eBay fees, how eBay screws you with them, and how you can screw them back

Of all the common complaints from powersellers regarding the pitiful service provided by eBay the exorbitant amount of fees has to be one of the most mentioned in all the forums.

The problem is not that they charge a fee. They provide a service and keep an infrastructure that fulfills a purpose, and it is only fair that they get paid for it.

However, a problem arises when they knowingly design a system that has the unique and exclusive purpose of overcharging you. How do they do this? The same way cell phone companies used to do it (round things up) and in a similar fashion to what shady insurance companies do (deny the claim, deny the claim, deny the claim and deny it until you cannot deny it anymore).

As everyone knows eBay will nickel and dime their sellers in every possible way. They could keep it simple, like a classified ad, or allow powersellers to pay a monthly all-you-can-eat fee. They could make it easy: charge a single fee. Instead, you get hit with the following:

- Insertion fees
- Reserve fees
- Buy it now fees
- Listing upgrade fees
- eBay picture service fees
- Seller tool fees
- Final value fees

This is not a one-or-another fee structure. I get hit with all of them every time I list something. The insertion fee is the welcome pad, all the other ones belong to upgrades (such as adding a subtitle or a tiny picture next to the listing) that are needed in an overcrowded market if you want to be noticed.

Listing a single "Buy it Now" item with just one or two upgrades and without any of their picture services costs me between $28 and $38. I pay that each single time I list an item. I list hundreds of items a week.

It is not true that "you get your fees back if your item does not sell". You can only get back the insertion fee, which is a pitiful $.01-$4 depending on the discount du-jour. Additionally, you never get back the money, you simply are not re-charged the insertion fee if you re-list it again, and only if you follow every absurd instruction on their booklet on how to do it.

This is easy if you are selling a single item and have nothing else going on in your life, but almost unmanageable if you use third party software and your sales volume prevents you from keeping mental track of things.

If the item sells, you are charged more money on top of that, the infamous FVF, or Final Value Fee.

This fee, the FVF, is the most ridiculous of them all. I need an Excel Spreadsheet with formulas touching 4 different cells to keep track of how much selling is costing me. The following paragraph has been taken verbatim from eBay's explanation on how much they charge you if your item sells:

"5.25% of the initial $25.00 ($1.31), plus 3.25% of the initial $25.01 - $1,000.00 ($31.69), plus 1.50% of the remaining closing value balance ($1000.01 - closing value)"

Now, that is just stupid.

Keep in mind all that above is on top of everything that you have already paid to get the item listed, and before you have to pay PayPal fees if you use them.

By now I have given up on trying to understand it, I just pay, but I still remember the very first time I tried to figure out how much I was going to get charged for selling things. Back in 1998 I gave eBay a call, and the conversation went more or less like my favorite scene from "A Night at the Opera"

Driftwood: Well I think I can get America to meet him half way. Could he sail tomorrow?
Fiorello: You pay him enough money he could sail yesterday. How much you pay him?
Driftwood: Well I dunno. (Walks off to the side in thought.) Let's see...a thousand dollars a night...I'm entitled to a small profit. (Walks back.) How about ten dollars a night?
Fiorello: Ten, ten dollar. Ha ha ha ha ha ha...I'll take it.
Driftwood: Alright, but remember I get 10% for negotiating the deal!
Fiorello: Yes, and I get 10% for bein' da manager. How much is dat leave?
Driftwood: Well, that leaves em...ahhh...eight dollars.
Fiorello: Eight dollars heh? Well, he sends five a week to his mother.
Driftwood: Well that leaves three dollars.
Fiorello: Can he live in New York on three dollars?
Driftwood: Like a prince! Of course he won't be able to eat, but he could live like a prince. However, out of that three dollars you know, he'll have to pay an income tax.
Fiorello: Oh, is income tax.
Driftwood: Yes you know, there's a federal tax, and a state tax, and a city tax, and street tax, and a sewer tax.
Fiorello: How much isat come to?
Driftwood: Well I figure, if he doesn't sing too often he could break even.
Fiorello: Alright, we take it!

Now, a lot of sellers think that eBay is not seeing how complicated this is. They think, and post in the forums, that nobody has suggested a simpler structure; a plain listing fee, like in a classified ad, or a plain percentage of a sale. Well, that makes so much sense! it would be such a good idea!

They know.

They will not do it.

Why? Because a complicated, excruciatingly convoluted and impossibly barbed fee structure is harder to challenge than a simple one. If the selling fees were simple, and I had a problem with the sale, I could ask for my simple fee back, and I would get them back, or not, but I would know.

With the current structure, if one of my sales ends up in fraud (happens about once every two days) I can request a FVF credit, but not a listing upgrade credit, I can have the insertion fees credited back, but only after I wait eight days to "work things out" with the buyer. But hey! the buyer is a Nigerian scammer that gave himself up, I already know this is fraud, look! PayPal took the money back, can I have my fees back? "No, sorry, gotta wait eight days", but why? why? why?

"Because there is a significant statistical probability that you will just forget about it and we will get to keep the money."

That is the reason. No other.

Why are the fees complicated? Because if you have to perform 7 steps and wait more than 8 days but less than 45 while depending on other parties to make their move in order for you to get your money back there is a chance you will stop at step 3, or 4, or 6. Maybe your wife will interrupt you, or your boss will walk into you, or the UPS guy is at the front door.

This may not happen all the time, but it does not have to happen all the time for them to make money, they are gambling on the volume of sales. If they manage to keep 28% of fees that they should not keep they are easily making an additional $300M. So volume works for them, just like it does for dishonest insurance companies. If you put enough stops, a large number of people will never get what is rightfully theirs.

So, how do you screw them back? You play the same game.

I dispute each and every single FVF for each sale that I make. A large number of buyers go "Hey, what are you doing? I already paid for the item". To those, I say "Sorry, must have confused your auction with someone else's, I apologize" and that is the end of the story. Keep in mind that what it is a systematic methodology for you is an odd occurrence for them. It is no biggie.

However, just like there is a large number of people that never manage to get their fees back from eBay, there is a large number of people that never answer a FVF challenge. Maybe they don't check their email often enough, or they use an account that is only used when they buy something on eBay, or they do not know that they are supposed to respond, or they see it but they just forget it, whatever the reason, if they do not respond in 7 days I get my FVF's back. This happens often enough for me to get thousands of dollars back each month, and I cannot tell you how much pleasure I exude every time this happens. I almost get an adrenaline rush each time I see the little message "FVF Credit granted".

This, of course, only works financially if you are a powerseller, and if you have a large number of transactions. However, it can also work for the casual user. Go ahead and dispute all your FVF's, tell eBay that you did not get paid, or the item was returned, or lost. If the buyer catches you, quickly apologize and move on, if they do not, count the dollars you took back from the evil corporation and buy yourself an extra sandwich, or put some more money towards your kids' college fund, you deserve it.