I just don't get the fees calculation...

[diplodocomp]

I apologize in advance for raising a topic that was mentioned countless times, but after researching eBay-related topics, I still can't get my math right. So here it is:

- I have above average standing with eBay

- I sold an older computer for $345. 

- I am located in Ontario and the buyer is located in Quebec, so sales taxes apply.

- The shipping costs were $26.92

- The buyer was charged 345 + 26.92 shipping + 18.60 GST + 37.10 PST = $427.62

Earnings reported by eBay:

• GST: -18.60
• PST: -37.10
• Transaction fees:  -64.48
• Shipping label: -26.92

 So, if I calculate the transaction fees from the above numbers, I get 64.48 / 427.62 = 15%.

I naively thought that the fees should be 13.25% according to eBay Canada:

"13.25% on total amount of the sale up to $7,500 calculated per item"

What am I missing? And again, my apologies for rehashing the fees issue...

Diplodocomp

[msau4301]

I know it's not easy (I occassionally work out the math myself and usually wish I didn't! 15% is lower than my totals sometimes are) but the reason is that the 13.25% fee is on the total transaction amount of $427.62, not just on the $345 the item sold for.

The extra $82.62 (taxes and shipping $18.60 + 37.10 + 26.92) is also charged the 13.25% fee, and then the taxes are charged on that total fee (item, taxes, shipping) to you (the buyer paid the first round of taxes).

That's the way the fee charges go so you just have to keep the higher percentage amount in mind when pricing your items.

[diplodocomp]

Thanks for responding. I do understand that the fee is calculated on the toal amount including taxes and shipping. As explained above, the total amount (including taxes, shipping, etc...) is 427.62. The fees amount to 64.48.

So -- unless my math is askew -- 64.48 / 427.62 = 0.1508

That's 15%?

[msau4301]

Yes, it is 15% in this case here. The amount can sometimes be less, if for instance you sell to someone who lives in a province (or in US) where their tax rate is less than 13%, assuming of course the shipping was relatively the same. My fees lately are always less when selling to US buyers since eBay has the low rates for shipping (less to most places in Canada) and they have a lower tax rate 5 - 6% sometimes.

[chicweb]

Here's the thing. eBay charges us taxes on the final fees....

I'm from Quebec, so I have to pay  GST (5%) and QST (9.975%).

Let's say I sell an item 11.25$, taxes and shipping included. That's what the end customer paid. (I have an example in front of my eyes).

The final Value Fee is 12.35% on this item. 11.25 * 12.35% = 1.39$

eBay also bill a fixed amount per sale (0,30$ if less than 10$ and 0,40$ if more I think). in this case = 0.40$

That mean: 1.79$.

Taxes on this 1.79$ is: 0.27$

Total of fees: 2.06$.

This is because eBay is offering us a 'service' and they have to charge taxes for this.

If you have a business tax number, you can report those taxes paid as a business. They can be deducted from the amount you have to send to the gov monthly/quaterly/annually. But I would suggest asking your accountant about it first. 😉 I'm in no way providing financial advices. lol I just send everything to my accountant and she take care of this.

[pjcdn2005 · Accepted solution]

As @chicweb  mentioned there are taxes on the fvf. There is also a .40 transaction fee.

$427.62x 13.25%=$56.66

56.66+.40 transaction fee = 57.06fvf

$57.06 x 13% hst = $7.42 

57.06 + 7.42 = $64.48

[diplodocomp]

That clarified for me. The fact that I was taxed on the service provided by eBay was not clear to me. I see the logic of it now. Thank you.