Should you charge your clients directly for their credit card processing fees or build it into your rates?

To Charge or Not to Charge? Should Credit Card Fees Be Built-In? 

The Pros & Cons of Charging Credit Card Processing Fees Directly & Indirectly

We’re not going to sit here and pretend there aren’t some less than stellar things about running a business.

Sure, there are great things about it–you’re your own boss, you likely do something you love, and you get to make the rules (can we get a big “hell yeah!” on that one?).

But what comes hand-in-hand with those pros? The cons.

And unfortunately, those cons sometimes come in the form of pricing and how to structure it.

This is especially unpleasant when it comes to the topic of credit card processing fees.

Yep, they’re not fun things to deal with, but they are super necessary factors to consider when you’re creating your pricing structure.

So, should you build credit card fees into your regular pricing and just not mention it to your clients so that they don’t think of it? (You know, a little out of sight, out-of-mind action?).

Or should you transparently lay out the itemized charges, so your clients know they’re being charged to cover the credit card processing fees?

In the end, it’s up to you and totally your decision–but this blog will give you some pros and cons of each option to consider.

First Things First, Bite the Bullet: You Have to Charge Somehow

 We want to make one thing clear–we’re not asking you to consider eating the cost of these credit card processing fees.

This is something that your customer needs to cover if they’re going to pay with a credit card; otherwise, you’re losing money.

So, ultimately, that coverage either needs to be transparent and outlined so that your clients can see what those fees cost, or you can build that estimated average credit card fee into the overarching cost of your services without mentioning it.

What are the pros and cons of each of these things?

We’ll lay all that out for you next.

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Building the Credit Card Fee into Your Pricing: Pros & Cons

There are pros and cons to every business decision, but this one is a toughie.

Here are a few things to think about when we talk about the decision to build the credit card processing fee directly into the prices that you’re covered–without making your clients think directly about it.

Looking for an example of what we’re talking about?

In this scenario, we’re not saying you should eat the cost of the credit card processing fee–we’re saying you build the average into your regular rate.

So, if you’re being charged 4% for the use of a credit card fee, that 4% would be estimated and built into your normal rates.

That means if you’d normally price a haircut at $100 for your time, effort, and skill, you’d need to factor in that 4% as part of the cost of the haircut.

So, instead of a $100 haircut, you’d be charging $104 for that haircut without mentioning the credit card processing fees. It’s built into the regular rate.

The Good to Consider

  • Usually, people won’t think much of a credit card processing fee if their focus isn’t directed at it. This can be helpful because it’s a one-price for all things kind of setup.
  • It makes surcharging easier for you–people don’t usually like to pay for convenience fees, but if it’s built into your pricing anyway, they don’t really know that cost is there.

The Bad to Remember

  • Customers who pay in cash would be paying the same rate that customers paying with a card would–but they’re not making you deal with the credit card processing fee. A way around this? You can offer a percentage discount for those who choose to pay in cash.
  • Some clients really value itemized billing and might want to know why their service costs what it does.
  • It might make some clients feel funky not to be told about the processing fees. While some might appreciate the out-of-sight, out-of-mind thing, others might not.

Outlining & Charging Credit Card Fees Directly: Pros & Cons

Just like there are pros and cons to building the cost of processing into your overall rate, there are good and bad things about not doing this, as well.

In a situation where you’re not building the processing fee into your price, you’re charging that fee on top of what your customers would pay for their service.

So, using the example from above.

You’d charge them $100 for a haircut and then the additional $4 on top of that for their total. It’s laid out, itemized, and they see very clearly why they’re being charged that cost.

The Good to Consider

  • It’s a more direct, transparent approach to your pricing that many clients will appreciate.
  • It doesn’t run the risk of clients feeling like you were burying an extra cost in there without telling them.
  • Typically, clients will understand that the credit card companies are charging you for processing, and they’ll be happy to pay it outright when told.

The Bad to Remember

  • This is sort of a con for both options, but customers just don’t like surcharges. Laying it out there as a reminder that they’re covering that cost is maybe an unpleasant reminder.
  • Being this direct and transparent with your pricing might lead to other (unwelcomed) questions about your pricing choices.

At the end of the day, whether or not you want to surcharge openly or build it directly into your pricing is up to you–you just need to make sure you’re covering that cost.

It’s the price of doing business, after all.

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