One of the most crucial areas of decision making for sellers on eBay is "Pricing". How much should I sell my item (s) for? Consider the following questions. And when you address these questions always ask yourself the rationale behind your answers:
• Do you have an overall pricing philosophy?
• What is it? (high end, medium, or low end)
• What are the characteristics of the people who will buy at your eBay auctions?
• For what reasons will they buy at your auction? (for low prices, for convenience, for service, etc.)
• How will you compute prices?
• When setting prices, will you take all of your operating costs into account? (including your own salary)
• Will your prices be "fair" to the customers who will buy at your eBay Auction?
• What does the term "fair" mean to you?
• Will you visit similar auctions to check on your competitors prices
• Will you use odd prices ($4.95, $4.97, $9.95, $9.97 ) rather than even prices ($5.00, $10)?
Setting Your eBay Prices
Fair Prices - From your perspective fair should mean "your prices reflect your overhead operating structure" in a way that enables you to earn a satisfactory profit without profiteering i.e. overcharging the customer.
You should use selling price = 100% calculations, with selling price = cost of goods + desired profit = 100%.
Odd Prices - Although the impact of odd pricing on customer behaviour may be overrated, there is one significant reason to use this practice. Consumers are more likely to believe that you have planned your prices very carefully and have worked hard to keep the prices as low as possible.
Competitors Prices - When setting your prices you should look at similar auction items and check out competitors to be sure that your prices are consistent with your pricing philosophy and the market place. Review the notes you made when you reviewed the Going, Going, Gone pages and collected first hand information on what items are selling, the selling price and the number of bids;
Low Prices - Consider pricing your item(s) low to attract bidders especially if you have an item that you know or suspect will sell quickly. Start it off at $.01 to attract bidders.
Reserve Price - If the item is valuable and you know it will sell, you can place a Reserve Price on it. This way you can still start off your auction at $.01 to attract bidders but avoid making a loss on the transaction.
eBay Category - Consider placing your item in a non-conventional category to attract more bidders and a higher final price. But make sure you don't violate any eBay Category Listing Policies.
Factoring in eBay Fees And Merchant Providers Fees in your Prices
As a seller, you should learn and understand about the types of fees you'll pay to use eBay's tools. Also you must know what fees PayPal or your chosen merchant provider will charge to service your transactions. Fee types to know and to consider when pricing your item(s):
• Insertion Fees: There is a non-refundable Insertion Fee for listing your item on eBay. Insertion Fees vary by the type of listing;
• Picture Services: If you use eBay Picture Services, there are different features from which you can choose. The first picture is Free;
• Final Value Fees: When your listing ends, you will be charged a Final Value Fee based on the final sale price (or "final value") of the item(s) you have sold;
• Listing Upgrades Fees: As a seller, you can choose several optional features to help promote your listing. These fees are non-refundable;
• PayPal Fees: Sellers have the option of listing with PayPal. PayPal charges Premier and Business accounts to receive payments. Personal accounts are free, but may not receive credit card payments. Fees are assessed at the time of the transaction and will be deducted from your PayPal account;
• Other Merchants: Fees are similar to PayPal;
Reducing eBay Fees as an Input Cost
You can slightly reduce the eBay Insertion Fees and Final value fees by reducing the auction price of your item(s) and charging a handling fee especially if the product you are selling is being delivered via a zipped file or file transfer e.g. software download or eBook via email.
eBay Policy Guidelines do allow the charging of reasonable shipping & handling Fees. BUT be aware of the eBay Fee Avoidance Policy which clearly states that Sellers must refrain from activity that circumvents eBay fees – including the Listing of items in a manner that allows circumvention of eBay fees and low prices but unreasonably high shipping or handling costs.
Do not make a habit of overcharging your customers on shipping and handling costs as this could affect your credibility and possible repeat business. It is also unethical! You should charge what it normally costs you to pack and ship. This is a grey area so be careful.
Stephen S Alison is a retired "bean counter" who spent 26 years in middle management positions for major US financial institutions in Europe and a further 10 years as an adviser/consultant to a number of European financial institutions. He has traded successfully on eBay for over 2 years using the same strategies and tactics published in his websites: http://www.howtomakeyourfortuneonebay.com http://www.learntomakeyourlivingonebay.com
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