Friday, September 5, 2014

Rick’s Pedigree Coins – Ebay & Pals Fees – Selling Coins on Ebay


If you are a coin buyer on Ebay and you are evaluating the purchase price of a coin, you are oblivious to Ebay fees.  But sellers have to consider these fees and they are reflected in the selling listing price.  On average, these fees add about 20% to the gross selling cost / list price.  For example, a coin listed at $100 breaks down like this:

$100 – Selling or List Price

10% of the selling price goes to Ebay
3.5 – 4 % goes to PayPal
4 – 5%  goes to USPS/Shipping cost ($2 to $4 for postage, $1 for padded envelope)

So there you have around 18% out the door to Ebay & Pals and they have no investment cost in the coin or risk associated with the transaction.  The seller still retains the transaction risk and the cost of delivering to the post office as well as shipping material cost.  Sure, the postman can pick it up, but that adds at least a day delay in shipment and the seller gets dinged by the buyer for being a slow shipper.  Conservatively, the post office is 5 miles away (round-trip) and the mileage allowance (IRS 2014) is 56 cents so that is $2.80 or another 3% on the cost to sell.  Plus padded envelopes run from 50 cents to $1 each.  And that takes your selling fee to 20% of the gross sales or more.

Now here is a real-life example:

$     9,686
 
Gross sales, 80 transactions
 $     7,796
 
Investment cost in coins
 
 
 
 $     1,890
 
Gross Profit before Fees
 
 
 
 $       973
51%
Ebay fees / Gross Profit
 $       302
16%
PayPal fees / Gross Profit
 $       166
9%
USPS fees – Gross Profit
 $         84
4%
Handling/office/envelopes
 $     1,525
81%
 
 
 
 
 $       365
 
Net Profit

 
For sharing in none of the risk and having no investment costs, Ebay & Pals take 80% of the profit while the seller makes a 5% return on the investment cost and has all the risk and work.

So when you see a coin that is listed at what you consider a high price on Ebay, discount it by 20% and then see what the price looks like.  The 20% difference – or premium if you wish – is all Ebay & Pals.  Not the seller price gouging.  And Ebay & Pals are taking 80% of the profit.  Amazing, 80% of your profit goes to someone else – and we have not even given the IRS their cut yet.

The two major competitors to Ebay in coin auctions are Great Collections and Heritage Auctions.  Both beat the pants off of Ebay as far as cost to the seller.  While postage may be a push, you may save in that you can send several coins together – saves postage cost and material cost.

Great Collections only charges 5% for their services and they take care of the listing and picture taking.  And, if your coin sells for more than $1,000 the selling fee is zero!  They also take care of the shipping and they absorb the transaction (PayPal) cost.  So you pay Ebay & Pals 20% or Great Collections 5%.  And Great Collections pays sellers within a week  - plus or minus a few days.

Heritage is a bit more complicated and fees can be negotiated, but still are lower than Ebay & Pals.  Additionally, you can list for free if your coins meet certain criteria.  Like Great Collections, Heritage takes care of all the listing work, photographic work, shipping and payment collections.  (Negative: Heritage is very slow to pay sellers.)

Buyers in both Great Collections and Heritage auctions share the listing cost to some extent because they are required to pay a buyer’s premium.  
 
And for these reasons, coin buyers may find higher listing and purchasing prices on Ebay than on Heritage and Great Collections.  As a matter of fact, I frequently see coins that have sold at those two auction sites and then relisted on Ebay for 2 to 3 times the selling cost.  On the flipside, I have never seen a coin purchased on Ebay and listed on Heritage or Great Collections for a higher price. 

The Wall of Greed
  

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