I cannot understand selling items for 99p!

[lord_and_lady_m]

Lets make some assumptions:

Cost to buy = 0

charging for time = 0

profit wanted = 0

postage is minium = 75p (i don't know what other business rates are available and cheaper)

Home and garden general category = fees 11.9% and 10p (under £10) = 14.28% + 12p with vat included

If you sell an item at 99p with FREE postage you will receive:

99p

-14.1372p variable fees

-12p fixed fees

-75p postage cost

=-2.1372p
I appreciate loss leaders but do you all think people that do this really know their fees?

What am I missing?

[4_bathrooms]

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@lord_and_lady_m wrote:

What am I missing?

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Paying ~2p for each positive feedback comment?

Also, few people would bother opening a case for a 99p item. The seller might be trying to dilute some poor selling history; especially if they're paying extra in fees due to being below standard or having poor service metrics. It would be a small price to pay to have that go away.

[sabe5994]

I often wonder about that one... I tried calculating what the lowest value could be to make any kind of pennies out of a transaction, and 99p just won't cut it. 

Even if they have an 80% off promotion or something it still hardly seems worth it.

[charmingdesignsdna]

I think a lot of sellers of low value items have joined the Low Cost Items - Final Value Fees offer  "Pay 5p + 15% final value fees for all transactions".  Also if a top rated seller you would also get 10% discount off fvf

So to sell an item for 99p it would work out as:-

- 15p fvf 

+ 1p discount (top rated seller)

- 5p fixed fee for low cost items

- 4p VAT 

makes total paid in fees 23p

- 57p postage (2nd class letter on account)

leaves 19p profit - less the cost of stock.

Hope this makes sense

[lord_and_lady_m]

Ah yes good point. Never thought of that. 

[sabe5994]

Thanks, that definitely makes more sense as far as the business sellers go.

It's the private 99p auctions that I don't understand.

[sabe5994]

I hadn't thought of that. That could be a good reason.

[ducatimondo]

Could also be trying to lighten their average weight on Royal Mail postage.

If you send a lot of items that are just over 100g LL for example, then add a few of these in, you might get your average weight under 100g and save on the postage of all of those other items.

We have done a similar thing for a long time, sell small insignificant low value items that weigh maybe 20g packed and it does make a difference to keep your average weight under 100g on your LL's
That can save whatever the difference is to the next tarrif, maybe 30p or 50p an item in postage
Send 50-100 a day at that and you get a decent few quid from playing the game your way

We all got goaded into providing free delivery, so make sense to try and lower the cost of that by being savvy to how the rules work

[charmingdesignsdna]

You would be surprised at how many people open cases for items / orders of low value/cost.  The buyers know that say buying something for £1.20 with free postage, then it will just be posted by regular post and not a tracked service.

[charmingdesignsdna]

If it is an auction, then it would be starting at 99p so sellers would be hoping to get a few bids on the item and therefore push the price up.

[ducatimondo]

Agreed, almost all of the cases we see are for items under £5 all in

[lord_and_lady_m]

Only downside thought to the low cost thing is if you sell products more in value it actually costs more in fees. I've just finally got off that promo after a lot of complaining as it's hard to get off it. 

Since the fees changed for home and garden, changing the fixed fee to 10p for under £10, it's only a beneficial rate for 99p sales. It literally only by 2p difference. At £1.50 the fees are equal and at £2 it's now 1p cheaper on the standard rate. 

I actually wasn't aware of an account rate for postage so that's good as that would make a big chunk of difference. I guess they need volume sales to make it worthwhile. I did notice one of the 99p ones I found, despatch was 10days, so assuming waiting to print labels until they can make it worthwhile in time, like one large label run.

[lord_and_lady_m]

Also, not accounting for shop fees or the all important PROMOTED LISTING fees. 

[charmingdesignsdna]

We have a Royal Mail PPI account (Printed Postage Impression) but as we are not VAT registered we do not get volume discounts on this type of account.  

All of our mail has to be sacked up seperately.  So any 1st class letters have to go in a sack, any 2nd class letters have to go in a seperate sack then the same for large letters 1st and 2nd class and parcels 1st and 2nd class.  

It is a lot of faffing, but we do send out quite a few 2nd class letter mail and normally RM charge 75p but posting with PPI it is 57p.

[rjwilmsi]

If a business seller is deliberately selling 99p items (as opposed to an individual seller who may underprice/make a loss by accident) then presumably it is either to boost some eBay metrics, clear some old stock or maybe enable a postage discount/average that saves money on other items.

[ducatimondo]

The difference in cost for average weight on account can soon add up aye.

We send items differently on a Monday to the rest of the week.

We usually have enough in the mail sack to send a couple of higher weight items, as much as 600-700g LL and still be under the 100g cut off
Then the rest of the week, we will often send those heavier 700g items with Evri as Evri Postable, so they don't throw the weight out on the LL bag, even though they are LL

Planning it means it is very rare we have a LL bag with more than 100g average weight, so all those items in it go at the lowest price

[wyntersemporium]

I'm selling g some of my items cheap and I'm on the promotion low cost which I joined a few years back.

plus it gets rid of stock which I don't want anymore. 

[wyntersemporium]

You're right there I'm selling some items £8.99. EBay took £2.00 off them. Free postage is included. And I send signed for. So would sell for just 3:00 like one item did today so have shoved it up to £12.99 instead. 

[j-tech_products]

Hi 

Do you know how to enrole on to the low FVF scheme? Not heard of this before. 

Thank you

Joe

[nigel_paul_wright7557]

A lot of multi listings start at 99p to get to top of search results.

However that 99p is usually only for a very small sample or some very cheap item.