eBay raising prices for selling on site

By Brian Bergstien The Associated Press
Friday January 18, 2002

SAN JOSE — Two days after reporting record profits, eBay Inc. said Thursday it will raise many of the fees it charges to sell items on the site. 

Starting Jan. 31, eBay will take a commission of 5.25 percent, instead of 5 percent, on items that sell for less than $25. The rate is rising to 2.75 percent, from 2.5 percent, on items between $25 and $1,000, and to 1.50 percent, from 1.25 percent, on sales of more than $1,000. 

The San Jose-based company also will begin charging five cents for all products listed with the “buy it now” feature rather than in the typical auction format. EBay says 45 percent of all items on the site are sold with that fixed-price option. 

Among the other increases: it will cost $40, up from $25, to offer and to sell a car on eBay, with an extra 50 cents for motorcycles sold with the “buy it now” option and $1 for other vehicles sold that way. 

San Jose-based eBay said in a message posted on the site that “we do not raise fees lightly or without considering the impact to our community.” But it said the higher fees would help the company invest in better technology, marketing and customer support, and did not rule out the possibility more increases could come this year. 

Some of eBay’s 42.4 million registered users posted critical comments about the fee increases on the site’s message boards almost immediately. 

One seller estimated the new fee structure would increase his or her monthly costs by $100, more than 6 percent. Another wrote: “You know, it isn’t much, but it seems a slap in the face when they have to KNOW how most of us are struggling.” 

But eBay spokesman Kevin Pursglove said most eBay users will realize the increases are reasonable. 

“Many of them are running a business, too. They understand the need for businesses to adjust fees from time to time,” Pursglove said. “The dustbins of the New Economy are crowded with companies that didn’t take the appropriate financial or fiduciary steps to bring in new revenues.” 

EBay said Tuesday it earned $90.4 million in 2001, on revenue of $748.8 million. The company expects to break through the $1 billion sales mark this year. 

Although the use of the “buy it now” function helps eBay by increasing the pace at which items are sold on the site, Pursglove said it was fair to begin charging a fee for it because sellers who use it have another way of drawing attention to their products that auction sellers do not. 

Shares of eBay rose $1.67, nearly 3 percent, to $61.61 on the Nasdaq Stock Market.