Facebook Marketplace allows users to buy and sell items directly on Facebook. It has become an increasingly popular way for people to sell their used items. When you sell an item on Facebook Marketplace, Facebook does not directly take a cut of the sale price. However, Facebook does charge fees for shipping labels purchased through Facebook and payments processed through Facebook Pay. Here is a breakdown of the fees Facebook charges sellers on Marketplace transactions:
Facebook Shipping Labels
If you opt to purchase a shipping label through Facebook to mail your Marketplace item, Facebook charges the following fees:
- USPS First Class Package: $2.60 + shipping cost
- USPS Priority Mail: $3.25 + shipping cost
- UPS Next Day Air: $3.75 + shipping cost
- UPS 2-day: $2.60 + shipping cost
The base fee covers the cost of the label itself. You still have to pay the actual shipping cost based on weight, distance, etc. But Facebook tacks on the extra base fee for the convenience of getting the label through Facebook.
Facebook Pay Fees
If a buyer pays for a Marketplace item using Facebook Pay, the payment processing fees are as follows:
- US Sellers: $0.40 + 5% of transaction
- Non-US Sellers: $0.40 + 6.5% of transaction
This fee covers the cost of securely processing the payment through Facebook. The fee percentage is based on the total transaction amount including shipping fees if applicable.
Taxes
Facebook itself does not charge any taxes on Marketplace sales. However, if you earn more than $600 in gross sales across all Facebook platforms in a calendar year, Facebook will send you a 1099 tax form reporting your earnings to the IRS. It is then your responsibility to claim that income on your taxes and pay any income taxes you owe. The amount you owe will vary based on your total annual income and deductions.
No Fee for Sale Price
Importantly, Facebook does NOT take any cut of the actual sale price for an item sold on Marketplace. For example, if you sell an old bike for $100, you receive the full $100 (minus any shipping fees or Facebook Pay fees the buyer paid). Facebook does not take a commission percentage of the sale price itself.
Seller Payment Options
As a seller, you have two options for receiving payment on Facebook Marketplace:
1. Facebook Pay
This allows buyers to securely pay through Facebook. As mentioned, you pay a small transaction fee for this convenience. Buyers can pay with a credit/debit card or their Facebook Pay balance if they have one. You must have a Facebook account in good standing to use Facebook Pay.
2. In Person Payments
You can also arrange to meet the buyer in person and accept payment through cash, check, Venmo, PayPal, etc. There are no Facebook fees if you arrange payment directly. However, you won’t have access to shipping labels or any payment protection through Facebook.
Tips for Minimizing Fees
Here are some tips to minimize any fees when selling on Facebook Marketplace:
- Arrange local pickup rather than shipping items whenever possible. This avoids shipping label fees.
- Direct the buyer to pay using an outside payment app rather than Facebook Pay. This avoids the 2.9% + $0.30 processing fee.
- Make sure your sale price sufficiently covers any applicable fees so you still net the amount you expect.
- Sell lower cost items to keep the flat transaction fee low relative to the sale price.
- Bundle lower value items together into one listing whenever possible so you only pay the fee once.
Pros of Facebook Payments
While Facebook payments do come with fees, there are some advantages to using their payment system:
- Securely accepts credit/debit cards which are convenient for buyers.
- Covers you in case of nonpayment or returns. The buyer’s payment is held in escrow until the sale is complete.
- Easy access to shipping labels through Facebook without needing a separate shipping account.
- Provides buyer and seller protection from fraud or item issues.
For high value items, the peace of mind and security of Facebook’s payment system is likely worth the extra fee cost. You need to assess whether the fees make sense for each transaction based on the item price and other factors.
Advertising Fees
Facebook also gives you the option to pay for promoted listings in Marketplace to get additional exposure. Promoted listings appear higher in search results. Fees for promoted listings are as follows:
- Minimum bid: $5 per day
- Average cost per click: $0.50-$5
This advertising spend is entirely optional. There are no requirements to advertise to simply post an item for sale in Marketplace.
Facebook Marketplace vs. Facebook Shop
It’s important to note the difference between Facebook Marketplace and Facebook Shop. Marketplace is for individual sellers to post used items. Facebook Shop, on the other hand, is for businesses to sell new products and gear promotions towards a target audience. Selling fees work differently for Facebook Shop. With Facebook Shop, Facebook takes a 5% commission on each item sold in addition to any ad fees.
Selling Fees on Other Platforms
For comparison, here is an overview of the selling fees on some other popular online marketplaces:
eBay
- Insertion fee – ranges from free to $0.35 per listing
- Final value fee – 10% of total amount up to $750, then slides down to 2.35% for expensive items
Etsy
- Listing fee – $0.20 per listing
- Transaction fee – 5% of item price + shipping
- Payment processing – 3% + $0.25
Craigslist
- No selling fees, only charges for job postings in certain areas
Amazon (third party sellers)
- Referral fee – 15% of total sale price including shipping
- $0.99 per item sold fee
As you can see, most marketplaces charge both listing fees and sales commissions. Facebook Marketplace is very competitive having no listing fees at all and only minor payment processing fees.
Taxes on Facebook Marketplace Sales
If you earn more than $600 selling across all Facebook platforms, you will receive a 1099 tax form to claim the income. You must report this additional income when you file your tax return. Here are some key things to know about taxes on Facebook and Marketplace sales:
- You are responsible for paying any income taxes owed on your Marketplace earnings. The taxation rate will depend on your total annual income and deductions.
- Sales tax may also apply for any physical products you ship and sell in your home state. Check your state laws.
- If you sell at high volumes, you may need to register for a sales tax permit.
- Keep detailed records of your costs of goods sold and fees paid to accurately calculate your taxable income.
- Deduct all Facebook fees, shipping costs, and other business expenses.
- You can deduct unsold inventory costs.
- This income needs to be reported on Schedule C for sole proprietors or Schedule E for those filing jointly.
So in summary, you do need to pay income tax and potentially sales tax on your Facebook Marketplace earnings. But you also get to deduct legitimate business expenses which can lower your taxable profit.
Is Facebook Marketplace Worth It for Sellers?
Facebook Marketplace can be a highly valuable sales channel for individuals looking to declutter and earn extra income from items around their home. With over 1 billion active Facebook users, Marketplace gives you access to a huge pool of potential buyers. And Facebook’s seamless payment processing and shipping makes transactions smooth and convenient.
Overall, Facebook’s fees are very reasonable compared to other sites like eBay and Etsy. The lack of listing fees and commissions on the sale price itself keep more profit in your pocket. Just be aware of the shipping label fees and Facebook Pay charges so you can accurately calculate your earnings.
Marketplace is ideal for selling locally, niche items, handmade goods, collectibles, and inexpensive used items in good condition. The categories that tend to sell best on Marketplace include furniture, books, women’s fashion, toys, autos, and sporting goods. Read Facebook’s seller guidance and tips to set your listings up for success.
For most casual sellers, Facebook Marketplace provides an easy additional revenue stream without much hassle or expense. The large reach and simple structure make it well worth trying out. Just take good quality photos, accurately describe your items, price competitively, and provide great customer service. With some trial and error, you can learn how to successfully sell on Marketplace and maximize your profits.
Key Takeaways
- Facebook Marketplace itself does not charge a fee or take a commission on item sales.
- Facebook may charge shipping label fees and Facebook Pay transaction fees.
- No fees are charged simply for listing an item for sale.
- Use local pickup when possible to avoid fees. Or direct buyers to pay directly through outside payment apps.
- Facebook Pay offers buyer and seller protections for high value items.
- You are responsible for reporting and paying income taxes on earnings over $600.
- Marketplace provides a large audience and seamless transaction system.
- With smart seller strategies, Marketplace can be highly lucrative for side income.
The Bottom Line
Facebook Marketplace does not take any portion of your item’s actual selling price. However, use of Facebook Pay for transactions and Facebook Shipping for delivery incurs minor processing and label fees. Taxes may also apply if you surpass $600 in total earnings. Overall, Facebook Marketplace provides an excellent platform for individual sellers to earn extra income with minimal fees and hassle.