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Friday, June 18, 2010

Is it really worth it to run $0.99 auctions?

I love free. I'm the first one to jump on a deal, but are the $0.99 free auctions really worth it?
The answer will be different for everyone and will vary wildly from product to product. It can be very profitable if you have an unlimited source of high demand products that you have access to at no cost. But, if you live in reality, you know how likely that is!
I'll use an example of an item I just sold. I sold a collectible card from the Miami Heat's 2006 NBA championship.

  • listing fee $0.00
  • final value fee $0.09
  • paypal fee with a micro account $0.34 (would have been $0.42 with a regular account)
  • they paid $2.73 for shipping, actual cost of postage $1.92
  • $0.06 for the shipping label
  • $0.16 for the tyvek bag
If you add that all up and subtract my expenses, I cleared $0.94 on a $0.99 sale. The percentages are pretty good, but if you take into account the time to photograph, list and maintain the auction, $0.94 is a sweat-shop type payrate.

There are more things to take into account too. The item I used as an example was something that I found for free. It cost me nothing to begin with. Had I purchased it with the intention of selling it, that would have to be added to the calculation. Even the time it takes to research and seek out good merchandise to sell needs to be added into the costs. If you spend 2 full days out of your week thrift store hopping, you need to account for that time and gas.

Some of my expenses were offset by the handling fee that I added to the cost of shipping. This is a very easy one to mess up. If you don't know exactly what it is going to cost you to ship the item (including the cost of packing supplies) than even a small miscalculation could wipe out your profit.
Another thought on shipping costs: The paypal fee is accessed on the TOTAL money collected, so if you shipped an item that sold for a dollar but costs $20 to ship, even if the customer covers that shipping cost, your paypal fee is $0.93. Definitely something to think about when using these types of auctions.

Basically, here is my advice on using the free $0.99 starting bid auction listings on eBay: If the item is one that WILL get bids, you can accurately account for the shipping costs AND the cost of shipping isn't so high that the paypal fee will kill you, go for it. Otherwise, don't bother.

Of course, I don't follow my own advice. Mainly just because I'm an eBay junkie, I still list at the $0.99 starting bid for things that fit the above criteria, AND if it is something around my house that I am willing to give away for free and I am listing it at my leisure while watching TV, why not make that dollar :)


Shameless self promotion:

Items for sale on eBay under user id Shelley-Faye

Items for sale on eBay under user id Love2DressUp

Items for sale on Etsy under user id KitschyAprons

My latest project... Kid's Creatures

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