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EDIT: Haha, I almost forgot that I posted this! I actually got some advice before this actually appeared on A_B, but I think everyone gave really great answers! Thank you! I'm sure you guys know that I would never charge such things maliciously. I just was not fully aware of how the fees worked (I originally thought it was standard to charge the fees (no matter what you call it). But now I think I know what to do! Thanks again! :)

I reeeaaally should have posted here before I posted on my art sites (because I think I got people unnerved).

Anyway, so I've discovered recently that if too many "gifts" are sent through Paypal, my account can lock down. That's how I've done my commissions for the longest time, but now since I get a lot more than usual, I feel the need to implement the fees.

I kinda announced it on my sites, but I don't think I'm getting that much of a good response out of it. Some are suggesting that I figure it into my prices, but I have too many prices to list (like...I have my base prices, but the price differs depending on what each individual wants). I mean, the best I can do is figure it after I find the total for that individual client.

Did I change my policy too quickly? Again, I'm not doing this just to get more money out of the client (and that fee money doesn't go to me anyway), I just don't wanna get in trouble. HALP.

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Comments

( 33 comments — Leave a comment )
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connorgoodwolf
Mar. 1st, 2011 03:45 pm (UTC)
Paypal transactions performed as gifts don't have the capability of performing disputes.

If I'm not mistaken, Paypal is like Visa/MC where the contract you signed with Paypal states you can't include a "Paypal fee."

People get around this type of statement by offering a "cash discount," however in your case just mark up prices accordingly. You'll have to state a higher price according to your items.
connorgoodwolf
Mar. 1st, 2011 04:13 pm (UTC)
I looked up Paypal's User Policy

https://cms.paypal.com/us/cgi-bin/?cmd=_render-content&content_ID=ua/UserAgreement_full&locale.x=en_US#7.%20Closing%20Your%20Account.

"For PayPal Business Payments, the PayPal Business Payment fee is paid by the recipient unless it is disclosed to you before you send the payment that you, the sender, must pay this fee."

I'm really liking Paypal if there are no further rules regarding who pays fees. For any new commissions, you can simply state, "The price is XX + the PayPal fee."
(no subject) - poprock_grey - Mar. 1st, 2011 07:45 pm (UTC) - Expand
dazen_cobalt
Mar. 1st, 2011 03:47 pm (UTC)
Add the paypal fees to the price of your commissions. Basically the cost of doing business. if paypal gets wind that you're using gifts to avoid fees or making customers pay the fee then you can get in trouble. I know what you're thinking "but you just said add the paypal fees to the price of your commissions" No their apart of the commission price. if I had of went "Well make em pay 25 then the service fee" then there would be a problem. and even if the price differs there is always a paypal calculator.

lurkerwisp
Mar. 1st, 2011 04:01 pm (UTC)
Since what you're doing (re: the gifts) is against PayPal's policy, then yes, your customers are right to complain. You really should factor it in to your base commission prices as a cost of using PayPal instead of tacking it on after. The fees are the only cost to you for using PayPal's service. Apparently I was wrong! No I wasn't. That was silly.

Edited at 2011-03-01 04:57 pm (UTC)
allykat
Mar. 1st, 2011 04:09 pm (UTC)
I run Teenycom, and I have to tell you that I got the BIGGEST headache trying to figure out the ins and outs of Paypal's policy involving marking payments as gifts AND charging paypal fees. Eventually I actually talked to a real life paypal employee, which took about a million years to pull off. If you're interested, you can check it out here: http://community.livejournal.com/teenycom/440419.html

Someone already covered that marking as gifts is really only an issue because of the ability to dispute a payment, but since you are using it as a business that's a pretty big issue.

The long and the short of it regarding fees is that it's probably safest not to CALL them paypal fees. Just tack it on, or call it a convenience fee, or figure it into shipping.

Edited at 2011-03-01 04:10 pm (UTC)
eveshka
Mar. 1st, 2011 04:45 pm (UTC)
Here is an official email reply I got once upon a memory.
Thanks for contacting PayPal. I appreciate the opportunity to assist you with your questions.

PayPal offers our members access to the world's leading online payment service. As our network of members has grown, an increasing number of sellers of goods and services are accepting payments through PayPal.

Under Visa, MasterCard, Discover, and American Express regulations and the laws of several states, including California, merchants may not charge a fee to the buyer for accepting credit card payments (often called a 'surcharge').

· In order to comply with these laws and regulations, sellers may not charge a fee for accepting PayPal

· This limitation does not prevent sellers from imposing a handling fee in connection with the sale of goods or services, as long as the handling fee does not operate as a surcharge (in other words, the handling fee for transactions paid through PayPal may not be higher than the handling fee for transactions paid through other payment methods)

· Sellers residing in the United Kingdom and listing items for sale on a UK-based website may impose a surcharge, but only under the following conditions:

1. Both the buyer and seller reside in the United Kingdom;

2. The purchase price is paid in pounds sterling;

3. The surcharge imposed by the seller is no greater than is necessary to recover the receiving fees incurred by the seller;

4. The seller clearly indicates to the buyer prior to the buyer's submission of a bid or (in non-auction transactions) prior to completion of the purchase that a surcharge will be incurred and the amount of the surcharge

Thank you for being part of the PayPal community.
Sincerely,
David
PayPal Global Services
PayPal, an eBay Company

Edited at 2011-03-01 04:49 pm (UTC)
eveshka
Mar. 1st, 2011 04:54 pm (UTC)
Here is the TOS on 'Personal Payments'
https://cms.paypal.com/us/cgi-bin/?&cmd=_render-content&content_ID=ua/UserAgreement_full&locale.x=en_US

(To find this yourself, click “Legal Agreements” at the bottom of any PayPal page.)

4. Receiving Money.

4.1 Receiving Personal Payments.

If you are selling goods or services, you may not ask the buyer to send you a Personal Payment for the purchase. If you do so, PayPal may remove your ability to accept Personal Payments.


--

There is a monitoring team that watches accounts for this type of activity, and clear repeated use of the personal payments option for payment of goods can get you suspended.
mandyseley
Mar. 1st, 2011 04:56 pm (UTC)
Basically, I would suggest the following:

Offer price ranges for your commission lists. For example, instead of charging "sketches $20", just say "sketches start around $20-25." Make it obvious that the prices listed are only estimates, and people will have to contact you for an exact quote. This gives you a little leeway.

You can use this calculator or another similar calculator to figure out paypal fees and factor that into your final cost. Alternatively, you can use the calculator to "adjust" static prices if you'd really like to stick with them (so instead of listing sketches for $25, calculate the fees and round it off to charging $26 for sketches instead).

Most importantly, do not call them PayPal fees and equally as important, if you accept other payment methods from your online commissions you MUST charge the same amount. The rule is against fees for using PayPal specifically, so don't specifically CALL them PayPal fees and don't treat them as being specific to PayPal, either. If you charge that aforementioned $26 for sketches, you charge that $26 to people paying with PayPal, with a money order, or with any other payment methods you accept. No discounts or adjustments based on payment methods.
sovy
Mar. 1st, 2011 05:01 pm (UTC)
Just knock prices up by a dollar to cover the Paypal fee.

Also you get dinged 3.9% + C instead of 2.9% + C when an international customer sends money to you.
temrin
Mar. 1st, 2011 05:05 pm (UTC)
No one who posts they are adding the fee's to their prices gets good response. I've seen many artists do it. To be honest, TECHNICALLY, your are not allowed to make your customers pay for the Fees, you are responsible for those fee's and its against paypal policy to ask your clients to pay it. The way around that, is to figure in a few extra dollars into your commission prices and NOT say that they are for paypal. Then, it just looks like your raising prices and not trying to get away with things against paypals policy's~
mekania
Mar. 1st, 2011 05:21 pm (UTC)
Since your specific problem is that you have a ton of different prices for what you do I think just adding $2 to your base prices should cover the fee (and say that it's just a price increase). Don't make it more complicated than it needs to be!
matrices
Mar. 1st, 2011 05:51 pm (UTC)
If an artist decides to charge a "PayPal Fee" I typically choose not to commission them. Its terrible behavior I do not want to encourage.

I highly recommend you stop considering charging a "paypal fee", and getting around it as a "gift" is something I will never do when I send payment, no matter what. I am buying goods, i will mark it as goods so I get my tiny shred of buyer protection. Just price your pieces appropriately, don't undercharge yourself, and you won't be worrying about "fees" which scare off buyers like me.

I usually add on a small extra amount to cover when I choose to, I prefer it to be choice under my own power and not under the influence of the seller. Seriously this is an issue that makes me so frustrated when artists flat out require it. I simply just don't commission them, and I am POSITIVE that there are others out there who feel this way.

Bottom line, Just figure it into your prices, round up so it doesn't look like you're trying to be shady. And accept that being a seller using PayPal involves an Overhead to be able to process those convenience payments. It is YOUR fee, not MY fee if I am the buyer.

*frustrated with how common this issue is*

circlingfreedom
Mar. 1st, 2011 10:48 pm (UTC)
*nods* I am exactly the same. I will not commission someone who flat out asks for me to pay the fee. Sometimes I'll throw an extra dollar in to cover it but less than I used to.

I get so annoyed when I see someone asking me to pay it. We're lucky to have such a service. There was once a world without internet or paypal. *shrug* to me paying the paypal fee is just a part of being a seller. You need to suck it up and just deal with it.

Raise your prices by a dollar if you have to. If I see someone charging $5.36 I'm also unlikely to commission them as it's obvious they want *me* who's already paying you to pay for their fees as well. If they charge $6? Not a problem. If they're doing what I want then I'll pay it.

It's just a pet peeve of mine. I know it doesn't bother some people but it does bug the hell out of me.
(Deleted comment)
skirtandzy
Mar. 1st, 2011 05:55 pm (UTC)
I have actually wondered about something with this, because besides gifts, you can send money as 'payment owed' which will not charge you any fees.

And from what I have gathered, there are no repercussions to doing so.
stormslegacy
Mar. 1st, 2011 06:31 pm (UTC)
Bad advice, it's the same as sending something a gift. Personal payment owed is for things like, me paying my roomate for the electric bill. It's NOT for business.

There are repercussions, someone running a business could get their account shut down.
(no subject) - oceandezignz - Mar. 1st, 2011 07:13 pm (UTC) - Expand
komickrazi
Mar. 1st, 2011 06:19 pm (UTC)
I just eat the cost. It's a fact of business... retail stores have to pay a fee to the credit card companies for their debit/credit machines, so how is paypal charging a fee any different?
If you are charging so low that a paypal fee is too much, it's time to raise prices.
stormslegacy
Mar. 1st, 2011 06:28 pm (UTC)
Short answer; YOU are responsible for the fees, NOT your clients.

Long answer: Businesses have overall expenses that should factor into their prices beyond the time+materials that should be in each individual product. These expenses are called overhead, and include everything from the wear on the pencil sharpener you use between commissions, electricity, heat/AC, website costs, advertising, basically all those materials that are not inherent to a single commission. This also includes transaction fees (IE Paypal and/or a credit card merchant account.) It's the cost of doing business, and a good business model will try to include it as part of the pricing. For example, if roughly 3/4ths of your customers use paypal, then calculate your prices as though each were being charged 3/4ths of a paypal fee.

If you cannot cover the fees yourself, then you need to relook at how you price your commissions. You cannot charge a separate fee for paypal usage, just as you won't be given a surcharge if you walk into your local grocery store and used a card.

Paypal fees may seem annoying to someone just starting out in business, but consider the fact that it's
A. convenient
B. more customers will use you because you take it
It's really a luxury that you pay for as a business owner that's well-worth the money. It's also MUCH less than a typical merchant account would cost you.

(Deleted comment)
jurann
Mar. 1st, 2011 07:00 pm (UTC)
Heh, you can't write the fees off as business expenses without reporting your income from the work you've done, though... ;) And I bet this artist and most other furry artists don't report their art income as wages earned. ;)
(no subject) - connorgoodwolf - Mar. 1st, 2011 07:04 pm (UTC) - Expand
(no subject) - jurann - Mar. 2nd, 2011 05:16 am (UTC) - Expand
(no subject) - connorgoodwolf - Mar. 2nd, 2011 06:07 am (UTC) - Expand
(no subject) - jurann - Mar. 2nd, 2011 08:31 am (UTC) - Expand
(Deleted comment)
(no subject) - fenris_lorsrai - Mar. 1st, 2011 09:20 pm (UTC) - Expand
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