EBay to Raise Auction Fees Jan. 31

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Online auctioneer eBay Inc. posted a note on its message board announcing that it will raise its user fees Jan. 31.


The company plans to change the pricing for its "Reserve Fee" system, add a fee to its "Buy It Now" auctions and increase its "Final Value" and its eBay Motors vehicle insertion fees. The company also said it will alter how it calculates charges for "Dutch Auction" listings in late February.


The note said the fee increases will help eBay reinvest in its services. The Jan. 31 increase applies to U.S., New Zealand and Singapore users. Final Value and Reserve fees will rise Feb. 1 for users in the United Kingdom, Australia, Canada, Ireland and Sweden.


"We recognize that price increases directly impact our users, so we do not raise fees lightly or without considering the impact to our community," the message said. "These increases will help us continue to build a vibrant marketplace by allowing us to invest heavily in technology, marketing and customer support, making it possible for millions of people to discover and use eBay."


EBay said it will raise its Final Value fee, based on the final selling price of an auction item, by 0.25 percent. Currently, Final Value fees range from 5 percent of the final selling price to 1.25 percent. The Reserve Fee, the price charged to list an auction with a reserve, or expected selling price, will rise by $1 for reserve auctions over $200. Reserve fees now range from 50 cents to $1 per item.


The Buy It Now fee, which applies to auctions that also include a fixed price that the item can be purchased for, will be 5 cents. The new fee does not apply to items sold in eBay Stores.


The fee increases follow eBay's fourth-quarter and full-year earnings, which were up substantially. The company said Jan. 15 its net revenue for 2001 rose 74 percent to $748.8 million, from $431.4 million a year earlier. Revenue for the fourth quarter ended Dec. 31 rose 64 percent to $219.4 million, from $134 million in fourth-quarter 2000. Online net revenue for the fourth quarter was $211.6 million, up 72 percent from the $123.1 million posted in fourth-quarter 2000.


EBay said it hosted 126.5 million listings in the fourth quarter, up 59 percent from the same quarter a year ago. In the quarter, the company added 4.8 million users and ended with 42.4 million registered users, up 88 percent from 2000.


Analysts said that while fee increases never go over well with those affected, eBay's users will accept them.


"Although fee increases never sit well with those sellers who bear the brunt of charges, we believe the vibrancy of the eBay marketplace will allow the company to implement this price change without a significant decline in its number of auction listings," said Mark Rowan, an analyst at Prudential Securities.


He also said he expects the fee increases to add $5 million to $6 million to eBay's first quarter revenue and as much as $7 million to $9 million to subsequent quarterly revenue.


"We view this price change positively," Rowan said.


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