I was reading the thread below and decided to spend some time crunching numbers to see just how fair or unfair typical eBay S&H fees on chip auctions actually are. I was shocked by my findings (they were the opposite of what I expected and what I had conditioned myself to believe). Please keep in mind that this analysis is relatively impartial in that it is done by someone who does NOT often sell or buy chips on eBay...

The Problem...
eBay Sellers have to recoup their eBay expenses and make a profit. The question is what's the best way for them to do it? By building it into the price of each item, or by adding the fees into the Shipping and Handling Fee?

It appears most eBayers are trying to recoup their eBay fees in the Shipping and Handling charge because for 90+% of all auctions the S&H fees exceed true postage and packaging costs (see postage costs below). The trouble is eBay fees are not shipping nor handling, and buyers are often upset about S&H fees that are clearly excessive of actual S&H costs. However, eBay doesn't provide another field to tack-on the "administrative fee" so sellers are left with the tough decision of deciding where should they go. Let's delve further into this...

Assumptions for our analysis...
Actual Shipping and Handling Costs:
It costs $.49 postage to ship a single chip. The weight 2-3 chips tips the scale/postage up to $.60. 4-5 chips make it hit $.83.

Now add the cost of a bubble mailer. As you can see, you can ship up to 5 chips for less than a buck (assuming you're not paying more than $.17 for a 4x8 bubble mailer). 4x8 bubble mailers can be had for a low as $.09/ea. in bulk. For purposes of our illustrations below, let's assume you don't buy bulk and they cost you $.21/ea. (a good estimate). To reiterate, it will then cost...

• $.70 to ship 1 chip
  
• $.81 to ship 2-3 chips
  
• $1.04 to ship 4-5 chips
  

Additional eBay Feels:
The Seller does not use any extra eBay features to incur any eBay fees other than the minimum Listing Fee and the Final Value Fee.

Profit:
We each know what amount of profit we need to make off each chip to make it worth our effort to sell them. For illustration purposes, let's assume that figure is $2 on a $5 chip (40%) - a pretty standard profit margin.

Now onto the analysis...
So where do we build in the eBay fees? It could be built into the price of the chip, but that would create a problem - increasing the Final Value fee by, in essence, charging it on itself. For instance, if you sell a $5 chip for $7 (and just get 1 bidder), your ebay fees will be $.35 (Listing fee) + $.37 (Final Value fee) for a total of $.72. However, if you build the .72 into the price of your chip (to cover your fees), then your Final Value fee will change to $.41 - in effect costing you an extra $.04. While this may not be much of a lost for one $5 chip, it will add up for hundreds of chips or for very expensive chips. So clearly building your fees into your asking price is not the best solution.

Let's look at putting it into the S&H fee. If we add the $.72 eBay fee to the $.70 s&h fee, it's clear that it costs the Seller $1.42 to sell one chip. So a S&H fee of $1.50 is clearly not too excessive - only an extra $.08 is going into the Seller's pocket.

What happens if the Buyer buys 2 chips and the Seller combines shipping charging $.50 for each additional chip? The Sellers costs then increase to: $.72 + $.72 + $.81 = $2.25, but they only charge the buyer $2.00. So the Seller is losing money ($.25)! Let's look at buying 3-5 chips...

• 3 Chips: ($.72 x 3) + $.81 = $2.97 (Seller loses $.47)
  
• 4 Chips: ($.72 x 4) + $1.04 = $3.92 (Seller loses $.92)
  
• 5 Chips: ($.72 x 5) + $1.04 = $4.64 (Seller loses $1.14)
  

With a little math, we can determine that the Seller must in fact charge an additional $.75 per chip just to come close to his actual additional costs when combining chips (and in fact, he will still lose a slight amount of money when the buyer buys just 3 or more chips).

It's clear that a $1.50 S&H fee is very fair for the Buyer and Seller, and that an additional $.50/chip is still a bargain for the Buyer.

In fact even a $2.50 charge + $.50 for each additional chip is fair if you're buying 4 or more chips, but it really is unfair if you're buying just 1-3 chips.

Of course, one good way to avoid all of this is to do your chip shopping at www.2chippers.com where shipping is FREE and the prices are low!