If you’re doing monetary transactions through PayPal, you should be aware that PayPal takes a cut for their services. This is how you would calculate the actual amount to charge someone who owes you money.
As of this posting, PayPal pockets 2.9% + USD$0.30 off from the amount you are requesting. Therefore, if you are requesting $50 from someone, you don’t request $50. You need to account for the amount that PayPal will pocket, so you need to request in excess of $50. Check this out:
Let x = total amount to request from payer (assuming the payer is willing to pay PayPal’s processing fees)
Let y = amount you want to receive from payer
y = x – (x * 0.029) – 0.30
So plug in your variables:
50 = x – (x * 0.029) – 0.30
50 + 0.30 = x – (x * 0.029)
50.30 = x – 0.029x
50.30 = x * (1 – 0.029)
50.30 / (1 – 0.029) = x
x = 50.30 / 0.971
x = 51.80226… = $51.80
So you need to request $51.80 from the payer. You can double check how the amount requested will be processed by PayPal. Check it out:
x = $51.80
Let z = amount you will pocket
Remember
y = x – (x * 0.029) – 0.30
We use the same formula before, substituting y with z
z = x – (x * 0.029) – 0.30
z = 51.80 – (51.80 * 0.029) – 0.30
(51.80 * 0.029) = 1.5022 = 1.50
z = 51.80 – 1.50 – 0.30
51.80 – 1.50 = 50.30
z = 50.30 – 0.30
50.30 – 0.30 = 50
z = $50
So it’s important you calculate the requested fee correctly so you get paid what you’re owed! Good luck with all your PayPal transactions!
Here are some online calculators to make it easier on yourself:
http://www.rememberingrolbe.com/paypal.htm
http://ppfeecalc.com/
http://www.paypalfeescalculator.com/
And PayPal’s documentation on processing fees:
https://www.paypal.com/webapps/helpcenter/article/?articleID=94008&m=SRE
https://www.paypal.com/webapps/mpp/paypal-fees
You can also check out my how to calculate Fiverr fees article too.
If those links don’t work, you can use my own simple online calculators. You’re welcome.
http://eastfist.com/paypalFiverrCalculator.html
Tags: algorithm, arithmetic, calculate, charge, cost, fee, formula, howto, math, paypal, price, processing, total