Card transaction fees and currency conversion fees

[PaulRoberts]

Hey guys!

I've started taking a closer look at the fees charged on each order. I am trying to get a clearer picture of what they are so that I can set my product prices accordingly. The problem is, my products are all POD (Printful - USA) and my profit margins are pretty low. My store sells worldwide and is based in the UK. I want to try to make some sort of table with a formula so that I can bang in my Printful price, retail price and have it take off all potential fees etc. BUT, I'm still not sure as to what they are exactly...that's why I'm reaching out on here. I use shopify payments with 0% transaction fees (as a payment gateway) but as far as I know, I would be charged the following on each transaction:

1. Customer Card transaction fee (1% to 3.5% depending on card company)
2. Currency conversion fee (around 1%) on receiving customer’s payment in UK bank
3. Currency conversion fee on me paying Printful for the order (around 1%)

As far as I know, I’m not charged a card transaction fee when paying my POD company. I wonder if all this seems about right? Any advice or info would be appreciated 🙂

[Elias]

Hey, @PaulRoberts.

Thank you for posting this question!

You are absolutely correct that Shopify Payments doesn't charge any transaction fees; however, the customer credit card processing fee is dependent on your location. You can check the credit card processing fee right on our pricing page and by toggling the region of the page. 

The currency conversion fee is only applicable if you're selling in a different currency to your payouts, more information can be found on our guide - Shopify Payments processing and conversion fees.

As for Printful, it looks like their conversion fees can fluctuate based on where you're placing the order from. For more information on this, we'd recommend reaching out directly to Printful or by referencing their guide - How does Printful's product pricing work?.

When paying your POD company, the credit card processing fee is charged as a merchant fee. Similar to how this fee works on your Online store, it would be taken out of the order total and not as additional charges to your customers. 

I'd love to know if this answers your questions. Let me know!

[PaulRoberts]

Hi Elias!

Thank you so much for your reply. I really appreciate your advice and the links that you have provided. My issue is that when I started this online store I was like 'hey, why not sell to anyone all over the world?' But this learning curve is teaching me that it isn't so easy. Especially with print on demand...I have learned that the margins have to be pretty low...which is fair enough, given the fact that it can become almost like passive income once set up. The margins being low, coupled with the various charges that could be added, has been a worry...as I don't want to be making any losses on sales hehe. So, I concluded that I should lower my sales prices a little (but work off the average price of the individual product variants), then add on 3.9% of the (item sale price) + (estimated maximum shipping cost). The 3.9% should cover currency conversion fees, and max 3rd party transaction fees etc....if I have my math right. I feel like the end prices seem fair. Let me know if I am way off on this one or if it seems like a decent pricing strategy. Again, thank you for your help and to all of you guys at Shopify. Your level of support for the community is outstanding!

Paul. 

[Elias · Accepted solution]

Hi, @PaulRoberts.

Thank you for following up!

I think you're on the right track with taking into account the credit card processing fees, print-on-demand fees, and shipping costs; nevertheless, with print-on-demand, I do think that you should set a profit margin for your designs. Depending on how much work you feel that was involved in creating these designs, your markup margins can be $5-$10 or more.

You can also create separate shipping rates for different shipping zones, which can help cover the international shipping costs to various locations in relation to what the POD charges. However, if you choose to offer free shipping, then you'll want to account for these costs in the price of each of your products. That being said, I was able to find a handy video from Printful on How to Price Your Print-On-Demand Products as well.

Have you prepared a marketing plan for your store?

[PaulRoberts]

Hi Elias.

Thanks for your reply and info. Sorry my replies take so long. I wish I only had to work on my store haha. In response to your message, yes...I have set a formula for calculating a 10, 20 or 30% profit margin. It does seem though that there is no exact method of calculating the 'actual' net profit on a single sale (correct me if I'm wrong). With a variation of... percentage card fees, the type or card, how much the total buy price is, how much the shipping is, the currency conversion fees etc......it seems impossible to calculate the exact net profit figure. However, I just formulated 3.9% of the total sales cost (inc highest shipping rate for that item from Printful). I took that 3.9% value and added it to the (base product cost + either 10%/20%/30% mark-up) to work out the final sale cost. It's not exact of course, but it does seem to take most things in to account. Taking in mind that my base product cost was already the average cost of its individual variants (in many cases)....I figure that sometimes, more than the projected margin will be made and other times, a little less....so it should average out...if I start making more sales lol. I wonder if any of that makes sense...or not?? hehehe.

Anyway, with regards to the marketing plan...nope..I'm lame and havent done that yet. I spent most of my time making  designs for my products and building my store up. I had this idea that 'I need to have more products' but I know that's probs the wrong way to think. I started building a presence on social...got facebook going and its shop....got insta going and recently was given permission to build my shop on there (have to do that). Got Pinterest hooked up, Google Business page (which I should put content on...cos it gets traffic). Got youtube but only one vid. My problem is TIME right now. But hey, Shopify is  good value and I guess I'm in no rush...just picking away at it.

Again..thanks for all the support! Have a great weekend!

Paul

[LaCollection]

Hi Paul, Im wondering how this worked out for you? Im a fellow shopify owner and have been recently hit with high fees. Im just wondering if this strategy is working for you? Im am trying to figure out what to do in my situation.