Avoiding Listing Fees that Don’t Make You Money
By Steve Nye, eBay Certified Consultant
This last week I reached a great milestone in my married life. My wife finally decided to let me get cable TV! I know it’s not that big of a deal, but I never had cable growing up, and therefore had to keep myself entertained with channels 3, 6, 8 and 10.
So I was left with the big decision: Which cable provider should I choose? Recently, many cable providers have bundled their services into a “package” discount (combining cable TV, Internet, and phone line) and I began shopping around for one of these bundles. After some research, I narrowed my choices down to two companies. I’ll refrain from using their names and will simply call them Company A and Company B.
Company A had a bundle with 78 channels while Company B had one with 120 channels. Although Company B was only $5 more per month (at $110), I was shocked at all of the accompanying installation and set-up fees. For example, it cost $65.99 to install and activate the phone line, $49.99 to set up the Internet (with a required monthly modem rental fee of $4.99), and $49.99 for the cable service (plus a monthly digital box rental of $9.99). Wait one second, I though. Not only will I have to pay $110 per month, but I've now got to cover $165.97 in installation fees and $14.98 in monthly rental fees?
Surely there was some way around these outrageous and unnecessary fees. I went back to Company A and was pleasantly surprised to find out that their bundle came with an installation fee of $22.99, with no additional rental fees or surcharges. This makes my cable, Internet and phone bill $113.99 monthly. Period!
Just as I avoided Company B's unnecessary fees, you should avoid the many listing fees that are “unnecessary” for your products like the plague.
Determining Whether or Not a Listing Fee Is Worth It
You can discover which listing fees to avoid by determining which ones do nothing to increase your profit margins or your success rate. This is especially true for high-volume sellers. When you are listing and selling several items a day, those listing fees really begin to add up. (And to tell you the truth, I’m horrible at accounting for these. I completely forget about them until I get my invoice from eBay. But of course by then, it’s too late to know whether or not the fee was actually worth it.)
Ultimately, if listing features aren’t doing anything for you, why keep paying unnecessary listing fees? For example, bolding your title costs $1.00, but unless it increases your profits by at least that amount or increases your sales success rate by a considerable amount, you shouldn’t use it. In the end, you'll save on unnecessary fees. Let’s use HammerTap and look at a few examples.
I did a little research on expensive handbags, and wanted to see how different listing features affect the success rate and sales price. Using HammerTap, I researched Louis Vuitton handbags and found the LSR (Listing Success Rate) to be 61.2% and the ASP (Average Selling Price) to be $408.60. Any feature that does not get us above a 61% success rate or $408.60 sales price is not worth the cost of the listing fee.
The report above tells us that using the Bold feature only increased our sales price from $408.60 to $411.17, a difference of $2.57. But remember that the bold feature costs $1.00, making our increase in profit only $1.57. However, in making $1.57 more, we also increased the LSR slightly. The Reserve Price feature also increased our sales price, but decreased our success rate (LSR) slightly. In this case, the increase in profit is well worth it.
Now look at the Highlight feature. Although the Highlight feature greatly increased our closing sale by $320.35, it was only based on a sample of 14 listings. This may not be enough information for me to make a solid listing decision, especially when the Highlight feature costs $5.00.
Remember, we are comparing the effect the listing feature has upon our sales price. We then look at the effect the listing fee has upon our profit margins. You will need to compare these costs with your own sales and profit margins like we've done above to determine which listing features are making you money, and which ones are costing you.
Developing a Keen Eye for Listing Fees
Let’s take a look at another example, just so you can develop a keen eye when it comes to weeding out unnecessary listing fees. In doing this, I wanted to look at something completely different from handbags to show you how every product is different. I am looking to buy a portable DVD player, so I did some research to find the best price.
I found that the LSR for portable DVD players is about 72.20% while the ASP is $59.87. Now remember, any listing feature that does not increase our LSR or ASP is one that we should avoid wasting our money on.
In looking at the research results for these DVD players, you can see that using Bold or a Gallery Picture feature both increased the Listing Success Rate.
However, only the Bold feature increased both the LSR and ASP. This is when your keen eye for listing fees comes into play. You need to be sure that the increase in profit is more than the listing fee. In this case, Bold costs $1.00, and your increase in profit is $18.83, which easily covers the the cost of Bold.
You may notice that Reserve Price and Highlight also increased our profits. But, be sure to look at how large the sample is. Only 11 listings used Reserve price and only two used Highlight. This really isn't a large enough sample on which to base a good listing decision.
These results, however, are for a general search of portable DVD players. I looked into Sony, Panasonic and JVC and found that the various listing features all affected the LSR and ASP differently. How do listing features affect the success rate and profits of your own products? Only by relying on accurate research results can you leave out any guesswork and unnecessary fees.
Looking at Listing Fees from Different Angles
Although the research tells you which features are successful and which are not, as the decision maker for your listings, you should look at listing fees from different angles. Here are a few to consider.
- Gallery Picture: Often the research results will indicate that a gallery picture did not increase LSR or ASP or sometimes both. The reason is that most listings use a gallery picture to draw attention to their listings. However, this also means that most of the listings that did not sell also had a gallery picture. This decreases the success and price of the gallery picture results. Depending on your profit margins, using a gallery picture usually always helps your listings.
- Listing Designer: If you don’t already have a design or background theme for you listings, you may want to consider using the listing designer. This feature only costs $0.10, but adds much more value to your listing. People are more likely to buy from professional-looking auctions. Go ahead and try running two simultaneous listings, one with the designer and one without. See which one makes you more money or gets more bids.
- Additional Pictures: Each additional picture costs $0.15. Usually two pictures are better than one for new items, and used items may need even more to show the extent of the wear/damage. People are more likely to buy when they are confident that the picture matches what they are looking for.
Remember—every listing is different. A highlighted title, for example, may work for one product but not for another. The most important thing is to carefully look at your products and the associated listing fees. Are you spending money on unnecessary fees, or are your fees making money for you?
Now, if you'll excuse me, I'm off to enjoy my new cable TV—without the excess fees!
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