I've been a semi-regular user of ebay over the last few years, having bought and sold about a hundred items in five or so years.
I had a bunch of auctions for lots of small craft things up this week while I was trying to get organized (i.e. "The nesting has started!"). The auctions ranged in price from a $1.50 to $4 for the initial bid, with buyouts from $4 to $8. Shipping on each item was $2 or $2.50, basically I estimated it such that I got $.50-$1 profit on the shipping depending on the weight of the item (with a little margin for error since I'm using a home scale that is not perfectly balanced and I could easily be off by one stamp's worth).
Why don't I charge the exact shipping cost? A variety of reasons. One is pure greed - these items are pretty slim margins as it is and it's common practice on ebay to bump up the shipping cost a little and bring down the bid price a little. Any savvy buyer should know to always compare shipping + bid as the final price before submitting your bid. Also, I'm using my stock of envelopes and plastic wrap for water protection. And there's the time spent wrapping and preparing things, and depending on the shipping method used and the target location, bringing them to the post office/mailbox, or scheduling a carrier pickup. I don't have an exact estimate of what each item I use for packaging cost me, but even with shipping included, these auctions of unused items (if I had the receipt from the store at which I bought them, I could return them) are still selling for about 25%-40% of the retail value.
A bidder recently asked me for a quote on combined shipping for two to three auctions of small, light stuff. The original item was $2.50 (the bidder had actually already won this item), and I quoted $3.50 for two and $4 for three. It probably would have cost me $2 total in actual shipping costs, plus the envelope/wrapping, so perhaps I'd be making $1.50 profit out of the shipping, not counting what my time is worth.
When I gave the quote, the bidder returned with a lost-little-puppy-dog email along the lines of "Wow that's expensive and that's more than it costs and I don't like to pay more than things cost, do you?" albeit with less punctuation and capitalization and a bit more text talking about the true price of shipping.
Is it fair? I think so. I have no problem with it as a buyer or a seller. As a buyer, there's some internal barometer I have that tells me if I feel someone is getting too much profit on shipping (case in point, my husband once bought some old receivers for a penny, plus $20 shipping... one of them was broken when we received it. Well, the company is happy to take returns and give us our penny back - but we have to pay for shipping to them. Never going to fall for that again). As a seller, I think my "shipping profit margins" are reasonable.
It's a free market. Don't bid if you don't want to. Everybody on ebay does it. Is that a good enough reason?
When I set my shipping prices as I do, I gamble on how some ebay bidders are drawn to the lower opening bid and don't properly consider shipping costs (or perhaps they are drawn in by the lower price but by the time they see shipping, they've already been 'hooked'); if they had, they might not have bid. I accept the risk that more experienced bidders might not bid if they don't think the shipping costs are reasonable. But is it really reasonable to expect ebay sellers to charge only what the post office or UPS charges for shipping? I don't think so. The beauty of such a market is that you can vote with your dollars.
Anyway, this is a fairly minor ramble, but I'd be interested to hear what others say... particularly if you are a regular buyer or seller, or have never used auction sites.
Also, does anyone know what kind of prices places like amazon and buy.com pay for shipping, compared to what they pass on to the consumer? That would be interesting to know.
