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.

Here are some quotes from Blizzard that should clarify things even more, although the language isn't 100% clear in this case either.

As others have pointed out there's a $1 transaction for any item such as armor, weapons, etc. which is only taken if the item sells. So that's the flat $1 fee for those types of items, and honestly I would personally expect most people to be interested in both selling and buying these types of character improvements.

Separately, there is a 15% transaction fee for any commodities (again, only if they sell), which are items that stack such as gems and gold. We take a percentage due to the way commodity sales work. You can put up 50,000 gold for sale, and because people can buy portions of commodity auctions, one person may buy 10,000, another may buy 30,000 and maybe nobody buys the remaining 10,000. Instead of charging $1 per transaction, which certainly wouldn't be fair to the seller in the case of commodities as they have no control over how many different people may buy from their auction, we go with a percentage. If that original 50,000 goes up for say $5, there would be a $0.45 fee on the 30,000, and a $0.15 fee for the 10,000, totaling a $0.60 fee for the sales that occurred.

Just to be triply clear, these fees only happen if the item sells. Putting an item or stack of items up to see if it/they will sell doesn't have any inherent risks, and is a good way to get some Balance built up. You can sell items you don't want, and then get something to spend on something you do want.
PayPal will not charge any fees for transfers to them. You'll pay a 15% transfer fee to move any funds to your PayPal account, and then whatever you do with the money after that is between you and them. But the transfer to PayPal is 15%, and that's it.

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