RealTime IT News

eBay Hikes User Fees

Just days after predicting continued financial growth in 2002, online auction giant eBay said it is raising fees for users, including the Final Value Fee, which is the bite the company takes when an item is sold.

In a notice in its announcements section, eBay said that effective Jan. 31, "we are increasing Final Value Fees, adding a new Reserve Fee price point, charging a fee to use Buy It Now, increasing eBay Motors vehicle Insertion and Final Value Fees, and in late February, changing how we charge Final Value Fees for Dutch listings."

The company, which earlier this week predicted continued growth in the first half of 2002, has not changed Final Value Fees since 1996. The increase is 0.25 percent to each Final Value Fee price point.

eBay posted fourth quarter earnings of $25.9 million or nine cents per share fully diluted, coming in with its 13th straight profitable quarter.

And clearly raising fees will help to keep that string going, although eBay did says that "other Feature and Insertion Fees, and fees for eBay Premier and Real Estate, will remain unchanged."

Rather than put out a press release announcing the increase, eBay put it out on the quiet, adding at the bottom of its announcement that: "We recognize that price increases directly impact our users, so we do not raise fees lightly or without considering the impact to our community. 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."

In its earnings report earlier this week, eBay said that it expects sales for the first half of 2002 to be between $490 million and $510 million. It also believes that pro forma earnings per share could range between 32 cents to 33 cents.

Wall Street liked the fee news, and eBay stock was up $1.29 to $61.23 in early afternoon trading.