$2 sales... avoiding losing most to Paypal fees? [updated w/ more questions]

by 15 replies
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I'm going to be selling products for $2 apiece in a trial to see if this particular market bites at this price point.

Problem is, the customer will likely pay me for each product they buy, and at the end of each month, I'll pay the product creator half of that amount ($1) for each unit sold that month. Even so, I'm going to be losing a lot to Paypal fees.

Any suggestions for minimizing this damage? Right now, I have a Wordpress plugin called Easyfileshop, which is why I'm using Paypal... otherwise I'll have to figure out how to sell them through another payment processor on a Wordpress site. Sigh.

**EDIT**

My questions have changed a little thanks to the helpful responses so far.

#main internet marketing discussion forum #avoiding #fees #losing #paypal #sales
  • There really isn't anything you can do if you are sticking with Paypal and a $2 price tag.

    1. Charge More
    2. Pay Product Creator Less
    3. Switch from Paypal

    If you can't do any of those, I don't think you can minimize your losses.
    • [1] reply
    • I assume your product is information based. If so, put yourself on Clickbank and avoid PayPal altogether.
  • Hi Zabrina,

    A $2 price point is a great way to find buyers... but don't stop there! Offer them a relevant, irresistable upsell and then it will well worth your while

    Oh, and don't forget to capture their email address.


    John
  • I have a $3 item that sells all day long and I get $2.66 after PayPal fees. As a % the fee is high I guess but in terms of real money it is only a few cents.

    Many years ago there was a rush of companies processing micropayments but I don't know if any of them are still around.
    • [1] reply
    • Zabrina,

      I don't know whether it would be appropriate for your market, but you could investigate a credits system similar to the one used by sites such as iStockphoto, where customers purchase a package of a minimum 10 credits worth $1 each and the products are priced in credit increments of $1, $2 etc.

      Or maybe you could try a system similar to the one used by Namecheap (and others), where customers using PayPal are required to 'load' their account with a minimum $5 prior to purchase.

      Of course, these payment models assume your customers would (eventually) be making multiple purchases.


      Frank
  • https://www.paypalobjects.com/Integr...opayments.html

    There you go.
    • [ 1 ] Thanks
    • [1] reply
    • Unfortunately, this isn't going to work for Zabrina as she lives in Canada. Micropayments are primarily for US, UK and EU transactions, from what I understand.

      Paul
  • Hi Zabrina! I think available ways include the things below.
    1. Calculate 12% of the price you want to set for your product and add it to the baseline price. PayPal charges recipients 4-6% of the entire amount from senders for regular PayPal balance-funded transactions and 9-12% for regular credit card-funded transactions.
    2. Offer other payment options to your customers. Some might not have PayPal and credit cards.
    3. Place your product in ClickBank as a merchant.
    4. Provide a mailing list sign up checkbox and a brief description of the benefits they can get from signing up to your mailing list on payment processing page.
    5. Mention your other products/services and affiliate products/services offering benefits not found on your product and newsletters/mailing list updates on your product and newsletters/mailing list updates.
  • I reckon the best way would be to increase the price or choose another payment processor. Paypal would eat too much of your profits at that price.
  • Thanks for all the responses! Let's see...

    Credits system: This is actually exactly what I was trying to go for at first... having people purchase a minimum of $5 in credit at a time and then spend the credits on the different products as they like. I just can't figure out where to find the coding/plugins/extensions to make it work! If anyone can help me out with this, I'd be so very appreciative.

    Clickbank instead: Unfortunately, I don't think that would work. I'm avoiding using Clickbank for this due to the particular niche and setup of this site... it's not a standard IM info product site.

    Charging more: That wouldn't work either, I'm afraid. The premise of the site demands keeping it to $2.

    Paying the product creator less: Also not possible... I don't want to be difficult, but again, the premise of the site demands paying the creator half, though I might consider splitting the impact of the fees on the initial customer payment.

    Different payment processor: Ooh, I like this one. Any ideas on which ones can be easily integrated into Wordpress, preferably through some kind of plugin?

    Upsells/email captures: Oh yes, they're going to be persuaded to buy products regularly. :p

    Paypal micropayments: Darn, if only it supported CAD.

    ===

    So I guess in the end, I'm looking for either a way to institute a credits-based system (what I initially started out trying to do and couldn't figure out), or a different payment processor.

    Any suggestions on these?

    Thanks so much to everyone for all your help so far!
    • [1] reply
    • If the $2 offer is a loss-leader anyways, I'd just focus my time and energy on increasing customer value with more backend offers.

      -Bryan
  • Here's a script that uses a points system. Turbo Download Manager
  • Thanks for the suggestions! Bryan, this is the main product I'll be offering, not a loss leader... hence the importance of minimizing fees.

    Jesus, that's a good system but not quite what I'm looking for: it's important for this niche to be able to select a few products to download and not pay for a monthly membership, as the latter has proven quite hard to sell to them. Thanks anyway, though!
    • [1] reply
  • Thanks to all for your help -- I think I'm just gonna stick with Paypal until I find a points system that works.
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