This is a short guide on a new method to cut your eBay Insertion fees by 50% or more. If you have already read my guide on dealing with raising shipping and handling fees and lowering your opening bid cost, then this will highlight some of the points mentioned and clarify this technique even more. If you have not read that Guide you should go back and review it first.

Lets review some of the facts that helped me discover this new technique.

1. Insertion fees can be 2 - 3 - or 4 times the amount you may think they are. If you run the same items over and over and only sell one for each 2nd, 3rd or 4th listing, then the one you have sold, has cost you four insertion fees not one...right? You actually pay the insertion fee on the one item you sold, plus the others you didn't sell.

Example:
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Widget selling on a Buy It Now or on Auction with an listed price of $25 and a $4 S&H fee, insertion fee is $1.20. You run 4 of these on eBay this week and your total insertion fees are $4.80. You sell one of them...your new insertion fee on that $25 item was now $4.80.

Now add your Final Value Fee on the successful sale and that adds another 5.25% or $1.31 so your total Fees on this sale was $6.11. If you accept Pay Pal add another 3% (average) of the total amount including shipping ($29) and your Pay Pal fee is .86¢. Remember the Pay Pal fee goes to 3.5% for international sales, so I have taken a 3% fee as my average on all sales.

So eBay and Pay Pal have now cost you about $7.07 on a $25 sale. That is a whopping 28%. Bet you never realized that they are now making more then most of us on the listings did you.

So if you look at the above illustration you will see you must find a better way to cut your insertion fees, since this is the single largest fee you will be paying.

Here is the legal method to cut this in half or more.
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Stop running Buy It Now auctions and don't put in Buy It Now options anymore on any of the auctions you run. Only use BIN if you have one item and you feel will sell the first time around.

The reason is that on multiple items you may not sell every one you list and this is how your insertion fees climb. In addition to the insetion fees, you will also pay a Buy It Now fee, when you add this option to your auction. On smaller items this becomes huge percentage wise, on a more expensive item it doesn't amount to much so you can offer it.

With my method you start your auctions low. I would advise .99¢ on most if the item is $10 or less. Go up a bit as the value of the item increases. On a $15 item, go to $1.99, $20 go to $2.99 or more, depends on you here and you should use your judgement. We don't want to Circumvent eBay fees and they are entitled to their proper fee on the sale, but you do need to cut down on the cost of the insertion fees as much as possible, thus keeping your Cost of Sale as low as we possible.

Lets see how the insertion fees change as we work through the numbers:

.99 opening bid....insertion fee is only .25¢

1.99 - 9.99 opening bid...insertion fee is only .35¢

25.00 opening bid....insertion fee jumps to $1.20

Now lets use my technique and see this Example:
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Now On a similar Widget where you feel the market will now pay $25 and the S&H is $4, if you put this on eBay the old way on a Buy It Now, we see we might spend $7.07 on that $29 sale to sell one.

With my method you now open the bidding at $5.99 on that $25 Widget and you put a shipping and handling fee of $19.99 and add another $3 for mandatory insurance. I self insure my smaller shipments because I can replace the lost item faster and easier then trying to put a claim in to the USPS for a $10 item. It enables me to respond faster to my customers if there is a problem and they appreciate it. Frankly, I have not lost one shipment in over 7 years, so for me it is also a new profit center, the same as it is to most retailers today that offer you their extended warranty policies on new merchandise they sell you.

Since you are running multiple items now, on 4 items your insertion fees will now cost you .35¢ each for a total of $1.40 for all 4. You sell the items now at only $5.99 and your Final Value Fee is 5.25% of that $5.99 or 31¢ so your eBay total fees on selling one is now $1.71. You add in your $22.99 for your S&H and Insurance and you end up with $28.98 or the same as our first example. Your Pay Pal fees are the same which was 3% of the total or 86¢.

So now your total fees on the same sale out of 4 that you have listed is only $2.57 vs. $7.07 the old way. You have just saved yourself $4.49 in fees on this same sale and your total fee is now only 10% which is a liveable cost of sales on this item.

You have now saved 18% on your fees alone on this sale and if you are like me this can add up to a savings of hundreds of dollars each month. You have cut your fees by about 65%. If you spend $500 in fees each month you have just saved $325 per month in fees....not bad huh!

Now I am sure during this guide you are saying to yourself, this can't be legal, it has to break some eBay rules, right? Wrong, it doesn't. You see eBay has no set policy on S&H for auctions and would have a very hard time accusing anyone running an auction of fee circumvention. Imagine an item worth hundreds of dollars, weighs 50 pounds and might cost $50 to ship. It has an opening bid of 99¢ (you must have seen many of these on eBay). I have run so many myself just to get the ball rolling and to get heavy interest in the item. On this item, what is a fair S&H fee? Does it look strange for a 99¢ auction to have a $50 S&H fee? Maybe, but as you can see it is a legitimate cost and eBay cannot nor do they have the ability to go to each auction to attempt to determine a fair S&H fee.

Now on a Buy It Now auction, it is easy to spot Fee Circumvention and they will pull down those Buy It Now deals fast. It is quite obvious when you list an item worth $25 for a Buy It Now of $5 and charge $25 for the S&H, but understand this is a different situation in an auction.

So the key is to stay within eBay rules and only apply this technique to auctions. Some might wonder if buyers are going to be annoyed when they come into your auctions and see a $4.99 opening bid and a $23 S&H plus Insurance fee. You would normally be correct in this assumption, however, if you are like me, you will see that so many of the larger Power Sellers are doing it and big time and I believe the experienced buyers on eBay know why they are and just accept it. I for one always look at my total cost on a delivered item and don't pay much attention to a starting bid or buy it now price.

One Power Seller I bought from who had 60,000 positive feebacks sells cell phone accessory kits at $2.99 with a combined S&H and insurance fee of $9. The items actually cost him 60¢ to ship via First Class Mail and he never insured them, but of course I paid for the mandatory insurance.

Another seller I saw has musical instruments on auction as low as $5.99 for a guitar with a S&H fee of $49.95. Look around, you will see so many of them, that you might wonder how they get away with it.

On a straight mail order item I needed (from Nutone the company that makes bathroom fans and bells for your doors), I needed a simple part for my door switch. They quoted me $2.70 for the part and their flat S&H fee of $5. Almost $8 for a small diode I needed (it was the size of a paper clip).

I searched the net and found the part for anywhere from 2¢ to 25¢ and finally ended up buying it in a local electronics store for 25¢ net.

So when you consider how major companies operate their business, understand that even on a small item like a paper clip, it is not only the value of the item you have to charge for, but the time it takes to pull the item, pack it, print the shipping label, your office overhead, gas, auto expenses and actual mailing costs.

I think as a seller you have to be as concerned as we all are about raising our S&H a bit to help offset our true costs, but they also should represent your True Costs. Any large company usually charges a flat S&H fee on small orders because they must and that charge can end up being a huge percentage of the cost of getting that item delivered to the customer.

Here is an email I got from eBay to explain their policy when I asked them to check some sellers out that were practicing this technique. =================================================================================

eBay is in the process of clarifying their policy regarding excessive shipping and handling charges. At this time, eBay is not taking action until a decision is made on the policy.

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I am now trying to give some details in my auctions to explain this new technique. This is how I have worded my auctions for now. I may modify this as I test this technique even more:

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As a way to keep costs in check, I have changed the way I am running my auctions on eBay. You will notice that I have taken off all the Buy It Now items and in its place now have started my auctions at a low opening bid. The shipping and handling now reflects a truer cost to bring these lights to you at these incredible opening bids. I hope you will find the value and total cost now better then before.

This is how it works...You will now be able to bid as low as $19.95 on each light you order and $59.95 for the S&H on each light (each additional light you win will cost $54.95 for the S&H). Your total cost now can be as low as $79.90 if you get lucky and you will save a bundle.

Canadian Customers will start the bidding at $19.95 for each light as well and $69.95 S&H for the first light and $64.95 for each additional light, these will ship via Air Parcel Post.

The total you will now pay for these lights, delivered to you, is actually less then it has been in the past. Canadian customers should especially like this new plan because the invoice cost of the item is now only $19.95 and that means any duty that might be due, is based on the $19.95 cost and does not the S&H fees.

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So as you can see this is really a win, win situation for everyone when selling multiple and repeat items. You pay eBay and Pay Pal around 10% on a successful sale, you end up with more in your pocket then before so you can either cut your prices a bit or take a well deserved vacation each year on the money you saved.

The US customer will pay about the same he did before so he is in good shape and the international customer will legally save a bundle on the duty on the item because it is based on the final auction price he paid. This might not be true in the case of obvious "under valued items" and I suggest you use your common sense here so you do not violate any customs laws. On a $5 win vs. a $25 win the international customer can save 7-10% or more on the difference in price.

I hope this guide will help you "think outside of the box" a bit and try to figure out other legitimate ways to keep your costs down. I for one know how many hours the little guys like me put into our eBay business and how little per hour most of us really make. At times I think working at McDonald's might even pay more then some sellers actually make on eBay.

Remember, that the actual shipping costs just went up as well, (postage increases) and this also hurts the seller and narrows the profit margins. The more the customer must pay for the delivered item means the less he will buy from us on eBay or the lower we must price the item to stay competitive with other retail sources.

One last item...if a buyer is new and misses all the information on my auction and never looks at the S&H fee and write me about the cost, I let them cancel the deal immediately or remove their bids. The intent it not to fool a buyer in any way but to help them and make them understand this selling technique. The experienced ones will and will be grateful and the newbies or those that can't comprehend the concept won't. When you allow the cancellation, be sure to apply for a Final Value Credit on that item. I will be posting another guide soon on how to do that. It is quite easy to do and fast.

I have to report to you all, that I have tried it this week as a market test and my sales are about the same as before and one buyer questioned the S&H fees and I let him retract his bid and another just didn't understand how this program worked and trying to read his email with all the spelling errors and trying to explain to him how this works was a waste of time. I think the bulk of the buyers on eBay are getting sharper too and they understand the need for the sellers to be a bit more creative to keep thier prices down and these are the buyers I seek out to buy my custom lights, not the ones looking to steal a $70 item for $10. Those buyers are always the ones that you can never satisfy and end up being the non-paying bidders or worse.

I would like to truly thank the eBay Power Seller Support Team I have spoken to over the past week or so. My auctions had some problems (too many links to outside sites with information about the products I was selling) and they not only helped me understand how to stay within their guidelines, but answered all the questions I had about this new method of running my auctions.

I welcome your comments or suggestions on your methods to save some money and do more business on eBay too.

Good eBaying To All,

Len Rapoport

A Proud eBay Silver Power Seller Since 1998