Dear Frame and Wheel customers,
What a great ride
It has been one year and about 130 transactions since the beginning of this endeavor and I am happy to report that it has been a successful year. I am very pleased to still have a 100% positive feedback score and to have many repeat customers. It has been a great pleasure to write about bicycles, frame sets and components and to work with people who love all things cycling. Thank you very much for using the service and I look forward to the coming year. Here are a few things I have learned and observed so far:
- Buyers want no reserve auctions, fast shipping, careful packaging and accurate descriptions.
- No reserve auctions frequently exceed the seller’s price expectations.
- Reserve-price auctions frequently do not succeed because the seller has unrealistic minimum price expectations.
- There is strong demand for used performance bicycles, frame sets and components from buyers in international markets.
- Performance bicycles, frame sets and components lose at least 25% of their value each year wether or not they are used.
- Frame and Wheel produces some of the best item descriptions and images on eBay.
Adding value is what Frame and Wheel does
As a result, I concentrate my efforts on writing comprehensive, informative and accurate item descriptions that are independent and objective, and a bit entertaining. I originate images that are pleasing to the eye, detailed and relevant. I wrap items carefully and I use good packaging materials. I disassemble bikes and customize boxes so that I can keep domestic and international shipping costs low. All of this takes time, effort and resources, but it is worth it because the result is a satisfied buyer and a satisfied seller, and this is the top priority for me.
You are getting the best
I very much want to continue to provide this service, and I am optimistic about its future, given the size of my “order book” and the references that are coming in from around the region. Frame and Wheel is establishing itself as a value-added auction service for cyclists and independent bicycle dealers (IBDs) and I am very pleased about this. Here’s the thing: I have to increase my commission if I am to keep on providing the same high level of service.
Switching to scaled percentage commission structure
Currently, Frame and Wheel uses a cost plus 10% fee structure. This means the client (the seller) pays all the “costs” of the transaction (eBay, PayPal and a Frame and Wheel eBay Store listing fee), “plus” a ten percent commission on the Final Value Price to Frame and Wheel. The problem is that there is a lot of time and effort required to clean the item, make the images, originate the description, upload all the information and package and ship the item. For most items, it is much more effort than the current fee structure rewards. Consequently, Frame and Wheel will introduce a “cost plus a scaled percentage” fee structure (Please see Appendix 1: Frame and Wheel revised commission structure). The change is effective October 1st, 2011 and applies to new business coming in after that date.
Cost plus a bit more
The revised commission structure means that the seller pays cost plus 20 percent for transactions less than $50.00. For transactions between 50 dollars and 1,000 dollars, and for transactions of more than 1,000 dollars, the seller pays cost plus about 15 percent. I estimate that the revised commission structure will lower net proceeds returned to client by about 4 percent. (Please see Appendix 2: Impact on Net Proceeds Returned to Client from Revised Commission Structure).
Just so you know
No one likes an increase in prices, including the guy who is putting them up. It almost always drives off a few customers. But the purpose of this correspondence is to make sure that you know, can see and understand why it is being done, and to hopefully convince you that even with a new commission structure, it will still be worth it to retain Frame and Wheel to manage your cycling equipment auctions.
Tweaking the name
When I started this company, I could not think of a name for it, so I gave it one that has an oblique reference to a bicycle: Frame and Wheel. When I began marketing the eBay service, I gave it a name that describes what the service does: Frame and Wheel eBay Selling Services. It is accurate and clear, but I have come to believe that Frame and Wheel eBay Auction Services is better. Unfortunately, it is equally boring as the previous name. Apologies in advance.
Thank you again for your business and patience and I look forward to working with you in 2012.
Sincerely,
Fred Thomas
President
Frame and Wheel, Inc.
Appendix 1: Frame and Wheel revised commission structure
Revised commission structure
| Revised | |
| Final sale price | Final value fee |
| Item not sold | No fee |
| $0.01 to $50.00 | 20.0% of the final sale price |
| $50.01 to $1,000 | 20% of the initial $50.00, plus 15.0% of the remaining final sale price balance ($50.01 to $1,000.00) |
| $1,000.01 or more | 20% of the initial $50.00, plus 15.0% of the next $50.01 - $1,000.00, plus 10.0% of the remaining final sale price balance ($1,000.01 – final sale price) |
| Previous | |
| Final sale price | Final value fee |
| Item not sold | No fee |
| $0.01 or more | 10% of final sale price |
The revised commission structure
According to the the revised commission structure, Frame and Wheel charges 20% of the final value price for items that sell between one cent and fifty dollars. For items that sell between fifty dollars and one thousand dollars, Frame and Wheel charges 20% of the first fifty dollars plus 15% for the difference between the final value price and the first fifty dollars threshold.
Finally, for items that sell for more than one thousand dollars, Frame and Wheel charges 20% on the first fifty dollars, 15% of the difference between one thousand dollars and fifty dollars, and 10% on the difference between the final value price and the one thousand dollar threshold.
Frame and Wheel’s commission is structured so that the higher the final value price, the lower the commission in percentage terms. Conversely, the lower the final value price, the higher the commission in percentage terms. This means that more proceeds are returned to the seller on larger more valuable items such as frame sets and complete bicycles.
Lowering Frame and Wheel eBay Store listing fee to $1.00 from $3.00
To offset the impact of the revised commission structure, Frame and Wheel will lower the Frame and Wheel eBay Store listing fee to $1.00 from $3.00, previously. This will offset the impact of the new commission structure particularly for transactions less than 50 dollars.
Appendix 2: Impact on proceeds to client from revised commission structure
Impact on Net Proceeds Returned to Client from revised commission structure
| Item | Final value price ($) | Revised (%) | Previous (%) | Percentage change (%) |
| Crank set | 26.00 | 61 | 64 | (4) |
| Wheel | 610.00 | 77 | 81 | (4) |
| Frame set | 1,211.00 | 78 | 82 | (5) |
Lowers proceeds by about 4 percent
The revised commission structure lowers the amount of proceeds returned to the client by about 4 percent. For example, for a $26.00 transaction, 61 percent of the proceeds are returned to the client under the revised commission structure compared to 64 percent previously. For a $610.00 transaction, 77 percent of the proceeds are returned to the client (Previous: 81%) and for a $1,211 transaction, 78% of the proceeds are returned to the client (Previous: 82%).
$0.01 to $50.00 item
| Crank set | Revised | Previous | Percentage change |
| Final value price ($) | 26.00 | 26.00 | |
| Cost | | | |
| eBay final value | 2.77 | 2.77 | none |
| PayPal transaction | 1.05 | 1.05 | none |
| Frame and Wheel eBay store listing | 1.00 | 3.00 | -67 |
| Plus | | | |
| Frame and Wheel commission ($) | 5.20 | 2.60 | 100 |
| Total transaction cost | 10.02 | 9.42 | 6 |
| Net proceeds to client | 15.98 | 16.58 | (4) |
| Frame and Wheel commission (%) | 20% | 10% | 100 |
| Net proceeds returned to client (%) | 61% | 64% | (4) |
Net proceeds to client decrease 4% to 61%
For transactions with a final value price between $0.01 and $50.00, the revised commission structure increases Frame and Wheel’s commission 100% to $5.20. This increase is offset by a 67% decrease in the Frame and Wheel eBay Store listing fee to $1.50. Total transaction cost increases 6% to $10.02. Net proceeds returned to client decrease 4% to 61% (Previous: 64%).
$50.01 to $1,000 item
| Wheel | Revised | Previous | Percentage change |
| Final value price ($) | 610.00 | 610.00 | |
| Cost | | | |
| eBay final value | 27.04 | 27.04 | none |
| PayPal transaction | 26.82 | 26.82 | none |
| Frame and Wheel eBay store listing | 1.00 | 3.00 | -67 |
| Plus | | | |
| Frame and Wheel commission | 84.00 | 61.00 | 38 |
| Total transaction cost | 138.86 | 117.86 | 18 |
| Net proceeds to client | 471.14 | 492.14 | (4) |
| Frame and Wheel commission (%) | 14% | 10% | 38 |
| Net proceeds returned to client (%) | 77% | 81% | (4) |
Net proceeds to client decrease 4% to 77%
For transactions with a final value price between $50.01 and $1,000.00, the revised commission structure increases Frame and Wheel‘s commission 38% to $84.00. The impact from the 67% decrease in the Frame and Wheel eBay Store listing fee to $1.50 is immaterial. Total transaction cost increases 18% to $138.86. Net proceeds returned to client decrease 4% to 81% (Previous: 77%).
$1,000 or more item
| Frame set | Revised | Previous | Percentage change |
| Final value price ($) | 1211.11 | 1211.11 | |
| Cost | | | |
| eBay final value | 57.47 | 57.47 | none |
| PayPal transaction | 37.59 | 37.59 | none |
| Frame and Wheel eBay store listing | 1.00 | 3.00 | -67 |
| Plus | | | |
| Frame and Wheel commission | 173.60 | 121.11 | 43 |
| Total transaction cost | 269.66 | 219.17 | 23 |
| Net proceeds to client | 941.45 | 991.94 | (5) |
| Frame and Wheel commission (%) | 14% | 10% | 43 |
| Net proceeds returned to client (%) | 78% | 82% | (5) |
Net proceeds to client decrease 5% to 78%
For transactions with a final value price of more than $1,000.00, the revised commission structure increases Frame and Wheel’s commission 43% to $173.60. The impact from the 67% decrease in the Frame and Wheel eBay Store listing fee to $1.50 is immaterial. Total transaction cost increases 23% to $269.66. Net proceeds returned to client decrease 5% to 78% (Previous: 82%).
