Guidelines for Setting Shipping Charges for eBay Items
Buyers who visit the eBay site are bargain shoppers. They want to get their items at the lowest possible prices, including shipping. They’re more cognizant about the hidden expense buried in the item’s shipping and handling fees. When you set these fees, you must take into account every expense involved in your packing and shipping. You can’t make your shipping area a losing proposition.
However, many eBay sellers have increased their shipping prices to outrageous amounts. But when the shipping fee equals a third of the item’s cost, a prospective bidder may think twice about placing a bid. Of course, if the item is big or the buyer wants it fast, he or she may feel better about paying higher shipping costs.
eBay penalizes sellers who charge high shipping fees and rewards sellers who offer Free Shipping by giving free shippers better visibility in the Best Match search results. Try listing your item by including the shipping amount in your selling price and offer Free Shipping. Then offer buyers a second shipping option for Priority Mail at a charge. Your item will still get the benefit of eBay’s Free Shipping search preference.
When calculating shipping costs, don’t assume that all you have to worry about is just the cost of your postage. You also have per-item costs for boxes, padded mailers, shipping tape, labels, and pickup or service fees from your carriers. Now and again, you may even pay the college kid across the street five bucks to schlep your boxes for you. Expenses show up in the strangest places.
In addition to adding up the packing and shipping supplies, you need to amortize the monthly fees from any online postage shipping services. Should you occasionally pay for a pickup from the carrier, you need to add that expense to the shipping charges, too. The following list runs down some of the expenses involved:
Padded bubble mailers: Select an average-size padded mailer that works for several types of items you sell. Selecting a few average sizes for all your products works well because it’s cheaper to buy in quantity. Even if a few of your items could fit in the next-size-down mailers, buying the bigger size by the case gives you a considerable discount. Besides, padded envelopes don’t go bad.
Don’t be misled by packaging suppliers’ claims of low-cost mailers. They usually don’t include the shipping costs in these price estimates.
When you price your cost-per-piece, be sure to include (as part of your cost) what you have to pay to get the item shipped to you. For example, if you purchase your mailers — say #4s by the hundred, they may cost you $.39 each. If you buy a case of 500, they may cost only $.29 each. By buying in quantity, you save $.10 per mailing envelope!
Packing peanuts: Storing all those packing peanuts is a real drag. But here’s where buying in bulk equates to huge cost savings. From Bubblefast, you can purchase antistatic packing peanuts in lots of various sizes:
3.5 cubic feet for $11.25 = $3.21 per cubic foot
7 cubic feet for $21.90 = $3.13 per cubic foot
14 cubic feet for $42.00 = $3.00 per cubic foot
It’s no surprise that the 14-cubic-foot deal turns out to be the most economical. eBay sellers such as Bubblefast sell packing peanuts for almost half what they cost when purchased from a brick-and-mortar retailer. (That’s because a store you can walk into has to use up square footage to store these babies, which means a higher cost.)
Packing tape: You need a stock of clear packing tape. The common size for a roll is 2 inches wide by 110 feet long. Shipping tape comes in two thicknesses, 1.6 mil and 2 mil; the heavier tape makes a better seal in larger packages and costs pennies more. eBay offers these deals on 2 mil tape, the following prices include shipping:
6 rolls = $14.98 = $ 2.50 per roll
12 rolls = $21.45 = $ 1.79 per roll
18 rolls = $26.45 = $1.47 per roll
Again, compare prices before buying.
Boxes: Shop eBay (but often the shipping prices are too high), and also check out uline.com for boxes at reasonable prices. For the example, let’s just say a typical box will cost $.55 each.
G&A (general and administrative) costs: For the uninitiated, G&A represents the costs incurred in running a company. Time is money. For example, the time it takes you to research the costs of mailers, tapes, and boxes on eBay is costing you money. The time it takes you to drive to the post office costs you money. You could be finding new sources of merchandise instead.
Online postage service: If you’re paying around $10 a month for the convenience of buying and printing online postage, that’s an expense too. If you ship 100 packages a month, that amortizes to $.10 per package.
If you’re questioning whether you need an online postage service, consider this: Being able to hand your packages to the postal carrier beats standing in line at the post office, and having records of all your shipments on your own computer is worth the monthly fee.
Item Estimated Cost per Shipment ($) Padded mailer 0.29 Peanuts 0.07 Tape 0.02 Mailing label 0.04 Postage service 0.10 Total 0.52
If you’re shipping many packages a month, you may want to use QuickBooks to easily and simply track your shipping costs.