Monday, October 31, 2011

Why We Don't Include Shipping In Our Prices

The prices shown on our site DO NOT include shipping costs in the price. The price shown is the price for the item itself. We have received some emails and seen forum posts with questions about this topic and wanted to explain our reasoning.

Shipping Costs Are Different for Each User

Shipping costs are not always the same for each user. Shipping usually costs $3.99 for items sold on Amazon. An Amazon Prime customer doesn't pay any shipping. Some eBay auctions are priced based upon the winner's zip code instead of a flat rate. And some sites offer free shipping if you buy a certain dollar amount.

All of these make calculating the shipping cost an imperfect variable because the price the winner actually paid might not be what you would have paid for the exact same item.

Different Users Want To See Different Prices has two main types of users. 1) video game consumers. 2) video game sellers. Both user types would ideally want to see different variables included in prices. Consumers would like to know the total cost of buying a game. So they would generally like to see shipping costs included in the prices shown.

But online retailers mainly want to know how much they can actually get for selling a game. They don't get to keep shipping because they use the shipping cost to pay for shipping the item.

Including shipping costs in the prices would make the prices better for some users but worse for others.

Shipping is a Transaction Cost

Shipping is a cost of completing the transaction. There are lots of other transaction costs that we could account for in our pricing too and adding each one would become prohibitively complex.

For buyers some transactions include all or some of these transaction costs: shipping, sales tax, cost of gas to drive to store, time to find and pickup the item.

Sellers have their own set of transaction costs: listing fees online, credit card processing fees, material costs to ship an item, costs of running a store or warehouse.

Each buyer and seller has different transaction costs depending on where they buy or sell the item and each of these would need to be considered when trying to determine the "best price". Here is an example:

A buyer is considering two options for a video game purchase:
A) item is priced at $4 in an online store
B) item is priced at $5 at a local store

In order to know which game is the best deal the buyer needs to consider the shipping cost for item A and they need to know how far away item B is and what the sales tax rate is at that location.

Including shipping costs in our prices would only account for one of the many transaction costs for buyers and none for sellers. Instead, we chose to include no transaction costs for buyers or sellers and let each user adjust the prices for their own particular needs and costs.


We do not include shipping costs in our prices because it would be an imperfect value, it would make prices less accurate for some users, and it would still not account for all costs. You should take that into account when making a buying or selling decision.

All that being said, we realize for some users seeing shipping costs included can be helpful. We have added a feature to the site letting you add shipping costs our prices.


Anonymous said...

You make a big assumption in setting the shipping price as a transaction cost. You forget the reality of list and sorting, and also the effect that altering the shipping and "handling" price can have on taxation.

here is example of a game currently for 4.99 + 3.99 shipping or 3.88 + 5.95 shipping or 10.62 + free shipping. Here the best deal is only sorted to the top when shipping is included in your sort. They all are the same cost and all have the same shipping coverage. Each item can go to the top of a sort, least shipping, lowest price, lowest price+shipping. So we see that playing with these two numbers is a strategy to gain traffic. When it comes to taxes that seller that shifts the most cost over to the shipping and handling will be helping his customer out because by claiming the work is paying for handling reduces the amount owed on the product. So again it is a strategy to gain traffic to a different population of searchers. A good seller will have his items priced in different locations according to these kind of differing concepts. Who knows maybe the 3 sellers i quoted were the same seller behind the screen.

JJ Hendricks said...

@anonymous - very good points about shipping rates changing how the item will appear on eBay searches. eBay by default sorts by "best option", which takes into account a host of variables but gives a boost to free shipping because customers say they like it (even if the final cost is the same). It is perceived as value for the customer.

Because this is the default search option for eBay, the biggest share of traffic would be gained by using free shipping. But you are right that all three scenarios you mentioned would appear on top with different customizations.

Unknown said...

Without including the shipping cost , essentially makes the data less accurate .. If it where feasable to create such A compilation of data , including prices via Free Ship , and Average prices including Average Shipping. Comparing all Marketplaces.
Or is it that .. The Data simply cannot retrieve the Shipping costs ?

Anonymous said...

I would only request that you be consistent throughout the website. Suggested prices on the Marketplace should be WITHOUT shipping, rather that assuming every game can be handled and shipped for $3.

JJ said...

@anonymous - The marketplace suggests including some money to cover shipping because all items offer free shipping. The prices are based on sales with shipping excluded so we need to recommend sellers include shipping in the price.

I hope that makes sense.

Anonymous said...

Shipping is inherently bundled into the prices of auctions on ebay. Game XYZ on ebay will sell for, on average $25-- whether it's $5 with $20 in shipping, or $20 and $5 in shipping. Items on Amazon might appear to have free shipping, but very often prices on Amazon are inflated a few % from other vendors.

It's true that sometimes international shipping can create significantly larger shipping prices that extend beyond the value of the item, but there are a couple mitigating factors: unless the item is extremely rare, most people will not purchase/sell internationally, and often when they do, again, the seller eats the shipping. But it'd be easier to filter sales made internationally and avoid the issue altogether.

Anonymous said...

When Making Lots for an online acution I always add the shipping to the value because the value is what the person is willing to pay for the item including the shipping. Some people buy a card for a 1$ but because its in the UK shipping is 25$. In total that person spent 26$ on the card even though its value might only be a 5$ card. Thats thier chioce but they still spent 26$ for that card. Thats what they are willing to spend on it so averaging it all out the card goes up in value. Big deal thats how all the guides like wizard beckett calculate the value by the totle amount a person spends on a item in all form of auctions rather its live or online. makes more sense and makes it more accurate when adding shipping. Shipping is not the same with every lot either. Some has shipping at 20$ even for cards that would cost 7$ to ship. Sellers do this to get the price they want for that item. Not counting that throws off the true value in an item. The buyers will only pay 99 cents for that item because shipping is so high.

Pat said...

I think it makes most sense NOT to include shipping costs in the final value of the item. PriceCharting is about determining the value of the item, not anything else! People forget that in a lot of cases, games are also purchased through means other than eBay!! People also pick up games in person from Marketplace, flea markets, events/expos, etc - where shipping costs are not applicable! We are trying to determine the value of just the game itself, not game + shipping + tax + blah blah blah.. It's no different from other collectibles i.e., coins, stamps, etc. People are NEVER satisfied. If shipping costs were included in the final value, people would still be b!tch!ng about that too. You can't win either way. Just realize the values that are determined by PriceCharting are rough estimates!! It's not going to be perfect, but it's the most reasonable and fairest estimate that you can determine, just judging by what people are willing to pay for on auctions, and using that data to get averages. The least you can do is help make it better by flagging inaccurate data, correct errors, or add valid data. Otherwise if you don't like it, don't use it, or come up with a better system yourself!

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