Here you go, why free shipping(and insurance in my case) helps me make more money. First I have to say you have to be a powerseller to get the benefits I do. Ebay currently has 4 ways of judging people called DSR's(detailed sales ratings) that a buyer leaves for a seller. Shipping price is one of those, so even if you aren't a powerseller and are serious about growing a long term business it does still help in the long term. One thing to do before you are a powerseller is split a little of the difference. Charging $1.49 or less for first class is a smart thing to do in my opinion.
Back to DSR's. ebay gives powersellers a discount on FINAL VALUE FEES depending on your DSR's received. No discount on listing fees, featured auction fees, etc.
Ebay gives powersellers a discount, and the higher your DSR's the better the discount. The note at the bottom about free shipping is most of the reason free shipping is making me more money. This is off the ebay website:
If you are a PowerSeller and all four of your detailed seller ratings (DSRs) for the past 30 day period are 4.6 or higher, you qualify for a 5% discount on Final Value Fees
If you are a PowerSeller and all four of your detailed seller ratings (DSRs) for the past 30 day period are 4.8 or higher, you qualify for a 15% discount on Final Value Fees
If you are a PowerSeller and all four of your detailed seller ratings (DSRs) for the past 30 day period are 4.9 or higher, you qualify for a 20% discount on Final Value Fees (the 20% discount will begin to show on your July, 2008 invoice).
EXTENDED THROUGH JUNE! For items sold between October 1, 2008 and June 30, 2009 PowerSellers with high DSRs that qualify for Final Value Fee discounts will get double the discounts on their items sold with free shipping.
Since October powersellers have been getting double discounts on final value fees when they offer free shipping. Ebay keeps extending it, and probably will be again.
I keep my DSR's above 4.9(not easy, especially with coins I might add), so I get a 20% discount off the top for final value fees. On items I offer free shipping, I get 40% off my final value fees, and extra 20% for offering free shipping. I get a hundreds of dollars credited back to my account at the end of the month thanks to the free shipping auctions. I also offer free insurance for a few reasons. The first is I can require insurance, but have found that people might hit you with a lower DSR, even if you offer the actual cost. I have offered optional insurance, but most people won't take it, and if a package gets lost they will hit you where it hurts, and cost you money, with lower DSR's if you don't eat the cost and give a refund.
Insurance can be bought cheaper than through the post office, even if you send USPS! Too good to be true? NOT. Inkfrog.com is where I do my picture hosting for my ebay auctions, and have for many years. They offer insurance, even international to most countries, where the post office won't. They charge 55 cents per hundred, which is a killer deal any way you slice it, and you don't have to pay postage or send through Inkfrog, it is a very cool program.
I hope this helps, and feel free to ask any questions you want about this or anything else to do with ebay.
I also start every item at 1 cent no reserve, even if valued at thousands of dollars, and have proven conclusively that I make more money this way, and the free shipping and insurance has consistently ended higher than auctions without.
