eBay raises fees: Half empty or half full?

Summary:eBay will raise its fees effective Jan. 30, but it's unclear whether this move is good or bad for the company.

eBay will raise its fees effective Jan. 30, but it's unclear whether this move is good or bad for the company.

Clearly, the price increase isn't so swell for eBay's merchants. As for eBay, the fee increase shows it still has pricing power even though growth is expected to slow. The details:

Core Auction-Style and Fixed Price Listing Fees:

Insertion Fees

We're increasing the Insertion Fee for the $1.00 to $9.99 level from thirty-five cents to forty cents.

Final Value Fees

We're increasing the Final Value Fee for the $25.01 to $1,000.00 level from 3% to 3.25%.

Please note that there are no fee adjustments for eBay Stores or Store Inventory listings.

eBay Motors also has increases.

eBay claims the increases are "modest" and due to "careful analysis," but analysts are reading between the lines on what it means. Overall, it's a glass half full or half empty depending on how you view eBay. Either eBay's dominance is strong enough to push fee increases or the company is flailing trying to keep growth going. To wit:

--Jeffries analyst Youssef Squali says the fee increase is eBay's seventh in as many years. The increase means that eBay will at least hit its financial estimates. "Like every year, we expect to see some push back from power sellers and management will reach out to them by month end to address their issues. We don't expect much desertion."

--Deutsche Bank analyst Jeetil Patel says the company "continues to experience slowing growth from user activity diminishing, ad costs rising and seller economics subsequently coming under pressure." While other large Internet companies are helping customers cut costs, eBay is going in the opposite direction, argues Patel.

The big question is whether the eBay increase is viewed as inevitable or a reason to try new pastures. My guess is eBay sellers will shrug off the increase, but at some point there will be a backlash.

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Topics: E-Commerce

About

Larry Dignan is Editor in Chief of ZDNet and SmartPlanet as well as Editorial Director of ZDNet's sister site TechRepublic. He was most recently Executive Editor of News and Blogs at ZDNet. Prior to that he was executive news editor at eWeek and news editor at Baseline. He also served as the East Coast news editor and finance editor at CN... Full Bio

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