Free postage vs paid postage on eBay UK: which earns more and when to charge

What is the real difference between free postage vs paid postage on eBay?

The choice of free postage vs paid postage on eBay is mostly about presentation, not fees. With free postage, the cost of delivery is inside your item price. With paid postage, the buyer sees a lower item price and a separate postage charge. If the totals are the same, you receive the same money and, for business sellers, pay the same percentage fee.

That surprises some sellers, who expect free postage to save fees or cost more in fees. It does neither for the same total, because eBay UK works out the final value fee on the whole sale. What changes is how the listing looks in search, which buyers find it, whether it qualifies for some eBay features, and how much risk you carry on awkward deliveries.

How do eBay UK fees treat postage?

eBay UK's fees for business sellers say the final value fee is a percentage of the total amount of the sale, which includes the item price, postage and any applicable taxes, plus a per-order fee. The regulatory operating fee of 0.35% is also calculated on the total. Promoted Listings general campaign fees are worked out the same way, on the total sale amount including postage.

So, for a business seller:

• £20.00 with free postage: fees are charged on £20.00.
• £17.00 plus £3.00 postage: fees are charged on £20.00.

The per-order fee also depends on the order total including postage: £0.30 for orders of £10 or less and £0.40 for orders over £10.

UK private sellers

eBay UK says UK-based private sellers pay no final value fee and no regulatory operating fee when items sell, Motors vehicles excluded. For a private seller, fees do not change between the two methods at all. The decision is purely about what buyers prefer and what your real postage costs are.

How do buyers see free postage compared with paid postage?

Buyers usually compare the total they will pay. A listing at £22.49 with free postage and one at £19.99 plus £2.50 postage cost the same, but buyers do not always weigh them the same way.

• Search filters. eBay lets buyers filter search results to show only listings with free postage. A paid-postage listing does not appear in those results at all.
• Sorting. Buyers can sort results by price plus postage, which puts listings with the same total side by side whichever method they use.
• First impression. Some buyers react badly to a separate postage charge, especially when it looks high compared with the item price.
• Item-price comparison. A paid-postage listing shows a lower headline price, which can look cheaper to a buyer scanning the item price only.

Which effect wins depends on the product and the buyers. For many everyday items free postage is the expected norm; for heavy or bulky items buyers are more used to a postage charge.

Does free postage help with Top Rated and Premium Service?

For Top Rated sellers, eBay offers eBay Premium Service on qualifying listings, with a badge and a 10% discount on final value fees on ebay.co.uk, calculated on the total sale including postage and not applying to the per-order part of the fee. eBay's Top Rated Seller page lists the listing requirements, which include:

• a free domestic delivery option within 3 working days;
• an express delivery option within 2 working days for no more than £10;
• for items over £20, tracked services for all delivery options, with valid tracking uploaded within the dispatch time;
• 30-day domestic returns, where the item is located in the same country as the site.

So if you are Top Rated, or working towards it, offering free postage is part of qualifying for the discount. To reach Top Rated in the first place, eBay UK needs an account active 90 days, at least 100 transactions and £1,000 of sales with UK and Irish buyers in 12 months, registration as a business seller, and performance well above the minimum standards.

When does free postage cost you money?

Free postage means you carry the delivery cost inside a fixed price. That works when delivery costs are predictable. It goes wrong in a few common situations.

A worked example

Example, with hypothetical numbers: suppose you sell a lamp to UK buyers. The item costs you £15.00, standard postage costs you £3.20, and you want £4.00 profit. For the arithmetic, assume a business seller's final value fee of 13% (a hypothetical rate; check your category on eBay's fee page), plus the 0.35% regulatory operating fee and the £0.40 per-order fee.

1. Free postage: price = (15.00 + 3.20 + 0.40 + 4.00) / (1 minus 0.1335) = £26.08. Round to £26.49.
2. Paid postage: you need the same total, so the item price is £26.08 minus the postage you charge. At £3.20 postage the item price is £22.88, which you might round to £22.99 plus £3.20.

Both earn the same profit, because the fee is charged on the same total. The decision is whether £26.49 with free postage or £22.99 plus postage will sell better to your buyers. Run both on similar listings and compare.

Now suppose the lamp is bulky and one in five orders goes to an address where the courier charges £8.00 instead of £3.20. With free postage at £26.49, each of those orders makes a small loss. Here, paid postage with a higher rate for those areas, or excluding them, protects the margin.

Which should you choose?

A simple rule of thumb from the points above:

• Choose free postage for light, standard-size items where your delivery cost is the same across the UK, where buyers in your category expect it, and where you want Premium Service.
• Choose paid postage for heavy, bulky or fragile items, for items where delivery cost varies a lot by address, and where you sell many items to the same buyer and want to offer combined postage.
• Test both where you are not sure, using similar listings and the same totals.

Whichever you pick, make sure the handling time you set is one you can always meet; our guide to eBay handling time explains how it feeds the delivery date. For the postage services themselves, see our guide to eBay UK postage options.

How do you switch listings from paid to free postage safely?

Most sellers set postage through postage policies, which are shared by many listings. That makes switching quick, but it also means one change affects every listing on the policy at once. If you change a policy from £3.20 postage to free postage without raising item prices, every listing on it loses £3.20 of income per sale from that moment.

1. Make a new policy rather than editing the one in use, so you can move listings across in a controlled way.
2. Reprice first. Raise the item prices of the listings you will move by the postage they used to charge, then recheck the per-order fee boundary at £10.
3. Move a small group to the new policy and check a few listings on eBay to confirm the price and postage show correctly.
4. Compare results after a few weeks with a similar group left on paid postage.
5. Move the rest, or move the first group back, depending on what the numbers show.

If you use repricing software, check that its formula knows the postage has moved into the price. A tool that still thinks the buyer pays postage separately will price every listing too low.

A quick checklist

1. Work out your real delivery cost per item, including packaging.
2. Price both ways so the totals match and confirm the fee is the same.
3. Check which method buyers in your category mostly see in search.
4. Use paid postage, exclusions or surcharges where delivery costs vary a lot.
5. Set combined postage or multi-buy pricing if buyers often take more than one.
6. If you are Top Rated, check the Premium Service requirements before you decide.
7. Recheck prices whenever your carrier changes its rates.