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Read
any online auction site's user agreement and you're bound to
encounter the disclaimer that the site is ''only a venue.'' But
it costs money to use that venue. Buyers might not have to pay
anything to browse and place bids, but sellers have to deal with
several different costs that come with the territory. Our tip
covers the various fees and seller options to know and
understand.
Insertion
Fees
This is what you pay to list an item, or items, on an auction
site. Also known as listing fees, insertion fees usually vary
depending on the amount of your minimum bid. In general, sites
break down the range in dollar increments. For example, eBay's
insertion fee structure is as follows:
1 cent to $9.99: 25 cents $10 to
$24.99: 50 cents $25 to $49.99: $1 $50 and up: $2
(Note that eBay charges a flat
insertion fee for certain items, such as cars, trucks, and real
estate.)
Compared to some other fees, insertion
fees won't cost you that much, that is, unless you are a
high-volume seller--in which case, all those listings quickly
can add up. Besides insertion fees, sites also charge relisting
fees, if you decide to list your item again when it fails to
elicit a bid the first time around.
Listing
Enhancements
Want to make your listings stand out from the online auction
masses? Lots of sellers opt for the various listing enhancements
that auction sites offer. The most common types of enhancements
include featured placement on the main page and category pages.
Less expensive enhancements include bold and italics. You'll pay
more for a main page feature listing, but it definitely gives
your auction more visibility and less of a chance of getting
lost among the scores of listings out there, especially on the
larger general service sites.
A main page featured auction on eBay
or Amazon.com Auctions will cost you $99.95. FairMarket sites
(such as MSN Auctions and Excite Auctions) charge half that at
$49.95, while Auctions.com charges $24.95 and Gold's Auction
$19.95. A featured auction listing on boxLot is a very
affordable $2. Yahoo Auctions offers a novel approach: Sellers
bid against one another for higher placement in the site's
featured auction lists on the categories page.
To save money, some sellers recommend
doing bold listings or using capital letters in auction titles
instead of paying for featured listings. It's best to experiment
and see what works best for you. Run a few featured auction
listings for your more expensive and promising items and see
whether the added visibility generates more traffic and bidding.
Another money-saving tip: Time your
auctions so that they'll appear in the new listings or closing
soon areas of a site at high-traffic times, such as Sunday
evenings. That way you'll get a little ''free'' visibility. (For
more information, see our timing
auctions tip.) Lastly, listing enhancements are more common
to person-to-person sites than business-to-consumer and
business-to-business sites.
Final
Value Fees
Like insertion fees, final value fees (also known as commission
fees) are not derived from a fixed amount. The amount is
determined as a percentage of the final sale price: The higher
the price, the lower the percentage you'll pay. Although sites
can vary slightly in what they charge, the standard structure
for final value fees is as follows:
-
5 percent on items up to $25
-
2.5 percent on items from $25.01
and $1,000
-
1.25 percent on any amount above
$1,000.01
The amounts are then combined. So, for
example, if you sell on eBay and your item sold for $55, you'd
first pay 5 percent of $25 ($1.25). Next you'd pay 2.5 percent
of the additional $30 (75 cents), making for a total of $2 in
final value fees. Final value fees are not charged if your
auction closes without a winning bid.
A final note on final value fees:
Although it's easier to calculate final value fees on sites that
offer a flat percentage, you might end up paying more
(especially on expensive items) than you would on a site that
uses multiple percentages. For example, if a site charges a flat
5 percent and one of your items sells for $1,500, you'll pay
$75, whereas on eBay you'll pay only $31.88.
Business-to-business and business-to-consumer sites usually
charge a flat rate, so you'll likely pay more in final value
fees than if you were using a P2P site.
In the case of B2C sites, you might
pay more (uBid charges a 10 percent final value fee, for
instance), but unlike P2P sites you gain the added benefit (and
peace of mind) of bidding on warranted, brand name merchandise.
Special
Services
As the online auction world continues to become more and more
competitive, auction sites are rolling out more services and
features to entice new users and hold older users. For example,
sites such as Auctions.com, edeal, and NiceBid are offering
their own in-house escrow services. Some special services cost
money (such as insurance and escrow and payment services), while
others are free (image hosting, email notification, and so on).
Other
Costs
Keep in mind that the cost of running your online auction
business involves more than the fees charged by the auction
sites. When coming up with a budget and figuring out your
overhead, don't forget about those ''other'' costs, such as
shipping, packaging and packaging materials, office equipment
and supplies, and more.
Know
Thy Site
Auction sites are free for buyers, but some sites, such as Yahoo
Auctions, are free for sellers as well, while sites such as
Gold's Auction and Auctions.com don't charge listing fees but do
charge final value fees. Some also offer free relisting and
other perks and occasionally will waive certain fees to increase
listings and lure in users. Be aware of the fee structure for
your site--again, not all sites are the same.
Furthermore, periodically check the
fee pages on your site. Fees can change from time to time, and
you want to keep up to date on what you can expect to be
charged.
Back to Auction tips &
tactics
by Vendio Services
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