Ebay has once and for all destroyed their business model by rearranging their fee structure charged to sellers. Ebay is promoting the fact that they are reducing up-front listing fees – very, very slightly I might add.

Ebay has long been criticized for taking too much of the final value of a sold auction item, but beginning on February 20, 2008 Ebay will begin raping and pillaging its sellers until they bow to their knees.

Go check out the new fees here.

Notice the extremely steep increase in Ebay’s cut for the first $25 of the auction’s final value? Jumping fees from 5.25% to 8.75% is insulting to every seller using Ebay and will make profitability for Power Sellers very difficult, if not impossible.

Because of the increased Final Value fees, more sellers will be inclined to begin their auctions at much higher prices to ensure their fees get covered, but alas Ebay will benefit from the increased starting price as well because the seller will most likely jump to another fee level.

Add to the mix that Ebay owns the payment processor PayPal and you see that they will also more than likely collect another couple percentage points on the value of the sale in the form of Premium and Business account transaction fees.

For a company who is growing quarterly earnings at 50%, has no debt, and nearly $5 Billion in cash they sure don’t blush at taking even more from the very users that keep them running. I think this planned fee restructuring will backfire horribly and open the market up to competitors who will be in a position to gain market-share from the current leader in internet auctions.

[tags]ebay, online auction, shaun carter, online selling, auction, sellers, buyers, paypal, internet payments[/tags]