posted on March 13, 2002 07:29:44 PM new
I think there probably isn't a single seller on eBay who makes real money on shipping. At best one recovers some of their costs of running the auction or makes up for the depressed prices on many items. Some fees are absurd so I simply don't bid or not nearly as high as I would otherwise.
To this day, I have not had a single bidder complain about my shipping charges, but I had one guy haggle a bit to save a couple bucks (it was a large order so I was still fine and he turned into a repeat buyer).
Again most bidders/sellers never do the math. How much does something cost down the block versus what I pay for it on the web? I could care less if I pay $5.00 for 2.00 worth of shipping if I still save money. Those cheapskates who just won't bid or want to complain mix foolishness with their inability to use a calculator.
posted on March 13, 2002 07:51:28 PM new
To get back to real world shipping and handling, there are as many variations there as there are on ebay. Some are reasonable and some gouge.
I just ordered some gourmet items from a small company, Upton Tea, they charged $3.95 shipping on my 58th order which they got out Priority Mail the same day.
I just abandoned my shopping cart at EddieBauer.com when I was reminded that they not only have high shipping, but a handling charge on top of that. The only time I order from them is when I can get free shipping or a 20% discount. Otherwise, too expensive. I can order a lot of the same stuff from LLBean for far less shipping expense. And I do.
Tickets? Did someone mention tickets online and their rapacious handling, convenience and every other type of fee they can add on?
My answer is simple. I just booked my New York trip to the booksellers show in May and I would normally be buying full price tickets on line, but that has become so outrageous, I will wait and stand in the half price TKTS booth line when I get there.
So in the past few days one company got its umpteenth order, another found an abandoned shopping cart with $96 worth of merchandise in it, and a third lost my business entirely and forever.
Shipping and handling may be controversial, but as a seller, I think of my personal feelings as a buyer when setting up my rates.
posted on March 13, 2002 08:02:31 PM new
Tomyou, your business plan includes bringing in repeat customers. I don't know what you sell. Obviously it's to your advantage to bring in new repeat customers, so you take steps to ensure that result.
I sell a few regular items. There's really no repeat business, though occasionally I do get repeats. More often, a buyer will discover one of my products and bid on several of them at once. For that, I do give them a break, after the fact, by combining shipping at no extra cost. I charge to ship the first item, after that, it's free.
In the category and type of item I sell, it's low price and lots of competition. An opening bid that's a dollar higher often doesn't even get seen. OTOH, getting the bidder to look at the ad, even with a small handling fee mentioned at the end, is a big advantage. When my competitors began using this trick, I had to follow suit.
The small handling fee I charge goes towards the usual - materials, time packing, mileage to the post office, etc., But mainly it goes towards bookkeeping. I have developed a system which works very well but does take some time. And of course little things like the hour or two I spend each week chasing deadbeats go into the equation.
To put it simply, I try to be fair with my customers and to myself. Most bidders understand and are okay with a flat shipping fee as stated in the ad. A very small percentage are cutthroat bidders who want to squeeze every penny and resent a seller recovering costs. I learned a long time ago that I am the one who decides what is fair.
posted on March 13, 2002 08:15:30 PM new
As a seller I am faced with high shiping cost which I must pass to the customer.
I dont like the high charges but since I am drop shipping, I am at the mercy of the shipper.... Don't like the high rates but I am at the mercy of the fullfilment warehouse.
How do you handle oversea shipments that are paid by credit card? I have heard some horror stories and would like to benefit from the experinces of the big sellers .
posted on March 13, 2002 08:26:04 PM new
"Most ebay sellers don't do the volume to push them past the IRS minimum to make these claims on the tax form. Also, sellers don't make back the full amount, it just reduces your taxable income."
This should be corrected/clarified. There is NO minimum amount you have to make to claim expenses on a Schedule C. You don't have to pay taxes on net income under a certain amount (which used to be $400 or thereabouts, and is probably more now), but you must declare ALL income. And, if you're filing a business return, you can reduce this gross income by all of your deductible expenses, from dollar one you spent. There is no floor on these expenses.
And, since you deduct the full amount of your hard costs before you ever figure your taxes, they "disappear." Yes, this reduces your taxable income...unless you charge a handling fee that recoups these costs and provides you with a net profit on your shipping. You get all these expenses back (i.e., they are deducted before your tax is figured), AND you pay less tax because your net income is less.
posted on March 13, 2002 10:23:43 PM new
"This should be corrected/clarified. There is NO minimum amount you have to make to claim expenses on a Schedule C. You don't have to pay taxes on net income under a certain amount (which used to be $400 or thereabouts, and is probably more now), but you must declare ALL income."
Not according to the IRS tax booklet. If you make under x amount, you don't have to file a return unless you are self employed and have earnings over x amount.
Any self employed person can claim expenses, but it is not required if you meet the qualifications above. That is what I meant by the IRS minimum.
posted on March 14, 2002 12:48:47 AM new
We've only had 1 complaint about a handling fee since we've been on eBay.
We ran into one of bdunique's no handling fee rebels that emailed us a while back and gave us a lecture over a 75 cent handling fee (clearly stated in our auctions). She went as far as accusing us of mail fraud, even after we gave in and refunded her the 75 cents just to get her off of our backs. She also sent threatening emails and made a lame attempt at auction interference after we left her a neutral feedback. She said she deserved positive feedback for paying on time (hogwash). She is now NARU. Thank God!!
posted on March 14, 2002 07:54:56 AM new
"Not according to the IRS tax booklet. If you make under x amount, you don't have to file a return unless you are self employed and have earnings over x amount."
From the IRS website:
"You must file a tax return if you had net earnings from self–employment of $400 or more. Net earnings from self–employment is your total self–employment income less the expenses paid in operating your trade or business, multiplied by 92.35%. For more details, refer to Publication 533 (PDF), Self–Employment Tax."
You said earlier that most eBayers didn't meet this "minimum." It's hard for me to believe that, given all the power sellers and all the folks here at AW who certainly wouldn't be bothering with keeping up on the latest news and views for a net income under $400.
And of course, as explained above, net earnings is total income less expenses. Which means you could easily make $1000 or more and still have a net income of $400.
And how do you arrive at that net figure? By deducting all your expenses...including those incurred in shipping items.
My point is that just about everybody using eBay who sells more than a very few items has created self-employment income, and also created an opportunity to deduct expenses.
You pay no tax on expenses, as they are removed from the equation at the beginning. However, if you treat shipping and handling as a profit point (and many sellers do--or try to), you will produce net income from it, which IS taxable. Of course, to make a profit on S&H, you're going to have to charge so much that you'll lose a number of buyers...so, for many of us, it's just not worth the hassle.
posted on March 14, 2002 10:50:10 AM new
"It's hard for me to believe that, given all the power sellers and all the folks here at AW who certainly wouldn't be bothering with keeping up on the latest news and views for a net income under $400."
It's $400 net earnings, not income. Considering that the majority of businesses do not show a profit in the first five years, it's very easy to see that most ebay sellers aren't showing a profit. I'm not. I'm liquidating old inventory which eats into my profits from the newer stuff I sell. My sales drop off considerably in the summer and fall months so I never push past the IRS minimums.
posted on March 14, 2002 12:01:06 PM new
"It's $400 net earnings, not income."
Yes, I'm aware of that. See the quote I posted from the IRS information board.
"Considering that the majority of businesses do not show a profit in the first five years, it's very easy to see that most ebay sellers aren't showing a profit."
I think if most eBayers (even including start-ups in their first year of operation) who sell more than a very minimal amount were to honestly add up their income and their expenses, they would have netted $400 or more. On average, I'm sure it would be much higher if you factor in the power sellers and other high-volume operations.
"I'm not. I'm liquidating old inventory which eats into my profits from the newer stuff I sell. My sales drop off considerably in the summer and fall months so I never push past the IRS minimums."
It's difficult for me to imagine that you are a regular seller yet can't manage to earn over $400 net income after expenses. If that's really your situation, you probably ought to look at another method of earning money.
posted on March 14, 2002 12:52:25 PM new
"It's difficult for me to imagine that you are a regular seller yet can't manage to earn over $400 net income after expenses. If that's really your situation, you probably ought to look at another method of earning money."
Where's the logic in that? Major stores even take on average five years to generate a profit. Since 90% of small businesses quit after five years, I'd presume they also had not generated profits. If every business quit because they didn't generate a profit right away, there'd be very few businesses around. There wouldn't be any chain stores or franchises.
I should stick around because my earnings are growing steadily. Keep in mind, I didn't start ebay as a business; I didn't intend to generate profits; I started to liqidate inventory that was part of a collection. In three years I have not completed liquidating that inventory. I have ventured on to new inventory which is profitable. However not all of my new inventory is profitable, it takes time to learn what categories are good sellers and those which are not. I have to take a lot of chances and usually I score big, sometimes not.
posted on March 14, 2002 07:03:44 PM new... it's very easy to see that most ebay sellers aren't showing a profit.
Maybe it would be better if we don't discuss our own personal finances. It might be just me but QuickDraw you are coming off as totally incredible. I would think you earn $400 a month on handling fees alone. LOL
posted on March 14, 2002 07:44:01 PM new
I make over $400 in handling in some months, but since I lose money on handling, what is your point? The IRS does not say if you make over $400 in revenue, they say over $400 in profits.
You're right, I am incredible, but you said it, not me.
posted on March 14, 2002 09:04:13 PM newI make over $400 in handling in some months, but since I lose money on handling, what is your point?
I dunno. Creative bookkeeping, maybe?
I charge about $3 for media mail for videos, and it's not overcharging. I'm losing money on it. Here's the breakdown: 50¢ for supplies; $4.40 labor; .12¢ car/gas; I'll include all the overhead as $0 even though I could charge fair market value. SubTotal $5.02 handling + $1.34 postage =$6.36. Buyer saves (I lose) $3.36.
So let's see, you figure the 10 minutes time you spend packing a video is worth five bucks, so you deduct that as a business expense? If you ever quit eBay, there's probably a job waiting for you at Arthur Anderson.
posted on March 14, 2002 10:13:10 PM new
Takes twenty minutes to pack a video at $4. Going rate around here is $12 hr. Sounds right to me. The remainder is based on delivery to Po.
I was not discussing what I claim. That is irrelevant. I was discussing that there are no profits in handling. You stated I make at least $400 in handling per month which has nothing to do with making $400 in profits.
posted on March 14, 2002 10:27:41 PM new
Although there are a lot of power sellers and huge volume sellers out there on Ebay, there are still a ton of small time sellers who only sell items they had purchased themselves over the years.
99% of these items are sold at a loss and do not generate any income at all.
As far as shipping, I add $.50 to each item--I feel my time and gas is at least worth that much. And, it does help recoup those high Ebay, Paypal etc fees. I do state shipping up front and I have never had a complaint.
posted on March 15, 2002 06:47:59 AM new
So you pay yourself five bucks to pack a video. Voila, no profit! But do you count that five dollars as personal net income?
Why not just award yourself a huge bonus, like PG&E Corp.? Oops, I forgot - the State Attorney General just filed suit against PG&E. Nevermind.
posted on March 15, 2002 07:07:05 AM new
I sell mostly videos and I can pack 6-7 in 20 minutes. I dont put a price tag on packing 1 video per customer and I certainly am not losing any money. My shipping charge covers my auction fees and packing material..therefore I am not losing money.
MEOW
posted on March 15, 2002 08:09:30 AM new
In reality I don't charge for labor, after all the other handling fees are incurred, the buyer couldn't afford or would be reluctant to pay my labor charges. But, if I decided to hire a worker I would have to go to the "6-7 in twenty minutes" route, and those labor costs would be deductible.
I was wrong about that I make $400 in handling in some months. I included shipping and handling in that amount. Even still, no profit on it especially when since I combine items and send things for a loss often to Canada.
posted on March 15, 2002 09:17:33 AM new
Interesting, when I analize the final numbers for actual expenses, I find myself undercharging on most items, not including labor. My average loss on handling is .21¢. To do the "6-7 videos per twenty minutes, I'd have to raise my rates another .55¢ which is what a box would cost.
I just got a neg for overcharging, too. I actually loss .45¢.
posted on March 15, 2002 09:37:41 AM new
I cant fathom why it would take 20 minutes to pack a video tape. You are using your time quite poorly in that case. If time is money..then YES..you are losing money.
MEOW
posted on March 15, 2002 10:51:49 AM new
Today I just paid a $175.00 invoice for the packing peanuts that were used to ship orders the last month. This, in itself, confirms that seller's shipping expense is much greater than just to cost of postage.
posted on March 15, 2002 11:14:41 AM new
I don't think anybody here has said that shipping costs are restricted only to postage. In fact, much of the discussion has involved the ancillary costs such as packing supplies, mileage, etc.
My point has been that all those hard costs should be deducted from your gross income as business expenses. If you elect to include a handling charge for your buyers, you can use it as a profit point, in which case you're going to pay taxes on the amount you've charged over and above your deductions.
The only cost you cannot deduct is your time, and hopefully your profits will pay you well for time spent buying, listing, and shipping.
posted on March 15, 2002 11:17:18 AM new
Thats not always the case. Anyone who ships just Priority Mail can easily obtain free boxes and tape...otherwise boxes are readily available at supermarkets. Many sellers have no need for packing peanuts and expensive box fillers (of course that depends on what you sell). I use newspaper, plastic bags as filler is needed. Therefore..only the sellers that spend alot on packing material have a "much greater" shipping expense. I factor in the little material I use when I ship along with the ebay fees and it comes out pretty much even across the board and my shipping charges in my auctions are more then reasonable. I certainly dont make money on shipping but I do not lose any either.
MEOW
posted on March 15, 2002 03:49:48 PM new
Let's see, I could save one hour on packaging so I can get home one hour earlier to watch People's Court. Or, I could take the saved money doing it my way and have a vacation prepaid. Tough decision.
The other option is to raise my handling again .55¢. which is what I'd do if was doing heavier volume, but this way I keep my prices lower and more competitive. That's what irks me most, how I find ways to keep the buyer'shandling down, then get complaints about high shipping. I'm wasting an hour a day of my time for nothing just for their benefit and they have the gull to whine.
[ edited by quickdraw29 on Mar 15, 2002 04:06 PM ]
posted on March 15, 2002 05:14:38 PM new
hi, I used to charge $4 for shipping for video and ship it priorty mail. boxes are free, but I have to buy the mailing tape for my local post office doesn't give me any. I make .50cents which goes for gas and time. 40% of the time, I only make .05 cents, for older videos weight more than a pound so it cost $3.95. I get countless complaints when they get the package for they see I over charge .50cents or even a nickel. Since the recession, I get too many fraud artist who said "I never got the package, give me a refund". so now I put deliverly confirmation which cost .40cents. Now I lose money so I raised my shipping to $4.50. Now I get more complaints. I barely make anything on these videos since most sellers out there charge so little, a rare video become useless in price. Is very hard to cut with $4.50 shipping, but the complaint is stacking up. Am I charging too much? I was thinking of doing media mail, but I did it 4 times as a special treatment for demanding customers, only to get more complaints on how slow it was (even when they demanded snail mail). media mail is fine, but 10 days is something they do not want to wait, so they attack even when they choose the cheap way. I just wish people mail the payment without countless chit-chats and I can just mail them and they go away. But all they do is complaint. So how much shall I charge? $4.50 or go up to $5?
p.s last christmas, i had a buyer complain about my shipping, i charged her 4.00, it was a older tape so it costed 3.95 prioirty. the buyer emails baqck, complaing "how dare you charge me 4.00 and not include DC and insurance! 4.00 is more than enough for priority mail with DC and insuranbce! I will report you to ebays"! ):
posted on March 15, 2002 09:23:27 PM new
I never had one complaint regarding shipping and I used priority all the time.
in part, the terms of my auction read:
"Buyer pays shipping and handling cost of actual shipping via USPS priority ONLY FOB XX please check the rates by referring to the USPS postal calculator
*I use priority in order to track the items and peace of mind for the buyer AND seller.
If you choose not to pay for insurance, I cannot and will not take responsibility for any damages incurred in transit. If shipping and handling charges exceed more than $1 over expected, it will be refunded into your paypal account."
posted on March 17, 2002 03:41:34 PM new
ironking: FYI, Videos can be sent via MEDIA MAIL through the post office. It's a lot cheaper than priority or first class. You can't use their boxes, but I received a tape I ordered recently in a priority mail box that had been turned inside out. This is definitely the wrong thing to do imo, but it does happen.
Media Mail takes longer, but most buyers know that. I always offer for people to let me know if they DON'T WANT Media Mail and wish to pay for Priority. Amazing how they'll stop complaining and take the cheaper/longer route. Delivery Confirmation is still necessary though and often speeds up the process.
posted on March 18, 2002 12:25:34 AM new
When I first started on Ebay and yahoo I lost my fanny on shipping charges, oh I weigh the product but I forgot to weigh the packing material and box. Also the time and gas to go to the Post office to ship and stand in line and find out I should of charged 2.00 more for shipping because I took the time to carefully wrap the breakable plus also all the packing material adds weight. Now I ship Priority mail they provide me the boxes I weigh packing materials for that item prior to listing it on ebay or yahoo and my Postal person picks up my packages so I do not have to wait in line at the post office or use gas to get there. Now for the other expenses Ink to print invoices the paper for those invoices and labels for postage and the charge that Stamps.com charges you and I still take the time to carefully wrap breakables for shipping I charge a small handling fee to cover these costs and I have no problem doing that.If you try and add the costs to your item price no one bids on it but if you put it in your shipping nad handling people still see the value in your product. There was one time I over charged a customer for shipping because my scale only goes to 5 pounds so I took a SWAG Scientific Wild Ass Guess. I sent him a check for 3.25 the same day. As far as Amazon and the rest of them, charging the S/H helps them keep product costs down but keeps the shipping dept employed with staff to get you product to you within a reasonable amount of time.
