I wonder how much of this increase was to offset the loss from the people who deleted their accounts (like me) for Reverb's atrocious decision to get involved in national politics.
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Reverb increasing seller fees
- Thread starter BunchyMutt
- Start date
If you sell a $1000 instrument, it will cost you an extra $15. This won't negatively affect them at all.
And how are they collecting fees "from both sides of the transaction"?
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I don't want to get into it publicly for fear of being banned.
As it should be. The seller typically has the longer and more resource-intensive relationship with the market maker, and the market maker takes their share from the money flowing from buyer to seller.
Economically speaking, however, buyer and seller will meet in the middle and end up bearing the cost of the increase equally. You'll up your price to account for the increased "spread" created by the commission, the buyer won't want to move (but will want what you have), and you'll get to a new middle ground that accounts for the increased cost of doing business.
It's all perspective. From my view, anyone making a living off of Reverb should be grateful that their platform provided an income possibility for them. Reverb doesn't owe anyone anything. We'll all free not to use them.
....but most of us will continue to use them, because as it stands, they are providing a service that no one else matches.
Businesses small and (especially) large have been involved in national politics for centuries. Lobbying, donations, etc.
Sorry, I didn't mean to make anyone nervous with the threat of any political talk. I was just wondering if Reverb did something outrageously offensive to the general public. Thanks for the explanation,...political debate successfully avoided.
I believe the topics of social equality and systemic racism are humanitarian and not political.
I also believe I will probably sell less than I already do at Reverb as a result of the price hike.
I also believe I will probably sell less than I already do at Reverb as a result of the price hike.
True, and as free people we are free to choose to do business with them or not.
All well and good but I've been suspended for talking here about these things you call humanitarian. Not gonna go down that road again.
Raising seller fees is no big deal. Sellers on eBay have been raising selling prices for years, in order to keep up with them. All fees eventually get passed on to someone else.
Unfortunately, humanitarian issues become political issues as soon as you use political power to further the humanitarian goals. I will say no more on the topic, save that this CGP Grey video is a good listen: The Rules For Rulers
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So, I've already seen small companies complaining about this. I think the issue is very much related to sales volume, and also the underlying cost of products being sold relative to the sale price and profit (aka "profit percentage").
For the average bear flipping used gear to fund more new gear, this is not likely to be impactful. The sale of anything bought new is already a loss. The profit/loss on the sale of anything bought used will vary wildly based on purchase price.
For bigger sellers, there could be a more meaningful impact, but a lot of those sellers are actual stores, so the presence on Reverb might drive a buyer to the shop to deal direct. Bass Central has a listing for a Spector that I just spotted. If I was interested, I'd contact Bass Central to ask about wiggle room on price, and deal with them directly. A listing on Reverb is a marketing tool. Bigger sellers/shops may also be better suited to absorb the increase without changing prices.
Now let's say I'm a small pedal maker and trying to build a brand. Let's also say I sell a pedal for $100, and it costs me $70 to build it, and I was paying $3.50 in fees. That's $26.50 in profit on $70 of product cost. 26.5% profit margin. My "profit percentage" is 37.9% based on my cost.
- If the sale fee goes up to 5%, making it $5, I now clear $25.00, for 25% margin (vs. 26.5%). My profit percentage is 35.7%, which is greater than 1.5% change.
- If I adjust my sale price for the fee change, I actually need to raise the price more than $1.50. Pricing at $101.58 will result in a fee at 5% of $5.08. Back out the $70 cost and I'm at the initial $26.50 of profit. If I only raised the price to $101.50, the fee would be $5.07 and I'd clear $26.43.
These aren't huge numbers, but if every penny counts, then this could be meaningful, particularly when you start increasing sales volume and the effect multiplies.
For the average bear flipping used gear to fund more new gear, this is not likely to be impactful. The sale of anything bought new is already a loss. The profit/loss on the sale of anything bought used will vary wildly based on purchase price.
For bigger sellers, there could be a more meaningful impact, but a lot of those sellers are actual stores, so the presence on Reverb might drive a buyer to the shop to deal direct. Bass Central has a listing for a Spector that I just spotted. If I was interested, I'd contact Bass Central to ask about wiggle room on price, and deal with them directly. A listing on Reverb is a marketing tool. Bigger sellers/shops may also be better suited to absorb the increase without changing prices.
Now let's say I'm a small pedal maker and trying to build a brand. Let's also say I sell a pedal for $100, and it costs me $70 to build it, and I was paying $3.50 in fees. That's $26.50 in profit on $70 of product cost. 26.5% profit margin. My "profit percentage" is 37.9% based on my cost.
- If the sale fee goes up to 5%, making it $5, I now clear $25.00, for 25% margin (vs. 26.5%). My profit percentage is 35.7%, which is greater than 1.5% change.
- If I adjust my sale price for the fee change, I actually need to raise the price more than $1.50. Pricing at $101.58 will result in a fee at 5% of $5.08. Back out the $70 cost and I'm at the initial $26.50 of profit. If I only raised the price to $101.50, the fee would be $5.07 and I'd clear $26.43.
These aren't huge numbers, but if every penny counts, then this could be meaningful, particularly when you start increasing sales volume and the effect multiplies.
I mean, the classifieds here are still only the price of admission, so it’s all good! 
Going to take a slightly different tack here and say that while raising fees is not something I'm in favor of, raising the fees was probably completely necessary. I read about the fee raise on a different thread and that got me to look up Reverb.
Reverb.com - Wikipedia
Etsy paid $275 Million in cash to David Kalt (it's a privately held company) for Reverb in August 2019. That's for a company that may have done $400 mil in sales in 2017, but the last number I've found for revenue is just $16 million in 2016. It's a year out from purchase and now you pile on recent economic difficulties and Etsy probably has to raise the fees to make some sense/cents out of the purchase.
Not saying I like it, but from the minute Etsy dopped $275 Mil the writing was probably on the wall...
One related issue. It seems that Reverb had pretty much become it's own thing apart from CME, but it still had the cache of being the sibling of one of the best guitar shops on the planet. Kalt still owns CME and I wonder if Reverb will loose some of it's perceived mojo in the market as it no longer has that connection.
Reverb.com - Wikipedia
Etsy paid $275 Million in cash to David Kalt (it's a privately held company) for Reverb in August 2019. That's for a company that may have done $400 mil in sales in 2017, but the last number I've found for revenue is just $16 million in 2016. It's a year out from purchase and now you pile on recent economic difficulties and Etsy probably has to raise the fees to make some sense/cents out of the purchase.
Not saying I like it, but from the minute Etsy dopped $275 Mil the writing was probably on the wall...
One related issue. It seems that Reverb had pretty much become it's own thing apart from CME, but it still had the cache of being the sibling of one of the best guitar shops on the planet. Kalt still owns CME and I wonder if Reverb will loose some of it's perceived mojo in the market as it no longer has that connection.
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I am registered w/Reverb, but very current issues w/Reverb search function via my iPad and iPhone (especially after chat w/Reverb rep yielding nothing), has me avoiding it as a buyer and as a seller. I will try my laptop. If better there, then it is an Apple issue and I will take it up with them (ala older top of line iPhone and iPad...victim of the Apple “slowdown”?)
I have purchased multiple times from Reverb, but haven’t sold there. Kind of like eBay...as the costs to sell go up, it just isn’t feasible to sell there anymore. Used goods have a street value that is fairly well known in given times and places. With the added costs to sell (including increased shipping rates) the seller ends up way short of street value. That would be the last ditch option.
Current circumstances with the pandemic performance restrictions, seemingly ever shrinking compensation for musicians/bands, venues disappearing, pirating online streaming or stupid low compensation per stream/download, it would seem to be a natural that such circumstances may create a “virus” in the live music world affecting every single thing necessary for live and recorded music. In that scenario, all entities and businesses are at-risk and devalued, even “exposure”.
Hopefully, we will see changes in the future. Changes that are good for musicians and artists on the buy/sell and performance fronts.
