Who pays the processing fees? How about taxes? Designer or Client?

In this episode of The Profitable Graphic Designer Podcast, we are revealing something that many designers don’t handle correctly. It’s definitely something that your clients can choose not to hire you for or hire you for. I’ve been freelancing and running my design agency since 2015, and I’ve been on both sides. Sometimes I am the client because we hire and outsource to contractors all the time. So, I know what feels right and who should pay the fees. Are fees the cost of doing business, or should your clients pay them? Tune in to learn more.

 

Listen to the episode here:

Spotify  –  Apple Podcasts  –  Amazon Music

 

You will learn:

• What fees you need to pay and what fees your clients should pay.
• If you are a contractor that a project was outsourced to, who needs to pay taxes and processing fees.
• If fees are included in a project price or charged extra.
• How to present the fees to the clients.
• Overall, who pays and what fees.

Tune in, and again, try out the Marketing Quiz for Designers to test it out.

 

Aventive Academy’s Resources:

Free Client Portal for Designers: https://aventiveacademy.com/client-portal/

$12k Client Attraction Masterclass: https://aventiveacademy.com/attract-clients-workshop/

The Wealthy Client Blueprint: ⁠https://aventiveacademy.com/wealthy-client/

12-Week Business Program for Designers: https://aventiveacademy.com/profit

The Creative CEO Accelerator: https://aventiveacademy.com/accelerator

 

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TRANSCRIPT:

0:00
So who pays the fees? You as a designer or your client? We can agree that we disagree and that is totally fine. I’m just sharing what I do in my branding and design agency and what I believe is correct. I am also sharing why my opinion is the correct one.

0:21
Welcome to the Profitable Graphic Designer Podcast, brought to you by Aventive Academy. I’m your host, Kady Sandel. I’m a brand strategist, designer, creative director, and the CEO of a successful six-figure design agency based in Austin, TX, serving clients worldwide. After mastering the art of building a profitable and sustainable design business, I decided to help you achieve the same success.

1:02
I teach brand, graphic, and web design business owners how to attract more clients, increase their pricing, and develop design businesses that provide the financial freedom and time flexibility you’ve always dreamt of. We offer online programs, courses, and templates that you can use along with our coaching accelerator and Mastermind High touch experiences for creatives. You can learn more about starting and growing your design business at aventiveacademy.com, but for now, grab a cup of coffee and join me in today’s podcast episode.

1:36
I honestly never thought I would be recording this kind of episode, but here we go. To me, it was always very obvious who needs to pay the fee, the designer or the client. But let’s unwrap that because many designers still don’t align with what I believe is correct. So yeah, let’s talk about it. Obviously, this podcast episode is not going to be super long. It’s more informational with an explanation, like why a designer should pay the fee and not a client. So here you go. You already have an answer, and you don’t have to listen to the rest unless you feel like it.

2:36
What happened is a few weeks ago, we hired a contractor, a brand designer, to help me and my team deliver something to the client. We told her, this is how much we can pay for this project. This is what we’re looking for. This is the timeline, you know, scope of work, like all of that. She agreed to everything. We signed a contract, and then she said, I’m going to send you an invoice through PayPal. Would you mind also paying the PayPal fees, the transfer fees?

2:54
At first, I was like, no, I’m not going to pay that. Which would be correct? I am the client now, right? That’s her cost. That’s the cost of a designer, or you or me doing business. You are the one that pays the fees. You should never ask your clients to pay the fees. In my mind, that sounds even embarrassing. It’s kind of cheap. It’s awkward. You pay your fees if you have to use FreshBooks or PayPal or whatever. A client pays the invoice, you pay the fees. To me, that is obvious.

3:43
But I can understand how it’s not as obvious to everyone and how and why maybe someone would not even agree with me, which is totally fine. We can all set our rules. I just feel that it’s not OK for a designer to ask the client. So what happened here is I did say yes, I’m going to pay the fees because the fees were really not that much. So I was like, OK, fine, I’ll pay them. I don’t care. But then I also took that opportunity to educate her even though she never asked for it. I gave her advice like, hey, I know that I decided and I said yes to paying these fees, but hopefully, you’re not asking your clients to pay the fees.

4:45
I remember in 2016, I was buying a property, an office building. We were looking for an architect to help us with some pillars and some tables, like desks and whatnot. Long story short, we found this one architect in Denver. When we asked him how much that’s going to be, when we explained what we need, he gave us some price. I don’t remember, like I have no idea if it was $300 or $3,000 or whatever. He gave us the price, and then he also said plus processing fees. Do I need to tell you that we didn’t go with him?

5:20
And it wasn’t even my decision. We decided not to hire an architect who asked for processing fees. If he was just to tell us, let’s say that he was charging $3,000 for whatever it was. If he had told us it’s $3,500, I would go with that. But $3,000 plus processing fees? Like come on, don’t be that cheap. If you get $3,000 from me, you can afford to pay the $27 or $50 or whatever it is in fees, right? It just doesn’t seem right, especially if you’re a designer trying to get high-paying clients. How embarrassing would it be? At least that’s, you know, you don’t have to listen to this advice. But to me, it would be super embarrassing that now my clients pay me $15,000 or $25,000 for their project. And now on top of that, I’m going to ask them for like, hey, can you please pay also like this $150 for processing fees? No, I pay the fees. It’s the cost of doing business. That is my fee.

6:43
Before we continue with this podcast episode, I just want to quickly remind you that if you’re a design business owner whose dream is to have a successful and profitable career so you can enjoy the freedom and flexibility that comes with it, then I have something for you. The Profitable Designer program is my signature 12-week system that will help you improve your business, sign amazing high-paying clients, and truly achieve your financial and lifestyle goals. Visit aventiveacademy.com/profit to check if you can join us now or if we are currently not accepting more designers into the program. In that case, you will be able to join the waitlist and be the first to know when we open the doors again.

7:33
Now we’ll go back to the episode in a second, but I just want to add that designers who completed the program were able to sign five-figure design clients, 10 times their pricing, reach six figures and beyond, make $20,000 per month while working only a few hours a week and more. Here is what Julia said: “It really has everything you could ever ask for to build a six-figure business that will allow you to have financial freedom.” And that’s why I personally did it. I wanted that flexibility. So if you want to be my next success story and achieve results like these, visit aventiveacademy.com/profit.

8:08
Now let’s go back to the episode. So to quickly recap, is it OK to expect a design client to pay any bank transfer-related charges in paying for services? For design services, no. The client pays an invoice. It’s up to you to calculate all costs in the invoice or pay part of them, if not all, by yourself. For example, I always pay PayPal’s 4%, never ask the client to pay it, nor do I increase my price by 4%. I treat it as my running cost because it really is. It’s the cost of doing business.

8:52
And I know I already said that, it really feels and it is cheap asking the clients to cover your costs. Many clients don’t like that, and some even hate it. You could or should include the fees in your project’s price. It should not be charged as extra. And if you can’t afford that 2% to 4%, then your rates are just too low to begin with.

9:29
Now, the other thing that I want to say is that if a client requests a special payment method that isn’t part of your standard options, then you can indeed charge an extra fee. So for instance, if you typically use a bank account, but the client prefers PayPal or Western Union, it’s reasonable to explain that there will be extra charges. So if they don’t want to pay the way you prefer and the way you usually charge your clients, and they need a different payment method, then you can be like, yeah, sure, we can do that, but then you can expect extra charges. I would totally understand that, like many large corporations have similar policies, especially when it comes to PayPal payments. One advantage of this approach is that the client may opt for your preferred payment method to avoid the additional fees.

10:29
However, if you offer only one payment method, like only PayPal, for example, then it’s simply not appropriate to ask for transfer fees or any other additional charges. These should be factored into your project’s overall cost and price.

10:49
Now, when it comes to requesting extra charges, it’s best to address this during communication before sending the invoice. You shouldn’t expect clients to calculate their own fees; it’s your responsibility to do so. A good approach is to ask via e-mail about their preferred payment method and then present your options and explain any associated fees clearly and without unnecessary justifications. You can then prepare the invoice accordingly.

11:18
And now for the end of this episode, I do want to mention that I did remember that architect I talked about. He was charging $300. He wanted to charge $300 for some quick consultation. I do remember that. And he said it’s $300 and the transfer fee is $12. And we were all like, what? Like you can’t pay $12 from those $300, or why didn’t you just say it’s $320, for example? It just left a bad taste in our mouth, and we didn’t hire him, not even for that consultation. We were even looking for an architect who would help us with further projects. That’s what it is.

12:10
So, yeah, I don’t know. I just don’t understand how and why designers or architects or anyone can ask their client for processing fees when that’s their expense, that’s the cost of doing business.

12:27
OK, well, I hope that this short episode was helpful, and I’ll talk to you next time. Thanks for tuning in to the Profitable Graphic Designer Podcast. But wait, before you go, if you enjoyed this podcast episode and want the chance to access one of our online courses for free, simply leave us a review on Apple Podcasts. Each month, one lucky reviewer gets to pick a course as a token of our appreciation.

13:02
And here’s a reminder, we are here to help you build the design business of your dreams. Whether it’s creating compelling proposals, attracting $10K clients, pricing your design services, improving your portfolio, reaching six figures and beyond, or helping you stand out, we’ve got you covered. I invite you to join over 1,000 designers in my signature 12-week program, The Profitable Designer. Visit aventiveacademy.com/profit.

13:21
And also don’t forget to hit that subscribe button. That way, you’ll be the first to know when each new episode drops, so you never miss out on future content. Until next time, be sure to connect with us on Instagram at @aventiveacademy, where we share valuable business tips, stories, and resources for brand, graphic, and web design business owners. Bye for now. Your host, Kady Sandel.