Formula and example
How it is calculated
Period fee = setup fee + months × (monthly fee + number of transactions × average payment × percentage / 100 + number of transactions × fixed transaction fee).
Worked example
For 500 payments per month averaging 10,000 currency units over 12 months: offer A charges 1% plus 50 per payment, totalling 900,000 per year. Offer B charges 10,000 per month plus 0.8% and 30 per payment, totalling 780,000 per year. The difference is 120,000 currency units; the total fees are equal at 250 payments per month.
Things to check
- If the difference is positive, B is cheaper; if negative, A is cheaper, based on the given fees. The threshold is a continuous mathematical value; the number of payments is an integer. All fees should be on the same, consistent cost basis applicable to your business. Refunds, chargebacks, minimum fees, currency exchange, card types and tiered tariffs are not modelled. There is no built-in current provider price list.
- The starting values are illustrative examples. Enter your own data on a consistent cost basis. The result is a conditional calculation; it does not model taxation or future market changes.
- Use one currency throughout. Amounts are illustrative currency units, not a currency conversion or a provider quote.
Frequently asked questions
What does effective fee mean?
Total period cost divided by the total charged turnover for the same period. It includes setup and monthly fees. This ratio is not meaningful for zero turnover.
When is there no intersection?
If the variable fees per payment are identical, the fixed costs decide. If fixed costs also match, the offers cost the same at every payment count. A negative threshold means there is no crossover at any non-negative payment count.