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Excellent Paypal Tool!

Paypal fees amount to an annoying ding: you charge someone $150 for services rendered and you end up shorted $4.65. That’s a pretty hefty fee, compared to a bank charge for an ordinary deposit. And despite the convenience of EFTs in the cloud, it’s unfair: you didn’t do $145 worth of work; you did $150 worth of work.

Well, obviously the trick is to make the client pay that fee. The calculation is onerous, though, and so many of us either overcharge the customer or just eat it.

No more!

Check out this handy-dandy Paypal service charge calculator! It will tell you how much you need to charge to get full payment for your product or services. Or, conversely, it will figure how much you’ll  net on an incoming payment.

Et voilà! Now it’s easy to see that if you want to receive your full $150, your statement will need to ask for $154.78.

How to extract the extra $4.78? Well, you could annoy your client by letting him know upfront that you’re passing Paypal’s annoying fee along. Or you could charge $165 and give him a $10 discount.

😉

 

7 thoughts on “Excellent Paypal Tool!”

  1. That’s still cheaper than taking credit cards. The cost of taking credit cards has steadily gone up over the years. Now it’s about 3.5% to 4.5 % of the total sales. You wouldn’t believe all the extra fees the credit companies get from the merchants. On top of the processing fee, which is about 1.6 %, these are some of the extra fees: vs key enter/card present/moto/otf/merit I ins r-e, vs key enter/moto/otf/vsp various, vs key enter/rewards/cnp/avs, vs world elite merit I/III business card IInon auth/otf, visa debit per item fee, mc key enter/moto/otf/vsp various, mc keyenter/rewards/cnp/avs, mc world elite merit I/III business card IInon auth/otf, amex inquiries, mastercard inquires, mc key enter/card present/moto/otf/merit I ins r-e, mc debit per item fee, discover inquiries, discover international service fee,visa inquires, mastercard cross border us, mastercard kb tran fee, statement fee, visa base II tran fee, visa international service assmt.

  2. The PayPal fees annoy me but not to the point where I regularly fuss over them. I guess I look at it as a ‘cost of doing business’ or overhead. Yeah, they take 3% or so, but the alternative is having to deal with a paper check, and if you get a group of transactions, that can get old real quick. I’m all about keeping 97% and having the 3% go towards making it quick and trouble free.

  3. @ MoneyBeagle: Yes, I have to admit that it’s seemed to me the simplicity of payment and the ability to move money back and forth easily has been worth the cost. Scanning a fistful of paper checks to disk, at least with my scanner (which runs at the speed of a stampeding snail), is almost as time-consuming as driving the darned things to the credit union, and so the magic of receiving payment electronically and then electronically downloading it into the corporate account is a minor godsend.

    Three percent, though, could add up if you were making a decent income. Even with the munificent 10 grand my side business has earned so far this year, if it all came in through Paypal that fee would have cost me $300. If our new campaign comes to fruition, we could make as much as $60,000: then that 3% charge could lift $1800 out of our bottom line.

    To my mind it makes sense to pass that fee along to the customer, exactly as retailers pass debit and credit-card fees along to us all by raising prices on merchandise.

  4. If I were a client I’d rather be billed a slightly higher amount than have a line item for the paypal fee. Make the fees you have to pay invisible to the clients. I think that’s why Zappos is so popular – they promoted it as ‘free shipping’ but really their prices just include the cost.

    I still balk at sites where you can purchase something online with paypal or CC where it’s more than if you go pay in person or mail a check (our state’s DMV renewals, for one, and movie tickets at some theatres).

  5. When I worked from home, I set my fees to include all overhead costs. I wasn’t charging clients separately for routine postage, phone, paper, etc., so why would I have a line item for the paypal fee? It’s a cost of doing business. Stores don’t have a line item on your receipt for the percentage they pay for CC use, it’s just calculated into the prices they charge.

  6. @ valleycat1: I think that makes sense.

    So merchants now can get away with charging extra for the use of a credit card? I thought the credit card companies had made a rule — or managed to make it the law — that stores could not charge less for customers who paid in cash. If that were the case, of course, no one would use credit cards…and I think if the general public understood how much the things push up prices, probably no one would use either credit or debit cards.

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