Bob: Do you feel EBay’s Donahue made the right decision?

Carl’s response: An eBay shareholder would definitely ask if eBay was leaving too much money on the table. In my opinion they were. But part of what excites buyers is the thrill of the deal and the fee adjustments encourage multiple re-postings of fixed price items. I would have raised final value fees (commissions) less and left the listing fees where they were to encourage low starting price auction format over the fixed price format or high starting price auctions.

Bob: Will the highest commission, now set at $25, be raised down the road?

Carl’s response: My crystal ball is not crystal clear. eBay’s variable costs of adding more auctions are practically nil. This price increase will affect the prices sellers push for. Sellers can increase prices by restricting inventory listed, higher starting prices or higher shipping prices.

These low-ticket sales are a large part of what sells on eBay. My sense is that eBay prices are often so low that the buyers will pay 3% more without complaint. But on categories with cutthroat prices off eBay as well as on eBay (such as computer memory or music CDs) many of the sales will migrate away from eBay.

I suspect the under $25 commission is as high as it’s going to go. Future price changes may be by category but with search the dominant method of finding items of interest (compared with browsing) more variable category pricing would be a massive enforcement headache.

Bob: Do you feel the barter industry’s transaction fees are a detriment and hinder trading activity?

Carl’s response: I don’t believe the typical 10-12% inhibits new members from joining and starting to trade. But a business with significant experience in the retail trade environment sometimes does much less trading than they could because of the typical fee structure.

Some businesses benefit a barter group more than others. Sometimes one business in a barter group can have a very positive impact on the perceived value of a trade dollar in that group.

Sometimes all it takes to keep that VIP member happy is a little higher level of customer service. Other times only a price concession will do the trick. Sometimes a fee cut would spark greatly increased trading for a particular business but how they earn or spend trade dollars suggests the fee cut is not in the interest of the group.

Fees are an area that independents can use to their advantage over large groups that choose to have little or no flexibility.

Bob: Are you suggesting transaction fees be lowered as the size of the transaction increases, like a “power sellers discount?”

Carl’s response: I would place more emphasis on a monthly or annual volume discount. By the way, the eBay power sellers’ discounts of 5% or 15% are totally predicated on Detailed Seller Ratings (customer satisfaction).