Now for the fun part of starting your web design business – Getting Paid!
At least, you thought it was fun, until you realized the costs and complexity involved in taking payments from your clients.
There are many considerations when deciding how to take payment like costs, security, and simplicity for your clients.
Electronic or Old School
I couldn’t find any reliable data on whether web designers accept electronic payments or rely on cash/check transactions exclusively. Most larger design firms appear to accept electronic payment options, but if you browse many smaller web designers’ websites, you often won’t find any mention of electronic payment.
If you do, it’s usually a generic Paypal button where clients can enter an amount to pay. It’s more convenient for sure, but still a little rudimentary.
My take on this question – There’s a reason that the largest and most successful companies take electronic payments and make it as seamless as possible. Doing so increases sales and improves the customer experience overall. In my opinion, web designers should take the same approach.
Cash for Crepes?
I recently traveled to Paris and made purchases at 30+ locations while there and used Visa/Mastercard at every one. One night we went to eat on the famous street with all the creperies. After handing the waiter my credit card and hearing him say “sorry, cash only,” it was a 10 minute walk to the nearest ATM machine to get some cash I needed to pay for our meal. Not super convenient – and we probably wouldn’t have eaten there in the first place if we knew it was cash only.
Don’t give your clients this experience by NOT providing easy credit card payment options. It will definitely cost you clients in the long run which is more more expensive than the fees involved in processing credit cards.
There are reasons to take checks and cash like when you have local clients or clients who prefer to pay by check for accounting purposes. But overall, I’ve found that most of my clients prefer the convenience of paying by credit card.
Not only is it convenient for your clients – it’s also a time saver for you – the web designer. I just received an email from a fellow web designer the other day and she asked me about my method for accepting payments. Her method is to manually send out an invoice every month and then accept payment by check or Paypal. She spends a lot of time creating invoices, cashing checks, and following up on late payments.
I encouraged her to consider recurring billing on credit cards so she doesn’t have to generate invoices each month and wait for the client to pay. This saves time for both parties and increases the chance that the payment ends up in your bank account.
So what’s the cost of this convenience you ask.
Cost of Convenience
It’s not cheap to accept credit card payments. Typically, you’ll pay about 3% on all your credit card transactions. That’s a large chunk of your revenue but the convenience of the payment option will lead to more clients that should cover your costs.
Keep in mind the costs of other options as well. There are fees involved with doing bank transfers even though they are typically much lower than credit card processing.
And even though checks are free to process, there is the cost of the check itself, the envelope and postage, and the time it takes to write and mail the check.
Measuring the cost is all about percentages. If you’re doing a $10,000 transaction, it’s probably worth the extra time to process a check in order to save fees. But if you’re doing a $30/month transaction, the convenience of an automatic recurring credit card transaction is well worth it when you consider the time savings over the long term.
Popular Options for Accepting Payments
Paypal – Paypal is super popular and many people already have accounts, so web designers often add buy now buttons on their site so people can pay set rates through Paypal or enter a manual amount to pay. A standard Paypal account is free and the cost of processing is around 2.9% + $0.30 per transaction.
Stripe – Stripe is a newer payment processor that’s designed for developers but also has as an easy to use Checkout feature that allows you to create slick checkout popups right on your page. It’s the same cost as Paypal but may be a good option for developers or people who just don’t want to use Paypal.
Recurly – When you get into processing recurring payments, it starts to get more complicated and costly. Most payment processors will charge extra when you want to automate monthly payments, or you’ll need to use a Gateway that administrates the monthly billing and links up with your payment processor. Recurly is one of those gateways. They charge a monthly fee + a $0.10 + 1.25% transaction fee. Pretty pricey! I warned you it would be costly.
My Setup – FirstData + KickStartCart
I am currently using FirstData to process my credit card charges. You can read more about my journey to land on a merchant account/payment processor. I’ve been using a payment gateway called KickStartCart.com (an affiilate of 1ShoppingCart.com) which links up to FirstData and also provides the functionality to process recurring payments. KickstartCart also provides the ability to have integrated autoresponders, one time payments, coupons, and more. It works for me but it isn’t free. I pay about $90/month + 3.2% to process all my payments when all is said and done.
You’re gonna pay the 3% no matter how you process credit card payments, but it’s the monthly fee that can change. For me, it’s worth spending the money make it as convenient as I can for my clients to send me money.