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Comment by simias | Hacker News Reader

I can't really make sense of that article:

>That changes on December 18, when patrons will start paying 2.9% plus 35 cents for each individual pledge

Then:

>With this update, creators will now take home exactly 95% of each pledge with no additional fees

Suppose you're donating $1, the .35 fixed "service fee" alone is 35% of the pledge, not even counting the 2.9% variable amount. I don't understand how they end up with the 95% figure.

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Did they really just try to define "amount pledged" as different from "amount the end user actually pays" so they can say "well now you always get 95% of amount pledged" but, of course, not 95% of what the user paid. Seems like a bad experience for the user that wants to pledge X and gets charged X+fees. At least the people who are getting paid are used to Patreon taking a cut.

Yeah, 10 pledges of 1 USD will cost 13.79 USD and end with 31% overhead.

Previously: patron pledges $1, patron pays $1, creator ends up with some amount significantly less than $1, depending on all the fees.

Soon: patron pledges $1, patron pays $1.38, creator ends up with $0.95.

Is it a common scheme? It seems super misleading to do it that way, why have a percentage fee on both sides? "I pledge $x, I end up paying more and the creator ends up receiving less".

i'm not defending patreon here, but it is pretty normal.

Even the state takes both income tax and sales tax.

Not including taxes in the prices is a US thing only.

Most other countries have sane regulation that foster competition and transparency.

I know, I'm German after all and pay mehrwertsteuer on everything.

But wherever it is listed directly up front or not doesn't change the fact that the state takes money on both sides. When you're earning it and when you're using it.

The actual tax in Germany is about 50 %, it's just hidden in several smaller percentages

It's uncommon in this context, common in other contexts. There are lots of things you can buy in retail stores that might involve fees. You might pay extra for using a credit card (versus cash) than the stated price to cover the processing fees. And it's possible that if you're using some service or intermediary for selling something then they might take an additional cut as well.

> patron pledges $1, patron pays $1, creator ends up with some amount significantly less than $1, depending on all the fees.

from [1], the "previous" (current) situation the creator would receive 85-93% of the amount. So $0.85 from $1, vs .95 from 1.38? Unless I'm completely flobbing the maths, that's ~69% in the new system?

[1] https://blog.patreon.com/updating-patreons-fee-structure/

The pledge is $1, what the patron pays is different from the pledge, that's the point. (It's not a good system but I'm not sure what you're getting hung up on.)

They used to bundle CC transactions, when they stop doing that micro payments become infeasible.

So transaction cost for a lot of 1$ pledges goes from 5-10% to 31%.

Let me add a bit of info for you that is the missing piece of the puzzle:

Previously: Patreon made 0.05.

Soon: Patreon makes 0.104

If someone pledges $1, the pledger gets charged $1.40 (edit: sorry, $1.38), and the pledgee gets paid $0.95.

Mmh, could you "show me your work"? Because I don't see how you end up with these numbers.

2.9% of $1 is $0.029

$1 + $0.029 + $0.35 ~= $1.38

95% of $1.38 is $1.311

Clearly that doesn't make sense.

Or does it mean that Patreon gets 5% from the creator's share and then 2.9% + .35 cents on your side? So if I want to pledge $1 then I have to pay $1.38 and the creator really only receives $.95? If so that seems misleading. Also in this case it would mean that in that case Patreon ends up taking 31% of the actual money spent by the pledger.

The pledge is $1.

The pledgee receives 95% of the pledge, $0.95.

The pledger is charged $1 PLUS the "processing fees", which are an ADDITIONAL 2.9% of the pledge (2.9 cents) and 35 cents fixed.

> Also in this case it would mean that in that case Patreon ends up taking 31% of the actual money spent by the pledger.

Yep, and batching charges means much of that 31% isn't actually going to real processing fees, but into Patreon's pocket.

Their recent (September) taking of $60M in VC money may provide a motive for this approach.

I believe that Patreon's claim is that the bulk of that money is going to the payment processor, although that argument falls apart if they are batching your payments (which is what they currently do).

And if they stop batching they aren't they just generating money for payment processor?

I for one don't want more than one email from patreon per month. Nor do I want more than one CC entry.

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