## Wednesday, May 2, 2012

### Dissecting the RMAH fees

I was going to make a detailed explanation of my understanding of the RMAH fees but others have already done my work for me. It seems I was right. If you plan to cash out (into Paypal) you will be taxed twice. Items will be taxed \$1 + 15% while commodities will be taxed 15% + 15%.

Here's a link to a forum thread showing a table with various amounts and the final, taxed amount. There's also a link to a Google docs spreadsheet which lets you play with your own values.

Furthermore, Diablofans has created a small web app that allows you to calculate the various amounts with your own input.

When Blizzard announced the RMAH fees, a lot of people were confused, me included. They should have done the right thing and posted, at the very least, a concrete example of how these fees would work. Instead, they used ambiguous language that could be interpreted in different ways. When I sat down and read carefully through the description, I concluded that we will be taxed twice if we cash out.

Because Blizzard has failed to give us any examples, I will give you a quick one, assuming you didn't check out the links I provided.

Items (weapons, armor, unique items in general)

Selling price: \$100
Fee: \$1
Profit: \$99
------------------------------
Paypal fee: 15%
Profit after cashing out to Paypal: \$99 * 0.85 (or 15%) =  \$84.15

Commodities (gold, crafting mats, gems, pages of training, non-unique items in general)

Selling price: \$100
Fee: 15%
Profit: \$100 * 0.85 = \$85
------------------------------
Paypal fee: 15%
Profit after cashing out to Paypal: \$85 * 0.85 = \$72.25

As you can see, at a \$100 price point, it is more profitable to sell items rather than commodities. The problem is that commodities are more abundant and common, while items are not. You will find an item worth selling for a high amount once in a blue moon, but you will always have commodities to sell, if you wish, for smaller amounts.

The forum thread I linked at the beginning better illustrates the fact that, while the profit percentage stays the same for commodities (72.25%) regardless of the amount, it starts very low (17% for a \$1.25 item) and goes up to 84.66% for a \$250 item.

Speaking of which... the maximum you can sell an item for is \$250. Which is a bit sad. I was hoping for a higher ceiling, at least \$500, preferably \$1000. While I don't entertain any illusions that I will ever sell such an item, there will be people who will find very rare items and will be forced to compete with inferior items at the \$250 ceiling. Even if their uber-item will sell instantly, they could have got a lot more for that item if the ceiling was higher. I'm afraid that 3rd party sites which sell items will sprout and flourish just like they did for Diablo 2.

With this, I'm hoping that the RMAH fee structure is cleared once and for all.