Why are eBay Fees so High & How to Lower them Significantly

by John-Paul Cody

Updated

If you’re wondering why are eBay fees so high, you’re probably a new seller or maybe thinking about getting started on the platform.

After selling on eBay for 5 years, I would actually argue eBay fees are a bargain.

In this post, I’ll tell you why eBay’s fees are worth paying, and several ways you can even reduce them.

Why are eBay fees so high?

eBay seller fees are relatively high at ~12.5% on average, because it costs money to manage their platform of 187 million shoppers, and provide sellers with services like fraud protection and discounted shipping rates.

Comparatively speaking, eBay’s fees are fairly standard when compared against other major online marketplaces.

online-marketplace-fees-compared

That said, eBay’s fees are category dependent, meaning some category fees are as low as 0% (shoe sales over $100), while others are 15% (watch sales under $1,000).

When analyzing the top marketplaces like Poshmark vs Mercari vs eBay, you’ll find very few have an adjustable fee structure by category.

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I’ve sold on eBay for over 5 years, and initially it was hard to come to terms with their fees, but when I considered all the advantages selling on eBay offers, paying the fees makes sense.

Here are some perks you get in exchange for the platform fee:

  • Instantly place your listings in front of worldwide audience of 187 million users
  • Sell goods globally with eBay’s Global Shipping Program
  • Transaction monitoring to prevent fraudulent orders
  • Ability to utilize multiple selling formats, such as auctions, buy-it-now, and local sales
  • Access to great shipping discounts

What percentage does eBay take from a sale?

If you are a new seller, you are probably wondering “does eBay take a cut?”. The short answer is yes, most of the time. However, in some cases eBay will take less, depending on what you are selling.

 eBay fees will vary by category, but on average they are around 12.5%, and can range all the way from 0% (shoe category on sales of $100+) to 15% (watches category).

Since eBay now manages the entire check out process (after cutting out Paypal), their fees jumped from the historical 10% final value fee, to today’s 12.5% as a result.

Fortunately, there are several ways sellers can lower their fees by offering fast-n-free shipping and by signing up for an Ebay store which can bring fees down to around 10.5%.

How do I avoid eBay fees?

Although you can’t avoid eBay fees entirely, there are several strategies sellers can use to reduce their transaction fees on the marketplace.

  1. Learn which product categories have lower fees – on eBay, seller fees vary by category. Learn what categories have lower fees, and consider selling more of those items to avoid high fees (such as guitars which only have a 5.85% seller fee, and high end shoes which have a 0% seller fee).
  2. Sign up for an eBay store – signing up for a Basic Store ($21.95/mo) on eBay slashes your final value fee on certain categories, and gives you more zero fee insertion listings (usually costs $0.35).
  3. Take advantage of discounted shipping – eBay sellers get access to steep carrier discounts from USPS (up to 30% off), FedEx (up to 37% off), and UPS (up to 50% off UPS Ground).
  4. Become top rated seller – if you can reach top rated seller status (6 qualifications shown below) then you’ll receive a 10% discount on your final value fees.

top-rated-seller-ebay-program

Does eBay take their fees automatically?

eBay seller fees are automatically deducted when the sales transaction occurs. This creates more clarity for sellers, as opposed to their previous process of sending a monthly bill of the total item fee amount. If you’re selling fast on eBay, that monthly bill was pretty daunting.

To see a complete breakdown of fees charged, go to the “Payments” section within your seller account, and you’ll find fee breakdowns like this:

eBay-fee-example

eBay has improved this process significantly from when I first started selling a few years ago. Receiving a monthly bill of hundreds of dollars in fees without a clear breakdown was frustrating to say the least.

Is it more expensive to sell on eBay now?

The overall amount charged to eBay sellers per sale is approximately the same as it has been for years (including before Managed Payments).

Before Managed Payments, eBay sellers would pay ~10% final value fees to eBay and a payment processing fee of 2.9% plus $0.30 USD to PayPal. With Managed Payments, eBay now handles everything (including payment processing), so both fees to eBay now.

Today, the average seller commission fee is ~12.5%, but varies depending on the product category being sold.

An alternative platform with similar fees but a simpler selling experience is Mercari. There are lots of easy to learn tips for selling on Mercari as well.

How long does it take to get paid on eBay?

It takes 1-3 business days to receive your payout from sales transactions on eBay. This allows for the buyer’s payment to be fully verified and then transferred to the seller’s linked checking account.

Sellers also have the option to receive their payouts daily or weekly.

Sellers can visit the “Payments” section in their seller account and see a detailed timeline that looks like this.

eBay-payout-timelin-1

Why is eBay shipping so expensive?

Ebay does not ship orders directly, instead sellers purchase postage from the leading shipping carriers (UPS, FedEx, and USPS) through their platform, at a discounted rate.

If you purchase shipping postage through eBay, you’ll receive a discount off retail rates, usually ranging from 8%-40%.

Therefore, you actually receive cheaper shipping rates by shipping through eBay than you’d get by going to the shipping carriers directly.

People think eBay shipping is expensive usually because they aren’t taking advantage of eBay’s shipping discounts or they aren’t shipping efficiently (such as using UPS Ground when they should be using USPS Priority Mail for smaller packages).

For example, if you buy and sell clothes for profit, shipping light weight clothing can cost just a couple dollars. Unfortunately, many new sellers don’t know how to ship clothing efficiently, and end up paying way too much.

Use the guide below to easily determine which shipping option you should use, to maximize your cost savings to the fullest potential.

Wrapping Up

If you were wondering why are eBay fees so high, hopefully this write up helped dispel some of that concern and helped you even reduce your seller fees.

If you have any questions, feel free to reach out!

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About the Author

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John-Paul Cody has been an avid online seller for years, across platforms including eBay, Mercari, Craigslist, and more. He has a Bachelor's Degree in Economics from UNC Chapel Hill, and works in data analytics and marketing.