Monthly Archives: November 2009

Cost of earning a dollar is expensive.


Here’s a realization:

Sometimes in business we just do things without realizing the impact involved. Let me give you an example. In my business if I invoice someone $100 and they want to pay me via credit card, guess how many fingers there are in the pie:

1. If they keep that balance running on their credit card, they pay anywhere from 12% to 20% each month

2. As the merchant, I pay 1.75% of the fee to the credit card processor

3. In order to process that charge, I have to have and pay for a phone line to do the charge

4. In order to process on something, I either have to buy my own merchant terminal, or rent one each month

5. I deposit the funds into my bank, but at the end of every month, I pay bank fees in order to have an account.

6. By completing this sale, I must pay a book keeper to record the transaction

7. At the end of the year, I have to pay my accountant to file my taxes

8. Finally, the government gets to look at my books, say “oh, you made $100”, let me tax you on it.

I am the one providing the service, I earned that $100, but I must share it with credit card processors, the telephone company, the merchant terminal provider, my bank, a book keeper, an accountant, and the government.


By the time all of that’s done, I get to keep what’s left. Maybe by the time it’s all over, I get 50%.

Then what do I do with my half? I go out and buy something, But then I pay sales tax as well.

As business people, and as customers, there are way too many people involved in grabbing “their share” from us. Not only that, but the rate of inflation and cost of living goes up and down, so the dollar I earned is subject to whatever people think it’s worth that particular day.

Too many fingers in the pie I am trying to create for myself.

Anyone feel the same way?