Ebay has maximum pricing power. The nature of it’s business model combined with it’s dominant market share presents Ebay with unique opportunities to maximize margins. If Meg Whitman and Bill Cobb do not leverage this advantage then they need to be replaced. So with great interest I have been following Ebay’s recent attempt at raising prices. I applauded their initial move to raise prices on their basic store subscription and to also increase the final value fee.

The announcement of the price increase was met by a major outcry from the Ebay customer base. Which is to be expected. I can’t remember the last time a customer thanked me for raising prices. And when I do raise prices I get nasty letters, phone calls and some customer will depart. But they tend to come back when my competition raises his price or goes bankrupt because he didn’t. When you raise prices you have to have the balls to fight the fight.

Because of this outrage Bill Cobb the newly installed CEO of North American operations rescinded part of the price hike this past Sunday. I’m unable to read why without insight into Ebay’s strategy. There are two possible explanations for this. First, the kinder gentler swarm of marketing locusts got to Bill and somehow forced him to listen to the customer and rescind part of the increase. Or, second, this was always in the cards – a bone to throw if the natives got restless. I hope it’s the latter. Either way it’s going to be interesting to watch the next couple of moves by Ebay. Here are a couple of other takes on the price increase. The Liberal Order  here. The Motely Fool here.

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