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Math and the madness of the crowds - fees

jmlanzafjmlanzaf Posts: 30,372 ✭✭✭✭✭

So many times I hear people talking about "fees". Some examples:

"Why would you consign to X auction house at 20% when Y auction house is 10%?"
"Why would you pay eBay fees when BST has no fees?"

This is laziness where you are so focused on the tree that you didn't do the math on what matters most: money in (or out) of your pocket. It is not better to pay $100 with a 10% premium than $90 with a 20% premium. If you are the consignor, it is not better to hammer $100 with a 10% buyer's premium rather than $101 with a 20% buyer's premium [assume the same seller's premium].

I bring this up because of my recent eBay experience when I changed the way I handled shipping costs. I used to charge a flat $3 shipping fee domestically. If you bought one coin, it was $3 to ship. If you bought 100 coins, it was still $3 to ship. I had done this for going on a decade and people would occasionally complain that the shipping was expensive even though I was losing money on most packages at $3.

The idea had been to entice people to buy a second coin because the shipping was free.

Recently, I changed. I added $3 to the price of all of my inventory and listed everything as "free shipping". Now, it actually costs you more if you buy 2 or 3 coins because you are paying $3 for EACH coin to ship. Guess what: people now THANK ME for the free shipping, including a guy today who bought 5 coins and therefore paid $12 more than he would have a month ago.

It is, of course, retail psychology. A sale is always better than regular price, even if regular price were cheaper. Free shipping, with the shipping cost hidden, looks better than a $3 shipping fee added on.

Please do the math...

Comments

  • JonBrand83JonBrand83 Posts: 430 ✭✭✭✭✭

    Good post! 'Free shipping' can be good optics.

    Jbknifeandcoin.com

  • TurtleCatTurtleCat Posts: 4,583 ✭✭✭✭✭

    It’s the same sales psychology that keeps people from buying something that’s $100 but they’ll buy it at $99.95.

  • Cougar1978Cougar1978 Posts: 7,207 ✭✭✭✭✭

    Yes it’s a buyer psychology thing. Many even tailor their search to include free shipping in the search string.

    Coins & Currency both US and World
  • MasonGMasonG Posts: 6,268 ✭✭✭✭✭

    @jmlanzaf said:
    Recently, I changed. I added $3 to the price of all of my inventory and listed everything as "free shipping".

    I came to the same realization and did this a while ago. People would rather pay $20 for a coin if the shipping is free than $14 for the coin with $5 shipping. Because everybody knows it doesn't cost $5 to ship a coin and it's wrong to make a profit on the shipping charge. Or something like that.

    @jmlanzaf said:
    Now, it actually costs you more if you buy 2 or 3 coins because you are paying $3 for EACH coin to ship.

    Another thing it does is allow you to accept offers of a couple of dollars off without having it cost you anything because that's what your price would have been before.

  • jmlanzafjmlanzaf Posts: 30,372 ✭✭✭✭✭

    @MasonG said:

    @jmlanzaf said:
    Recently, I changed. I added $3 to the price of all of my inventory and listed everything as "free shipping".

    I came to the same realization and did this a while ago. People would rather pay $20 for a coin if the shipping is free than $14 for the coin with $5 shipping. Because everybody knows it doesn't cost $5 to ship a coin and it's wrong to make a profit on the shipping charge. Or something like that.

    @jmlanzaf said:
    Now, it actually costs you more if you buy 2 or 3 coins because you are paying $3 for EACH coin to ship.

    Another thing it does is allow you to accept offers of a couple of dollars off without having it cost you anything because that's what your price would have been before.

    Yes. I can also run a promo: Buy one, get $3 off the second.

    Smh...

  • lkeigwinlkeigwin Posts: 16,879 ✭✭✭✭✭

    There are other factors at play as well.

    I don't mind paying a little more for a product through Amazon, for example, for the convenience of easy transactions, speedy shipment, painless returns and prompt refunds, consolidated records, etc.

    I also consider a seller's reputation and our relationship. I'll pay a little more to a dealer I know and trust, and have confidence our past business will be remembered in the future.

    But to OP's point...if all else is equal, I'll do the math to save money.
    Lance.

  • Morpheus1967Morpheus1967 Posts: 173 ✭✭✭
    edited May 24, 2021 7:39AM

    @jmlanzaf said:

    Recently, I changed. I added $3 to the price of all of my inventory and listed everything as "free shipping". Now, it actually costs you more if you buy 2 or 3 coins because you are paying $3 for EACH coin to ship. Guess what: people now THANK ME for the free shipping, including a guy today who bought 5 coins and therefore paid $12 more than he would have a month ago.

    Edit: Nevermind, my reading comprehension sucks. Free shipping lol.

  • rickoricko Posts: 98,724 ✭✭✭✭✭

    The vast section of the buying public does not - or cannot - do math when it comes to pricing. They look at product price, then look at 'shipping and handling'.... that, to most, appears to be just more profit. Also, most are too lazy to shop around... Cheers, RickO

  • amwldcoinamwldcoin Posts: 11,269 ✭✭✭✭✭

    I switched to free shipping many years ago when the Top Rated Seller discount required it. My sales went up around 30% even though I added in my shipping costs to the listing!

  • tincuptincup Posts: 4,666 ✭✭✭✭✭

    There certainly is psychology in play when buying and selling.

    Another one that always amazes me: I will sometimes list an item for a bargain price... with no takers. But jump the price up to a level that is no longer a bargain but even somewhat 'steep'... suddenly more interest and it sells. Guess some are suspicious of low prices and stay away....

    ----- kj
  • yspsalesyspsales Posts: 2,025 ✭✭✭✭✭

    Paying attention to little details add up over time..

    Whether it be fees or a higher sale price due to better customer service.

    This AM, guy ordered two coins and I print two labels... arghhh.

    .71 cents down the drain...

    On a side note...

    This weekend, a potential buyer insisted on pictures of the coin in slab to compare to TV's.

    His request made sense as some toned coins don't reflect the TV.

    BST: KindaNewish (3/21/21), WQuarterFreddie (3/30/21), Meltdown (4/6/21), DBSTrader2 (5/5/21) AKA- unclemonkey on Blow Out

  • WinLoseWinWinLoseWin Posts: 1,443 ✭✭✭✭✭

    @TurtleCat said:
    It’s the same sales psychology that keeps people from buying something that’s $100 but they’ll buy it at $99.95.

    If I only had a nickel for every time I did that.

    Wait a minute, I do!

    "To Be Esteemed Be Useful" - 1792 Birch Cent --- "I personally think we developed language because of our deep need to complain." - Lily Tomlin

  • tommy44tommy44 Posts: 2,158 ✭✭✭✭✭

    In the past I've had identical items up for sale at the same time, one fixed price, one at auction, and the auction item would sell for 20-30% more than the fixed price item which did not sell. Go figure.

    it's crackers to slip a rozzer the dropsy in snide

  • ctf_error_coinsctf_error_coins Posts: 15,265 ✭✭✭✭✭

    All of my 600 BIN's end in .97 as it is a better deal than ending with .99 ;)

  • ConnecticoinConnecticoin Posts: 12,418 ✭✭✭✭✭

    Free shipping on BINs is the way to go - you just include it in the sales price. It is expected because of Amazon.

    For auctions, I do have shipping (at USPS cost) to encourage bidders to bid on multiple items to save on combined shipping cost. Others may disagree, but from my experience free shipping does not result in higher bids to compensate for the shipping cost.

  • jmlanzafjmlanzaf Posts: 30,372 ✭✭✭✭✭

    @retirednow said:
    Ask people 2 questions
    Would u drive 20 miles for item on sale from 20$ to 10$ ... Ans is yes
    Would u drive 20 miles for item on-sale from $1000 to $990 ... Ans is no
    So 2 different answers to same question ... Would u drive 20 miles to save $10

    Or there's my mother who will drive 5 miles to save a quarter on eggs. I can't convince her that the gas costs more than the quarter

  • jmlanzafjmlanzaf Posts: 30,372 ✭✭✭✭✭

    @tommy44 said:
    In the past I've had identical items up for sale at the same time, one fixed price, one at auction, and the auction item would sell for 20-30% more than the fixed price item which did not sell. Go figure.

    Auction psychology needs its own thread.

  • BuffaloIronTailBuffaloIronTail Posts: 7,338 ✭✭✭✭✭

    @jmlanzaf said:
    So many times I hear people talking about "fees". Some examples:

    "Why would you consign to X auction house at 20% when Y auction house is 10%?"
    "Why would you pay eBay fees when BST has no fees?"

    This is laziness where you are so focused on the tree that you didn't do the math on what matters most: money in (or out) of your pocket. It is not better to pay $100 with a 10% premium than $90 with a 20% premium. If you are the consignor, it is not better to hammer $100 with a 10% buyer's premium rather than $101 with a 20% buyer's premium [assume the same seller's premium].

    I bring this up because of my recent eBay experience when I changed the way I handled shipping costs. I used to charge a flat $3 shipping fee domestically. If you bought one coin, it was $3 to ship. If you bought 100 coins, it was still $3 to ship. I had done this for going on a decade and people would occasionally complain that the shipping was expensive even though I was losing money on most packages at $3.

    The idea had been to entice people to buy a second coin because the shipping was free.

    Recently, I changed. I added $3 to the price of all of my inventory and listed everything as "free shipping". Now, it actually costs you more if you buy 2 or 3 coins because you are paying $3 for EACH coin to ship. Guess what: people now THANK ME for the free shipping, including a guy today who bought 5 coins and therefore paid $12 more than he would have a month ago.

    It is, of course, retail psychology. A sale is always better than regular price, even if regular price were cheaper. Free shipping, with the shipping cost hidden, looks better than a $3 shipping fee added on.

    Please do the math...

    "People would occasionally complain that the shipping was expensive even though I was losing money on most packages at $3."

    You know, some peeps still have trouble with arithmetic, let alone math.

    Pete

    "I tell them there's no problems.....only solutions" - John Lennon
  • BryceMBryceM Posts: 11,594 ✭✭✭✭✭

    The right side and left side of the brain don't speak to each other all that often. At the end of the day, even supremely intelligent humans are emotional creatures too. All of us are susceptible to stuff that would otherwise drive our rational brains crazy.

    It's not always easy (or desirable) to process life in a way that keeps emotion out of it. If we could, none of us would likely collect coins. :)

  • airplanenutairplanenut Posts: 21,756 ✭✭✭✭✭

    This is something I've tried to explain to people for a long time. Some get it, others just can't figure it out. If I sold my own inventory fixed price, I'd almost surely have free shipping. The only reason not to would be because then there's no shipping cost to break out of a return (and yes, I know people can always get all-expense-paid returns, but I'm ignoring that and focusing on someone buying something and just wanting to send it back).

    For my actual business, where I auction items that are consigned to me, it just doesn't work. Even if someone bids more because shipping is free ($97+$3=$100+free, for example), I personally see such a small amount of it that there's just no good way to do the accounting. If I tried to pass the charges along to my consignors (since they net the benefits of higher bids) I'd drown in the math of trying to distribute costs with multi-coin orders that span multiple consignors. But that's me. If I were selling my own stuff, yes, free shipping makes a lot of sense.

    JK Coin Photography - eBay Consignments | High Quality Photos | LOW Prices | 20% of Consignment Proceeds Go to Pancreatic Cancer Research

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