Why Fair and Square Pricing Fails

Purple and White Speech Bubble Clothing Logo-2I like for the price to be the price. But, I must be one of the few people who think that way. Fair and square pricing works for me: I can budget for what I need to purchase, and know when it is okay to splurge a bit. However, I have a dear friend who won’t buy anything unless she negotiates a better price. This practice is downright embarrassing at times. Recently, we were in a charity thrift store and she saw a large ceramic vase filled with fake flowers. (I know, taste varies.) Anyway, it was priced fairly, but she stood in line to ask a harried clerk to lower the price by $5. The clerk said, “The price is the price.” My friend walked away. “It’s a charity,” I reminded her. As we got into the car, my friend made up some excuse about the quality of the item. But, I know her. No discount, no sale is her motto.

I’ve sold items on eBay for almost a decade. But, recently, I’ve been rather frustrated with the “Buy it now or best offer” feature on eBay. As a seller, I prefer to list an item at the price I want for it, and my potential customer can pay for the item and the shipping (which isn’t free, so I never pretend that it is) or not. However, if sellers don’t activate “best offer” when creating the listing, eBay will do it later, and before long, I start getting half price offers. Yep, the default “best offer” setting is literally half price. I hate telling customers, “no.” And, I have learned that counter offers seldom result in a sale. Lately, I have been listing items a couple of dollars more than I normally would ask, then setting the best offer for the real price. Yes, the whole thing bothers me, but many, many shoppers want to feel that they got a discount, especially on really low priced items. I’ve literally gotten an offer of $2 on a genuine leather designer handbag.

And, this gotta have a discount mentality is not just for used items, such as the pre-owned books and garments that I generally list in my eBay store (The Alternative Article.) Remember the absolute disaster of “Fair and Square” pricing at J.C. Penney? Although I am not particularly fond of that merchant, I really liked their pricing when that experiment was underway. Apparently, I was alone, however. J. C. Penney customers stayed away in droves until the management jacked up the prices and paid newspapers to print coupons so customers could “save” 40% off.

It’s psychology. And it sucks.

Want a book? Check eBay before you check out!

My daughter and I have been using eBay as our “go to” bookstore lately. As an eBay seller, I’ll assure you that the fees are far less when selling used items, including books, on eBay. When selling via the big A marketplace, the fees start at about $4, and go up incrementally. Obviously, selling anything other than textbooks or other high end items on the big A marketplace is not worthwhile. However, eBay’s current fee structure is 12% for books, which means sellers can offer better prices to customers. Also, big A has a flat fee of $3.99 to ship a book, unless the seller offers “free” shipping. As USPS offers “media mail” rates for smaller books, the shipping can be cheaper via eBay. Win-win, right?

Here’s an example of a book that I have placed on the marketplace for a client; basically big A gets $6 of the $17 price:

Amazon fee

The fee for that book on eBay would be $2.04. The difference between selling via eBay vs big A is 23%, which is about $4 on a book that costs $17.

Let’s say you’re a bottom feeder looking for a deal. Here’s what happens with a $5.50 book listed via the big A marketplace:

Amazon fee 2

The sale price is $5.50 and the fee for selling it via the marketplace is $4.21, which means the seller gets $1.29. Not many sellers will opt for such a small amount, which is bound to drive up the prices of used mass market paperbacks and/or popular hardcovers. By the way, as of this post, this same book is available for $3.34 on eBay, while the lowest possible price on big A is $4.75. Clearly, bottom feeders need to go to eBay for book purchases. And, while there, check out all the other goods available, from electronics, to clothing, to collectibles— often at better prices than you’ll find anywhere other than the neighborhood yard sale.

One reason buyers flock to big A is the user reviews. Unfortunately, those reviews are not particularly reliable. Big A is purported to fighting this issue, whether banning reviews by customers who have not purchased the item being reviewed, or attempting to  control “paid” reviewers. Lately, the issue with reviews on big A is a problem with “hijacked” reviews, where in a product’s reviews are actually for a different product. Certainly, if you must read those reviews, really read them, and don’t be fooled by the number of stars highlighted. All in all, while there may be more variety available on big A, the prices are probably better on eBay.

As a matter of full disclosure, I sell on both big A and eBay. My eBay store is here:

The Alternative Article