eBay has introduced [effective since June 16, 2009] a new pricing structure for its auction style listing. This is not a promotion, it is a permanent feature. That is, for every 30 days, you will not be charged a listing fee [regardless of the starting price] for your first 5 single-quantity auction style listings if you list them via its SYI or Sell Similar Form. The final value fee, however, will be a flat 8.75% [with a cap at $20 whichever is less] of your selling price. If you list your items via 3rd party listing tool or eBay’s own Turbo Lister and other mass listing tools etc, the pricing will remain the same as before [i.e., you will be charged a regular listing fee and FVF according to its original pricing structure].

        This looks like a refreshing start [i.e., no listing fee, flat FVF with a cap] in sharp contrast to its current Byzantine style of grading listing fees and FVF.  Cynics, however, have quickly declared that this is yet another eBay’s fee hike masqueraded as a fee reduction and listing stimulation package. Indeed, unless your item sold below $25 or above $530 [with exceptions as outlined below], you will end up paying a higher fee [up to 70% higher, more on this later].

        The above statement is true only if you always start your auction at $0.99 or below. Thus, if you would start your auction at $0.99 and below, the choice is very clear [i.e., only use the free listing option if your expected selling price is either above $530 or under $25, but that is hard to know for sure before hand]. Furthermore,  many sellers could not stomach the potentially huge loss by starting an auction at $0.99 regardless an item’s fair value, then, the question of when should we use this free listing option become more complicated for you will have to factor in the higher listing fee you must pay when starting at a higher level under the original fee structure.

         The purpose of this guide is to give you a precise answer on when you should use this free listing option at various starting/selling prices for your benefit. Yes, when used properly, as explained below, you can actually save some eBay fee [often quite significantly] with the new pricing structure.

        For the sake of simplicity, let us assume that your starting price is your selling price  [depend upon your starting price, this actually happens quite often with only one bidder for instance, or assuming that the starting price and selling price are close to each other - by close I mean selling not over 200% of your starting price. But really, assuming it or not will matter very little for vast majority of our situations. i.e., few cents difference when the starting/selling price are low, and almost no difference when starting/selling price are high for the gap between different grades of listing fee are quite wide]. The fee [listing and final value] of every possible starting/selling price [from $0.01 to over $600 at $0.01 increment] of both pricing structures are calculated and plotted against each other in the following figure [I apologize for the image quality for they were all blurred by ebay after upload, red=original, blue=free listing option, maximum scale for starting/selling price is marked at $500, the maximum ebay fee scale is marked at $25, mentioning this because the image is blurred ]:


       As you can see, the free listing is actually beneficial [meaning you are going to pay less eBay fee comparing with its original fee structure] for a wider range than the naive under $25 and over $530 range as outline above. Indeed, you will pay a lesser eBay fee when the listing/selling price is either lower than $62 or higher than $448. The difference between the two fee structures is quite high when starting/selling prices are between $150 and $300 and the highest when selling at $228 [with greatest percentage of increase in fee for the free listing at $199.99 selling point at around 70%]. Thus, if you know with some certainty that your item will sell between $62 and $448, you should not use the free listing option. You will be better off sticking with the original fee plan for those instances.

 
      Although it is generally beneficial to use the free listing option when the listing/selling price is below $62 [notice, however, that you are going to pay a slightly higher fee when starting/selling are between $44 and $49.99, this is mainly because of the jump in listing fee at $50 for the original listing plan], but the difference overall is quite small and largely inconsequential. Unless you are certain that your items will not sell more than $62, I do not recommend using the free listing option in order to save very little in listing fee but risk paying a much higher final value fee when you are wrong [but not wrong enough for it to go over $530]. Thus, we have the following $448 cut-off rule:

 

• Only use the free listing option if you are going to start your item at $448 or higher. Otherwise, do not use the free listing option [but note the following exceptions]!

 

      The above recommendation is suitable when your sell-through rate is 100% or nearly 100% [or if you don't know your sell through rate for that particular item but want to play safe]. Many sellers actually consider a sell-through rate around 50% or even 30% [e.g., if you list 10 items and only 5 or 3 sell, then your sell-through rates are 50% or 30% respectively] is quite good. In fact, the average sell through rate of an eBay auction is around 40% to 60% [depending upon the specific category]. So for the vast majority of  eBay listings where our sell-through rates are less than perfect, the pictures are a little different. Obviously, this is because the lower the sell-through rate, the higher listing fee we are going to pay with the original fee plan for each successful sell-through. This point [after the fee of every listing/selling price under different sell-through rates is calculated of course] is illustrated in the following figure [blue=free listing option, red=80% sell-through rate, yellow=50%,orchard= 30%, green=20%, maximum scale for starting/selling price is marked at $500, maximum eBay fee scale is marked at $40]:



     It is very clear that as your sell-through rate decreases, the free listing option became more attractive. For instance, at 30% or lower sell-through rate, you are always better off by using the free listing option no matter what your starting/selling price is. So it pays to know your sell-through rate. Since most sellers do have some idea about their sell-through rates [or you might better define it as the likelihood or probability of an item will sell at a particular starting price, this will be another interesting/important subject that we can treat later], I thought that this current exercise is quite useful [especially if you have confidence in your assessment of the particular sell through rate at the particular starting price of your choice for each item before listing] and my general recommendation is as following:

 

• If an item's sell-through rate is 30% and below, you should always use the free listing option for that item. If it is around 50%, then, use the free listing option if your expected starting/selling price is either below $150 or above $350.  For 80% or better sell-through rate [or if you don't know your sell-through rate for that item], use the free listing option only if your starting/selling price is higher than $400.  

         Notice that the above analysis is about one-time listing and did not take into account of the possible re-list fee credit. It is true that under the original fee plan, a re-list credit is beneficial [i.e., you will not be charged a 2nd listing fee if your item sell in the 2nd attempt]. Since not every relist is qualified for the credit and many do not relist at all, we will treat listing with relist credit as a separate case below:

        First, it should be pointed out, however, that the benefit of a re-list credit is very small with a  maximum saving for listing fee at only 17 % when your sell-through rate happens to be around 60%. The saving in listing fee is negligible for either high or low end of sell-through rate. So do not automatically relist everything right away for this little saving in listing fee alone - it is actually an eBay way of extracting more fee from you with clever wording.

       It is quite straightforward to take into account of the re-list credit precisely. Let us denote p as your sell-through rate, instead of been charged at a factor of 1/p of the listing fee without the re-list credit as analyzed above [in the 2nd image] for each successful sell-through, the effective charge for listing fee with re-list credit is a little less than that of course [i.e., at a factor of [1+(1-p)^2]/[(p+(1-p)p] of the listing fee for each successful sell-through with re-list credit to be precise, mentioning this so those who are well versed in math will know how it was derived].

          The following figure shows the results of the eBay fee with re-list credit under various sell-through rates [blue=free listing, red= original fee plan with 100% sell-through rate, green= 80% sell-through rate, gray=50% sell-through rate, blue=30%, and yellow=20% sell-through rate under original fee plan]. Thus, if you always re-list your item under exactly same condition when it failed to sell the 1st time, then, the recommendation is slightly different from the one above as outlined below:

         Follow the guide properly [e.g., do a careful assessment (subjective or otherwise) of your sell-through rate for a particular item at a particular starting price before listing, and then use the free listing option if your expected or comfortable starting/selling price falls into one of the recommended listing zone], the saving in your eBay fee can be quite significant. For instance, with the most conservative $448 cut-off rule [which is suitable for all situation regardless your sell through rate] instead of the generally lauded over $530 and under $25 rule, your average saving in eBay fee [for starting/selling price between $448 and $530] is at least 8% [and up to 20% or 40% saving in eBay fee if your sell through rate is 50% or 30% respectively]. Overall, the average saving in eBay fee for all the applicable starting/selling price region between $25 and $530 is at least 7% and up to 40% or more depending upon the sell through rate. Obviously, a mere 7% [minimum though] saving in total eBay fee in the applicable region of starting/selling price range [between $25 and $530] does not sound very much, but it is far better than facing a hefty fee hike when you use the free listing option without being aware of its full consequence.