbers eBay, and PayPal always quote, are only a part of the bigger picture.
THEY PAINT THE BEST POSSIBLE SCENARIO!
Like dieting- the SALAD is LOW in calories. Add croutons- and the calories go way up. ONE EXTRA photo, one extended listing here and there, and the numbers eBay uses do not reflect your reality.
For each seller, within their own business model- if their product, and prices remain relatively stable, the OVERALL fees paid will average out, and give a truer picture of the REAL fees for doing business.

For us, PayPal fees don't exceed 6%, and are now 4%, which for very LOW ticket items isn't that bad- in our opinion.
Should we look elsewhere? I don't see a huge advantage in doing so.

On the other hand- March sales were not what we would have liked- and the number of unsold items pushed our eBay %'s to ALMOST DOUBLE what they were, on average, in May. I think 23% is obscene.

Pierre- the biggest part of this exercise is trying to understand the PERCEPTION vs REALITY. I am certain some sellers would see paying PayPal 5% is TOO HIGH- because an alternate service provider offers a LOWER fee. At the end of the day- if you can get 1.9% (BIG BOX STORE) then you would understand that you are paying PayPal TWICE+ as much.
On the other side- if they provide the service at around 3%- even though the amount may be near DOUBLE- is the convenience, and other protection factors worth the money.

By using these REAL number- and not perception, can we collectively find ways to REDUCE the overall % fees we pay?

[pierrelebel]

"THEY PAINT THE BEST POSSIBLE SCENARIO!"

Nobody paints anything.

Take a few minutes and you can get accurate information by digging out eBay's financial statements filed with the US Securities Commission.

It only takes a few minutes to put numbers together. .

[pierrelebel]

"PayPal 5% is TOO HIGH- because an alternate service provider offers a LOWER fee"

Where would that be? Can you give us the name of ONE online service in Canada willing to provide credit card processing for online transactions at fees lower than PayPal? One? .

[pierrelebel]

"if you can get 1.9% (BIG BOX STORE)"

You are confusing card present fee structure with card not present (online) fee structure.

Two totally different services. Apples and oranges.

The risks of fraud are much greater obviously when the clerk cannot match a signature on the card to the signature on the transaction slip. .

[lina-mallows]

1.9% was a rough average.
We have a BRICKS & MORTAR location- so swiping is available at Pick-Up.

For the BIG BLUE BOX "membership only" wholesale club, their fees for- for VISA & MasterCard ONLY (WE DO NOT USE or ACCEPT AMEX!)
Card swipe MERCHANTS- 1.67%
Key Enter MERCHANTS- 2.22% (yes the fee is higher- but less than 2.9%, AND without the additional 30¢ per transaction)

pierrelebel- you write "Nobody paints anything."
I disagree. Marketing is designed to attract buyers. We are eBay/PayPal customers. Their job is to get us to buy. I am not saying they are misleading us. It's just their job to 'spin' things in a positive way. And, somewhere along the way- perception and reality diverge. How many sellers see the PERCENTAGE number- and fail to take into account the additional cross border, and item fees? Which, lead to a totally different PERCENTAGE?

Here's a fun one from PayPal- "Receive payments funded by Credit Card, Debit Card or Buyer Credit 1.9% to 2.9% + $0.30 CAD (with two symbols following indicating exceptions.)
You must click- or know to click the NUMBERS to get further information.
1.9% applies to those with volumes in excess of $125,000.
OK- so HOW MANY people are at that level of monthly sales?????
Yet, the 1.9% is stated first, and certainly no indication is given that it DOES NOT apply to everyone- at that moment, when viewed. And, there is a further condition, that the $125,000 sales trier "Does not apply to Website Payments Pro or Virtual Terminal." So, when these HIGH VOLUME sellers are netted out- how many people really get to take advantage of the 1.9%?

[pierrelebel]

"How many sellers see the PERCENTAGE number"

The percentage (11%) I quoted earlier is from my own calculations, NOT something eBay promoters or "paint". .

[dagr8_renaud]

Pierre , the fact that paypal takes a 5% fee on Credit card transaction is Ok , but they take the same exact fee on direct money transfer , that is way too hi . just my 2 cents .

[lina-mallows]

pierrelebel - the 11% you state, is a REAL number. However, you don't get it from PayPal- you get it by subscribing to eBay "Sales Reports".

How many sellers are aware of this "Sales Reports" feature?
And- even when you are aware, and the information is presented- it is presented beyond the first page- so you have to click DETAILS to find this % information.

Admittedly- there are those posting here who were not aware of the information available on the eBay SITE MAP. How many are unaware of this additional information? Pierre- you found the percentage information. But it certainly wasn't handed to you anywhere at the PayPal website!

My comments respecting eBay/PayPal painting a rosy picture are related to their overall presentation of general information. The specific information provided to you, in a SALES REPORT is personal, and not public. So you know what the REAL fees represent as a percentage for you, if you care to look, and not be distracted by the LOW numbers presented up front.

[snoopwiz]

Most of my sales are in the core, therefore my eBay fees are considerable lower. For instance

May 2008.....Sales were $5416.00
eBay Fees $ 302.16
Paypal Fees $ 150.24
Total Fees $ 452.70
Fees in % 8.4 %

I attribute this to selling higher ticket items (May average was $128) and sell through of approx 70%. Can I get this much exposure and bang for my buck elsewhere?

[lina-mallows]

Our COMBINED eBay/PayPal fee average over May was 17%- mostly BUY IT NOW items- no STORE, and some auctions.
Average ITEM PRICE US$11.oo

[pierrelebel]

"eBay/PayPal fee average over May was 17%"

11%-12% eBay ?
5%-6% PayPal ?

That would be close to average.

Obviously your PayPal percentage will be higher than average if most of your transactions are under $10.

The overall PayPal average for all users (including international) is 3.8% .

[lina-mallows]

pierrelebel - I appreciate that "The overall PayPal average for all users (including international) is 3.8%
." is great information.
The problem is that we are individual users- each with our own set of criteria. Again- 3.8% paints a rosy picture of the real world- IF you are the WHOLE world!
Being a very very small part of it. What can we do to as individual sellers to tinker with our formulas to achieve better results?

[pierrelebel]

"3.8% paints a rosy picture of the real world"

Not rosy, simply an average.

Many large volume sellers pay less. Those with high value transactions pay less. On the other hand, to make up the average, you have sellers with smaller volume and smaller amount transactiuons paying a higher percentage.

The majority of those small volume sellers will find the PayPal fees are the best bargain available for online transactions except for the very few who already have a retail outlet with a merchant account which allows for online transactions.

And life does go on. .

[lina-mallows]

Pierre- please understand- I appreciate the value of knowing averages. But averages are not the REAL world of an individual. I appreciate them telling me, on the news, what the average price of gasoline is accross Canada. HOWEVER- I do not purchase gasoline in Vancouver, nor Halifax. So, while the number is interesting- what does it matter? If I were to buy gasoline- it would be likely the most convenient station- with some consideration given to the very minor difference in prices.

HOWVER- and to the point,when you are paying MANY TIMES the "AVERAGE" 3.9% stated, 3.9% IS an unrealistic expectation, and a very ROSY number.

The question is- what can we each do to lower our own percentages?

It's nice to know that PayPal may be the best bargain around- but figuring out how to pay them LESS, as a % of sales, is always a good idea.