eBay follows Yahoo's lead with auction fees

Listing fees will increase between 5 cents and $1.30 on most items beginning Jan. 31, the San Jose, Calif.-based online auction company announced Tuesday.

"Our overall goal is the long-term health of eBay's brand and the eBay marketplace," spokesman Kevin Pursglove said. "This will help us keep the eBay business financially healthy."

Earlier this month, eBay's chief rival, Yahoo, announced that it would begin charging listing fees for the first time. Yahoo's new fees, which are lower than eBay's even before the increase, took effect Jan. 10.

eBay's increase is unrelated to the new Yahoo fees, Pursglove said.

Under the new fee schedule, eBay will charge 30 cents to list an item with an initial price or reserve of up to $9.99, and 55 cents for items with initial or reserve prices between $10 and $24.99. Currently, eBay charges sellers 25 cents and 50 cents, respectively. At the high end, auctions starting at $200 or more will have fees increased from $2 to $3.30.

Reserve prices are hidden prices below which sellers will not sell items, even though they may begin bidding at lower prices.

The new fees do not affect eBay Motors, eBay Premier or real estate listings, but they will apply to some auctions on eBay's Canadian auction site. The fees will apply if the item is listed in U.S. dollars, but not if the item is listed in Canadian dollars.

Pursglove said that while the increase may have a "moderate effect" on the number of listings and revenue in the short term, the increase will be beneficial to the company in the long run.

"We recognize that price increases directly impact our sellers," eBay said in a note to members on its announcements board. "We will continue to build a vibrant marketplace by investing heavily in technology, marketing and customer support to make it possible for millions of people to discover and use eBay."

eBay said it was the first fee increase since December 1996.

eBay also announced a new 10 cent per auction charge for auctions that last 10 days, citing the costs of hosting those auctions. The company will not charge an extra fee for auctions of three, five or seven days.

In a research note, WR Hambrecht financial analyst Derek Brown praised the new fees.

"In our opinion, this price increase is a powerful indicator of the health of eBay's franchise and of the company's superior competitive positioning," Brown wrote. "Though some current users may withdraw from eBay's service as a result of this announced price increase, we suspect that the overwhelming majority will continue to list through eBay."

On the AuctionWatch.com message boards, many eBay sellers said they expected the new increases, especially in the wake of the new listing fees at Yahoo. Still, many were unhappy with the new fees.

"Between PayPal's increase in fees, the increase in the United States Postal Service fees and now eBay's increase, I don't know if I will be able to continue to run auctions full time," said one eBay seller who lists low-end auctions. "This additional 10-cent fee for 10 days is really outrageous. Ah well, it was good while it lasted."

Currently, eBay charges sellers a transaction fee for items that sell on its site, and extra fees for featured auctions and those listed in bold print.