August 10, 2017

Don’t Forget To Plan For Credit Card Fees

credit cardThere’s a board at a local, family-owned market I frequent that keeps a running tally of how much they have paid, year-to-date, in credit card fees. Even mid-year, the number is truly staggering to comprehend. This market is like many of us small businesses in that it is trying to compete with ‘big supermarkets’ which means, in part, they have to be somewhat price competitive. So the chunk that gets taken out for credit card fees is very real money out of their pockets and, in this case, is no small change.

As you think about your business expenses, it can be easy to overlook the toll that credit card fees may have. Similarly, as you set your prices for your products, it can be easy to overlook how much credit card fees will eat into your profits.

The necessity of whether or not you’ll incur credit card fees is in large part driven by how you plan to sell your products. If you’re mainly selling at in-person events such as farmers’ markets or festivals, it may not be necessary to accept credit cards (though it’s recommended you have that as a payment option as you’d hate to turn eager customers away if you don’t have to) or those people who use a credit card to purchase from you may make up a miniscule percentage of your overall sales. However, if you’re selling online, for example, being able to accept credit cards is a critical component in your business strategy but that also means you’ll incur credit card charges on every product you sell.

If you find yourself in a later category where credit card payments are going to make up a big chunk of your sales, it’s worthwhile to run some numbers to see what, on average, you’ll end up owing for each of your products sold and then making sure you have the wiggle-room in your profit margin to absorb those credit card fees. Truly, the last thing you want is to spend all this time and energy working on your business and creating your products only to have all your profit go to credit card companies.

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