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Interesting to read that in a period of time when companies of different shapes and sizes are finding ways to lower prices – Delta Airlines, SBC Internet, Apple iPod, Google search appliance, SF Chronicle classifieds – eBay is going the other direction – raising prices.

Yesterday eBay announced that they would be raising the prices on a number of their services. For instance, the monthly fee for an eBay Store will increase 60 percent from $9.95 to $15.95 per month or $72 more per year per store. And transaction fees for transactions up to $25.00 will increase over 50 percent from 5.25 percent to 8 percent.

Red-faced newspaper publishers must be reading these announcements with considerable envy as they battle day in and day out to squeeze in every ounce of classified revenue they possibly can. Directory publishers too must be reading with similar envy as they fight tooth and nail to hold customers to rate cards.

eBay's pricing opportunities make even more clear that performance matters most – something that directory publishers believe about their value-proposition but are only now beginning to make absolutely clear to their advertisers. In time, new value propositions that offer advertisers pay-per-click and/or pay-per-call options will certainly position directory publishers to push back at advertisers with performance numbers that demonstrate the true ROI for advertisers. Perhaps in 18 months, we'll be reading about how directory publishers too are raising prices once again.

This Post Has 4 Comments

  1. Neal, saw an article today (1/19) that indicated that some of the other selling sites might reap some business from e-bay's decision. It'll be interesting to see if any real defections occur and if they really stick over time. As I recall e-bay was already doing good from the net income perspective…they need more? Fred

  2. Yep. The general feeling is that they're angering small biz sellers. Before there was little or no competition. Now there is. Free classified sites such as Craigslist, LiveDeal, Zixxo and sites such as Overstock.com mentioned here.

    They won't lose tons of folks in the short term, but over time–depending on what happens with the other sites–they might need to be careful. And eBay slightly missed its profit targets according to today's announcement.

  3. I would think that eBay did a fairly significant amount of research to make the decision to increase their fees. I doubt it was a simple "hey let's make some more net income" but rather a opportunity, given their traffic and brand that they could not pass up. Raising a price umbrella does certainly open the door a bit wider for others.

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