How To LOSE Money Selling on eBay
The title may sound a little odd as we are so used to seeing articles about how to MAKE money on eBay - well, let’s face it, who wants to know how to LOSE money on eBay?
Well, when you know how to do something, you automatically know what to do to avoid doing it.
Confused? (for those of you who used to watch the TV series “SOAP”….’You will be’) 
OK, so everyone wants to know how to MAKE money on eBay but do you know how important it is to know how to LOSE money on eBay? Think about it for a moment, if you knew how to list an item on eBay which you know will not sell then you wouldn’t even list it would you.
So now you know how to LOSE money on eBay, you can avoid doing it which increases your odds of MAKING money - see?
So why am I telling you this - the obvious? Well, I gotta throw my hands up here and admit that even though I have been buying and selling on eBay for years, I had a harsh ‘refresher course’ in how to lose money when selling things on eBay.
If you’ll allow me a couple of minutes of your time, I’ll explain what happened so that you can learn something from it and hopefully avoid making the same costly mistake that I made…
This wasn’t a cheap item either - It sold for £425 ($850)I decided that I wanted to sell a laptop that I don’t really use anymore and I could think of lots of things I could spend the money on if I sold the laptop, so I decided to sell it on eBay (UK - hence everything in UK £’s).
So I crafted my eBay ad, took lots of pictures and added them to the listing, making sure I hadn’t missed any details and everything looked nice. The ad probably took me half an hour or more by the time I resized the pictures and uploaded them so I could host them from my server to appear in the ad. I even made sure I knew the exact weight of the laptop and found the true shipping costs.
So far everything looked peachy …
So I listed the item on a 10 day, featured listing, with a gallery image and a starting bid of jut £10 with no reserve. I knew that this would attract watchers and bidders. So, fast forward 10 days to the end of the listing …The item was viewed 697 times and had 22 watchers. The final selling price was £425 ($850).
Ok, not bad but not brilliant for a 3 month old laptop which had the new Microsoft Office 2007 suite installed as an extra.
It is from here where it all slipped down hill because what I hadn’t been looking at were the eBay listing fees, final sale fees or the PayPal fees. (Massive Mistake)
So, I had been paid £425 for the laptop and £25 shipping = £450 ($900)…..
What one hand giveth - the other taketh away
First of all there was eBay’s first bite at the cherry with their listing fee which came to £10.45 ($21) - ok not bad for all those eyeballs seeing my ad….
But then came eBay’s second bite at the cherry with a final sale fee of £14.41 ($28)
And then along came PayPal which I guess is eBay’s third bite at the same cherry which now seems to be getting smaller and smaller. The PayPal fee for receiving £450 ($900) was £15.50 ($30)!!!! Now I gotta admit, that bite hurt the most.
So now that eBay has had its fill, it’s my turn to start slicing up the cherry and giving it away because although I had charged the buyer for the true SHIPPING costs, I hadn’t taken in to account the costs of the shipping materials which I needed to buy.
- Very strong shipping box = £2.00
- Bubble wrap = £3.00
- Brown packing tape = £2.00
- Packing foam sheet to cushion the laptop and fill out the box because I couldn’t find
one the right size £9.50 (I bought it from eBay - the foam was £4.50 and the P+P was£5)
All that adds up to an extra £16.50 which I hadn’t budgeted for.So now my nice £450 ($900) bounty has been reduced to just £368.14 ($740)- that’s £81.86 ($160) lost !!!!
- eBay’s share = £24.96
- PayPal’s share = £15.50
- My own lack
of forethought = £16.50
The moral of the story - BEFORE you start to list an item first check the actual listing costs. Next, estimate how much you think the item will sell for and work out the actual final sale fee.
If you are accepting PayPal, work out the PayPal fee. And finally, if you are shipping the item, find the actual shipping cost and don’t forget to take in to account the packing materials used. It is only when you have ALL of these figures can you see the true profit you will receive when selling an item.
A very harsh lesson learnt and I truly hope that by sharing with you what I have learnt it can save you from the same thing.
There is an easy and cost free way to work out your exact eBay and PayPal fees - I used an online fee calculator at http://theauctionhelpdesk.com/ebay_fee_calculator/ Yep, this is another of my sites
And best of all, it covers eBay in the UK - USA - Ireland & Australlia.So now there is no excuse for not being knowing in advance what the costs will be of the items you sell. Good luck and if you have any comments please feel free to add them below.
Michael Sherriff
Posted by michael on Friday, March 30th, 2007 at 12:22 pm.
Ouch!
Left by LivingFreeOnline on March 30th, 2007
Michael,
I feel your pain. Is there anything that can be done however? Let’s say your item is going to cost you $100 to sell… what then? It’s an auction! Can we charge $100 for shipping? I don’t think so… we’d hear the screams across the Atlantic! Can we charge: item + shipping + selling fees?
Left by Craig on March 30th, 2007
Michael,
Thanks for pointing out the ecal tool, feeBay UK’s constant fee changes over the last year have been a major headache and this tool will be a big help.
Left by Gordon on March 30th, 2007
Hello Michael
It is a very valid point you makle in your blog and I am certain that mnay eBay sellers are no aware of the true costs of selling on eBay.
With your permission I am going to mention this blog and place a link to it from http://www.ukauctionline.co.uk so that my subscribers can also learn from your experience.
Keep up the good work
Dave Bromley
Left by Dave Bromley on March 31st, 2007
Hi Craig,
A very valid point you made there - I don’t think any eBay seller should charge high shipping fees such as that - however, there was a report I read somewhere about how to correctly charge shipping and HANDLING fees which need to be taken in to account for the sellers real costs of actually packing the item and getting it shipped.
I am not saying that eBay sellers should over-charge for shipping but charging the TRUE cost of shipping is very acceptable and charging a ‘handling’ fee is standard business practice anyway.
A painful lesson to learn
Left by michael on March 31st, 2007
Hi Dave,
Good to hear from you and thank you for your comments. Be my guest to place a link to this blog posting in the hope that it may save one of your newsletter readers from making the same mistake.
Michael
Left by michael on March 31st, 2007