If I add buy-now-pay-later with higher fees than my card gateway, should I raise my prices?
Work out the gap first, then decide. A product costing 200 with shipping of 20 and a 20% margin needs 283.87 when paid by card at 2.5%, and 301.37 when paid in installments at 7%. Keep the price at 283.87 for an installment order and its margin falls to about 15.5%.
Why the gap matters
Buy-now-pay-later services usually charge the merchant a higher rate than a card gateway, sometimes with a fixed fee on top. That rate comes out of the selling price like any other fee, but only on orders where the customer chose installments. So the real question is not 'what is the fee?' but 'what do installment orders do to my margin?'
Solve both prices
- In the Selling-price calculator, enter cost, shipping and margin, with the card gateway rate as the percentage fee.
- Change the rate to the BNPL provider's rate from your contract, and add any fixed per-transaction fee to fixed fees.
- Compare the two prices and profits.
Card at 2.5%: price 283.87, fees 7.10, profit 56.77.
Installments at 7%: price 301.37, fees 21.10, profit 60.27.
An installment order at 283.87: fees about 19.87, profit about 44, margin about 15.5%.
Three options
- Absorb the gap: keep 283.87 and accept a lower margin on installment orders. Sensible if installments bring orders that would not otherwise happen.
- Raise the price for everyone to 301.37: your margin is protected in every case, but card customers overpay and you may end up pricier than competitors.
- Use an average: if around 30% of orders use installments, the average fee is 3.85% and the price is 288.90.
Do bigger baskets make up for it?
Installments are often said to lift order value and conversion, but that varies by store and the tool does not know your numbers. The honest route: switch the service on, track average order value and the share of installment orders for a while, then solve again with the real share. If installments grow a lot, the average you built the price on no longer holds. To review the margin of a real installment order once the settlement arrives, enter costs plus fees in the Profit margin calculator.
Common questions
Can I add a surcharge for customers who choose installments?
Check the provider's terms, as some forbid it. The calculator only does the numbers and does not know those terms.
Where do I get the installment rate?
From your contract with the provider or your first settlement, not from generic figures.