EBay Inc. said on Tuesday it will reduce the fees it charges sellers to list their goods online by about 50 percent in an effort to retain and attract more sellers while improving customer service.

John Donahoe, eBay's next Chief Executive Officer, said sellers who meet certain criteria will be rewarded with incentives and priority ranking in search results for auction items.

Sellers that describe items accurately, ship on time, and ship at a fair price will enjoy preferential and discounts on eBay, said Donahoe. We're serious about making eBay easier and safer to shop.

However, eBay will increase its commission on cheap items and the greatest fee increase will be for goods sold for less than $25.

The fees for transactions less than $25 will increase by two points to 12 percent of the final price while fees for items sold for between $25 and $100 will increase to 8 percent.

For items sold at $100 or more, the fees will drop by one percent.

The firm said the new fees structure will be in effect starting February 20 in the United States affecting auction bidding and fixed price markets. Later there will be more price changes in the U.K. and Germany, before the pricing and other rules changes take effect in the rest of the world.

According to eBay, the fees changes will vary by country in an effort to encourage sellers to list many items and use more pictures to illustrate listings.

After the announcement shares of eBay dropped 2.8 percent, or 75 cents to 26.12, on the Nasdaq stock market.