Thursday, September 6, 2007

How much should I charge for shipping?

It seems like the internal struggle many eBay sellers have is deciding on how much they should charge for shipping.

The problem is that they hate to spend a lot on shipping themselves, but they also hate to lose out on potential earnings.

This is why I say, you should charge a lot for shipping. Well, not a lot, but let me give you an example.

When I first started selling pants on eBay, I would put them in a priority flat rate envelope. This cost 4.60, and I would charge 4.95 for shipping. I did not want to charge too much, and I wanted happy customers.

But then, I read an article by an economist that studied eBay buying habits, and he found that shipping price, to an extent, does not matter.

The moral of the eBay article was that people bid on your item based on how low your starting price is, not how high your shipping price is.

So, I was charging 4.95 for shipping, and then I raised my prices to 6.60. Doing this, I was making an extra 2.00 an auction. That adds up folks, and it completely covered my listing fees and cost of merchandise. This was awesome, and it did not effect my sell through rate at all.

I raised my price, and the amount of items that was being sold remained steady. So I raised my price again.

The third time I raised my price, it went up to 7.95. Doing this I was making an extra 3.35 an auction. This is completely amazing, and adds up so fast. Imagine if you were completing a hundred auctions a week. That is an extra 335.00 a week!

The best part is, that when I raised my price again, my sales did not fall. They stayed steady, and I reaped the benefits.

Now, handling fees are ok to charge, but do not go crazy. Look at what people are charging for shipping and getting away with. This is the best guide you can go by. I feel that if I continued to increase my shipping costs without lowering my initial starting prices, I would see a decline in sales.

But this is something you have to experiment with. Try to charge an extra dollar for shipping, see if it effects anything. The worst thing that could happen is people stop buying from you. Well, guess what, if this happens just change it back to the original price.

Good luck, I hope adjusting your prices makes you a lot more money.

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Anonymous said...

using handling fees to cover the cost of your ebay fees is EXPRESSLY AGAINST EBAY POLICY YOU JERK

David- Ebay's #1 Computer Seller Consultant said...

Woow! Anonymous was nice... No one said that the handling fee wasn't covering handling...

I found a little "trickier" way of getting around the shipping - and anonymous would probably be right about this one. I post shipping as "Free" - Local Delivery, but say in the auction that i deliver worldwide... This way I can charge ebay buyers for shipping, and not have it included in the cost.

But this only really works with high end products, where it's worth my time