eBay raises fees, after announcing record earnings

Two days after posting record earnings ($25m) and revenue (over $1.7billion in cash and investments), eBay said Thursday that it is raising fees, some by as much as 100 percent, starting 31st January 2002.

"We recognize that price increases directly impact our users, so we do not raise fees lightly or without considering the impact to our community," the company said in a note to its customers.

eBay spokesman Kevin Pursglove said that the company needs the additional fees to help maintain its marketplace and to keep the company on a sound financial footing. He also said that the lack of any real competition to eBay and the company's goal of hitting $3 billion in revenue by 2005, played little role in the decision to increase fees.

The prices increases for eBay fees are as follows :-

  • Items with an ending bid of up to $25, eBay's take will be now 5.25% (up from 5%)
  • Items with an ending bid of up to $1000, the first $25 will be charged at 5.25%, and increase it's take on the next $975 to 2.75% (from 2.5%)
  • On items that sell for more than $1,000, eBay will charge the same way as above, but will increase its cut on the amount over $1,000 from 1.25% to 1.5%.

    Example, you sell an item for $150, you would pays eBay transaction fee of $4.75 (was $4.38), and someone selling an item for $1,500, would pay eBay $35.63 (from $31.88 under the old pricing scheme).

eBay is also introducing a 5% fee on its Buy It Now feature (previously offering this feature for free), which allows bidders to purchase an item immediately without going through the bidding process by paying a fixed price. In December, some 45% of the listings on eBay (US site) offered Buy It Now.

News source: CNet News

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