Payment Why do people charge 4% Paypal fees?

It's math.

When Paypal takes the 2.9% + 30 cents, they take it off of what was sent. So if you're sent $100, yes, you lose $2.90 + $0.30, or $3.20.

If you ask for $103.20, however (adding 2.9 + 30), now the amount to calculate percentage is higher, and you now lose $3.29--you still aren't getting the full $100. In order to receive the full $100, you have to request $103.30, or roughly an addition of 3.5%.

So I suspect the 4% is just a way of making the math easier.

 

I just don't get why seller's just don't price their items taking the paypal fees into account and just make it easier on the buyer. I don't charge paypal fees for that reason. I just price my items according to what I think I need out of the item, regardless of the few dollars and cents it costs to take paypal.

I tend to avoid sellers who charge PP fees too because of the principal of the thing, basically they are jacking up the price for their own convenience. Why should just one party bear the cost of the paypal transaction? I just don't think it is a very good marketing practice in these competitive times...

 

I think it's sometimes ignorance and sometimes a sneaky way to get a bit more money while obscuring the charges.

There are services like ppcalc that allow you to calculate the exact fees for any Paypal transaction so there's really no reason for the fuss about the math. I think some people charge 4% fees because that's what everyone else does so they assume that's what they should do, and some people charge 4% because hey, they can make a little extra money on the transaction, and who's going to object?

Personally, on the rare occasion that I buy from someone who charges fees, I calculate the fees myself with ppcalc and pay not a cent more. I once had a seller try to quote me a price for a transaction with 4% fees that was more like 15%.

 

I thought the 4-5% addition was with the usage of credit card payments as paypal do also charge a credit card fee. In fact, for a layaway I'm doing, because of the country the seller is located in, currency conversion plus the fact it is going through the card is actually pushing the fees up to 7% on her end.

 

Also paypal charges extra for out of the Country.
For my account (Premier) I get charged no matter how the person pays
I am not wealthy enough to pay for part of other peoples orders. I already pay out of pocket for the boxes and packaging materials although I do tend to charge exact amounts for paypal fees because I am not a swindler and I do group orders so everyone can benefit not just myself. I too use the paypal calculator and have others so they know upfront.

And for those freaking out over .5% dont forget the person doing the group order does have to accept the package, go through the items and make sure they are correct. Then they need to box up the items package them correctly and drive to the post office I doubt anyone at .5% is making any profit. Gas where I live is over $3.00 a gal.

 

For some people, it's because they are willing to haggle on item prices. I used to include shipping and paypal fees into my items, now I only include shipping because people would PM me to try and haggle the price if they bought say 4 items, I'd think "Sure, I can take $5 off for that many items", then when I did the math I realize I'm actually losing money between the combined shipping and the paypal fees.

It's easier for them and me to remember how much wiggle room there actually is if I add the paypal fee seperately. It's easier to actually take a bit off the price of the actual item and the shipping then it is for the paypal fee, when they're all together it kind of mixes a bit.

Of course if you're someone who doesn't haggle or ship internationally that's alot easier to just include everything, but not everyone can easily do that. I certainly don't want to say "It's $20 shipped, including paypal fee", then need to re-quote for more paypal fee because the shipping is higher, that is actually more likely to make someone think they're being duped then just breaking it up seperately so they can see all of where the price comes from.

 

People, the original post was about group orders. It was not about selling items directly.

 

I just include the fee in my asking price calculation. I usually do free shipping for within US too. Once I've set all that, my price is usually pretty firm and I don't back off it.

It's a lot easier to just tell people how much you want than try to say "well this much is postage and this much is fees and this much is a markup because the doll's sold out right now and this much is for mailing tape and this much is for the cost of my time when I have to go stand in line at the PO," etc. I just say here's how much and take it or leave it, except maybe for international postage, in which case I'll go get it priced and charge the exact amount. I've personally found that a lot of buyers just want the total price and don't want to feel like they were told a price and then had extra charges tacked on.

The only time I bother with a breakdown of fees is when I used to run GO's, because I wanted to make sure people would save money by joining the GO, otherwise there is no point to joining one. Edited to add, when I ran the GO's I didn't charge the flat 4%. Instead I made a spreadsheet and calculated the exact fee percentage for each person. This is because if someone is paying cross-border their fees are different/ more and also because for domestic, the regular fees worked out closer to 3.5% or something less than 4%. I certainly don't want to make money off my GO's, the point is to SAVE money for everyone.

It's very simple to get the exact fees if you just pop the right formulas into Excel, or you could use a calculator. Anyone who can't handle that type of calculation probably should not run GO's.

 

Cynthia in FlintHills - My layaway is on an order split, so I thought it was a relevant thing to mention

Ostrich - Not sure, I don't have a premier account so I cannot tell

 

For group orders I charge PP fees because if, for example, someone is buying an item worth $100 in my group order - they send me the $100 and I am charged (x) amount for it. So when I send the payment on I have to pay the money taken from me out of my own money - in a GO worth $1000 for example that can work out to a LOT.

As for why it's 4%, I just go by what others' charge - but I know that when I calculate it from ppcalc more often than not I end up getting charged more than it says I should be. In order to work out how much I get charged on each transaction (since as it has been said it can change depending on if they're within your country or not) I actually have to change it per transaction - and since I have no clue what I'm getting charged till the money gets into my paypal account 4% is a good amount to cover if I get charged more or less (which actually does happen more than you'd think -_- I don't know why, but my fees seem to be some ridiculous amount >_<).

I don't tend to charge fees on single transactions - though I do make some exceptions. But though I may advertise that I'm charging fees, I'm often willing to drop them if the buyer is particularly nice/just bothers to ask.

 

I always take paypal fees for myself. even when I send money in "friends/relatives" way.
but I think that leaders of the GOes should take it. simply not to pay for a few per cent of other peoples things from their "pocket money".
but easier is to add a link to ppcalc. it is really nice device.

however, people should remember to change calc defaults because of country of destination. e.g. Polish paypal takes bigger fee than American.... weird, huh?

 

If someone wants to charge a handling fee to cover their expenses for a group order I prefer that they state that upfront as opposed to overcharging me on Paypal fees. If you do enough big group orders that .5% can add up.

IMO transparency regarding charges is REALLY important in group orders. They're not supposed to be run for a profit, but when group order runners are rounding up in places it's very difficult to tell where your money is going.

 

0.5% of a $1000 is $5. You don't think $5 is reasonable for the hassle and real risk of organizing and shipping a GO of that value?

It's 0.5%. Let it go. Nobody is making a living off these overages.

 

My GO's tended to run between 1500 and 3200 USD which means the extra PP fee would be more than 5 dollars. (Edited to add, I revised those numbers down a little from what they were originally after looking at my records.) And like I said when the point of a GO is to save people money, I like to give as much back to them as possible. The GOs usually were saving me about 20-40 dollars on my shipping and in some cases (Minimees) significantly reducing the cost of my own purchase, so every little bit I can give back to others counted in my opinion.

 

Running group orders takes time and effort. So I have to say I agree with this

 

I realize that the purpose of a GO is mutual benefit--both organizer and participants can save a lot on shipping. However, the organizer has additional burdens placed upon her:

1. Taking orders, invoicing and receiving payments.
2. Tracking shipments from the company.
3. Taking inventory and packing for distribution.
4. Tracking shipments to the participants.
5. Accepting risk of Paypal chargebacks from dishonest/delinquent participants. One bad report on you can freeze your Paypal assets, justified or not.
6. Responsibility for covering any unexpected expenses up front.

I am not suggesting that an organizer be paid explicitly for this, but everyone can agree that underpaying an organizer is clearly unfair. I am just saying that there is real hassle and risk in organizing a GO, so a small 0.5% overage that simplifies the invoicing step and provides a small hedge against unexpected expenses could be reasonably overlooked.

 

Like others mentioned, I've found that ppcalc isn't exactly accurate, too; it's usually off by a few cents, but that adds up over time.

My guess for why 4% is a combination of "everyone's doing it and I don't want to do the exact math, they must have figured it out as right so I'll just run with it" and compensation for the inaccuracies on ppcalc. (The numbers I used in my previous post were all derived from ppcalc, as I'm not so hot with confusing calculations like the ones for paypal fees.)

 

I'm more concerned about people rounding up the Paypal fees, AND the shipping cost, and whatever other costs. I've seen group orders that charged a 4% paypal fee and then a handling fee on top of that, or group orders that charged a 4% paypal fee and then charged extra for shipping to cover packaging materials and transportation.

Basically when I join a group order I'm doing it to save money, not to line someone else's pockets, no matter how thinly. And when I'm paying Paypal fees AND the cost of packaging and materials AND subsidizing someone's gas to get them to the post office AND they're rounding up on each of those things, I wind up saving only a couple of dollars, and it's just not worth it to me anymore.

 

I don't expect to be paid for doing a GO beyond just the fact that I usually get free shipping and sometimes get other benefits like a significantly reduced cost for my own item or points from the manufacturer.

Sorry if it sounds like I am making a big deal over this, but I too don't like the "rounding up" some organizers do on GO's, and most people who are in the GO's are doing it because they are more cost-conscious. Plus, I've gotten invoices from some GO operators who would miscalculate (supposedly) Paypal fees and then send out invoices for stuff like an extra two dollars because they didn't figure the fee right the first time. I remember going round and round with one GO organizer because I'd already calculated the fee and this person was basically bunged up on the math and wanted me to essentially pay it TWICE. It's not the two dollars or whatever it was, it's the principle of the thing - you don't ask people to do you the favor of joining your GO so you can get some benefit (let's get real here, almost no one running these things is being purely altruistic in their motives) and then ask them to overpay fees and say "oh well it's not a big deal, I am doing all this work so I deserve a few extra dollars, don't I?" That is just not right or honest in my book, and I think a lot of people who join GO's would agree, because the whole reason they bother to join the GOs is because they're cost conscious. If that extra few dollars isn't important then you might as well just order your stuff yourself, or go in with your best friend, and not hassle around with being in a 10-person GO.

 

Just from my perspective, I tend to ship items before I charge shipping (if I can afford it) and just charge exact shipping, and I almost always (when estimating shipping before shipping) under-charge for shipping as the UK has a flipping terrible online shipping system making it virtually impossible to get an accurate shipping estimate.

Regardless of putting 4% on my GO orders, I have never yet run a GO where I haven't lost money I also often cover the customs fees personally, though that's a practice I've had to stop of late, since the last two orders I placed cost me over £100 in customs fees

I hate Royal Mail and Parcelfarce and HMRC

 

Isn't it the buyer's responsibility to check if the deal is fair? That includes learning about all the costs involved. The same calculators, shipping charts, etc. are available to both parties. If you think any of the fees are unfair, negotiate or don't participate.

I am actually of the opinion that most normal GO's are unnecessary. Only if a company refuses to ship to a certain country or if arranging a split do I see it worth the trouble.

Distributed postage costs are not really that big a discount considering all the extra steps needed by both parties. What if an item is wrong or defective? Every shipment and every payment is a risk--the fewer transactions needed, the better. And for normal orders, the fewest transactions you can go is just between two parties: you and the company.

I still believe that the 4% is primarily from simplicity. Consider this hypothetical situation: Paypal raises the fees from 3.5% to 3.9% or anything in between. I'll bet you dollars to donuts that most organizers will still only ask for 4% Paypal fee because it's easier to work with.

 

Sorry, I did'nt read carefully enough when I posted earlier. Having run a GO myself, The paypal fees did get rather tricky and I thought I was charging enough based on advice that it was a certain percentage, then wound up losing out a little for the out of the country orders because I charged everyone the same flat fee. It is a ton of work to run a go, and despite the points and control perks-you really are donating your time. Quibbling over.paying a few extra cents or bucks via the paypal fees charged to the person that runs the "Go" if they do a good job seems almost insulting when you know everything that is involved.

 

This is what used to happen to me because I didn't want to charge people fees but then I end up having to pay out of pocket for everyone's fees and after enough group orders it adds up. I have never had a group order over $1500 so I don't think most group orders are in the several thousand range. I have done enough goes to now know how much to add and I do this for each person so it is fair. I only charge what I am charged nothing extra But I do eat the packing material fees just because I sell other items so I will be buying the materials anyway. And as far as perks I never got more than a few dollars in points and many times like for Minimee Gos they dont give you points. I have never even had enough points to actually cash in LOL

 

As a buyer, I do my research - when someone says "I have to charge Paypal fees of X percent" then I expect to pay X percent. I don't expect to pay X + some additional small percentage because the organizer rounded up or miscalculated, or have to pay additional fees that I didn't expect to incur later on.

Also, I transact a lot in the Marketplace, on eBay, and in hobbies unrelated to dolls, so I know what to look for and ask. Not everyone who goes in to transact is going to have 1000 transactions to their past credit and know what to look for. Someone who only transacts a little bit can't be expected to know every single thing about how a GO runs, and I think that is unfair to expect them to know everything before they join in.

That's my opinion. If you think it's perfectly OK to impose whatever terms and "buyer beware", that's your opinion, but in my experience that just makes people uncomfortable, and I don't like to have uncomfortable people in my GOs.

If you think they're unnecessary or don't like them, then I find it a little odd that you'd be so interested in the topic of fees. I've had people join GO's for a lot of reasons - to save money on shipping, to get an item where they weren't comfortable ordering off the website because the order process was difficult, or to drive down the overall costs of the items. Obviously if you want to buy one wig or one pair of shoes off a doll site, and nothing else, a GO is the sensible way to go about it if the company charges disproportionate shipping for small items. For Minimees and sometimes for other items, the price drops significantly if you order in a large quantity. And then of course there are the ever-popular Soom doll splits which run the same as GOs. So, while I agree with you that GO's may be overused, I think there's a place for them for the people who get a benefit from them. Anyway, I think I've exhausted what I had to say on this topic so I will leave it at that.

 

If the organizer is tacking on fees of questionable origin after a mutually agreed amount, that's fraudulent, and thus a separate issue. This you could (and should) dispute and seek mediation, possibly backing out of the order altogether since the original deal was not respected.

The point remains though, that sellers are indeed allowed to set their terms. Organizers have the understood guideline of "zero profit", but how this is executed is, again, their terms. And if you think the organizer is rounding up too much, call them on it or ask for a partial refund after they get exact postage or such. The buyer has a "duty" to defend her own money. That's what the feedback system is for. Or, as I said, stay away. Find a better organizer or become one yourself.

If you want to run a GO such that you lose a modest amount of money, that's your call (after all, your GO, your terms). But don't expect every other organizer to follow suit. Personally, I don't think it is the organizer's role to subsidize her participants' order.

The fact remains that until Paypal has a request payment option like "Request ____ after fees", so Paypal itself does the calculation, you won't know the exact fees charged until after they have been incurred. If you think a 0.5% overestimate for this uncertainty is extravagant, we'll just have to disagree about it.

I am "interested" because I recognize that there are cases where GO's are useful, which you then helpfully listed. This issue is relevant.

 

But why shouldn't you pay for those things? It's unfair to expect the GO organizer to lose both time and money for your sake.