Changes in processing fees - 95% income to the creators

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I don’t know if Patreon employees check every blog post, but in case they do, here we go:

I’ve been a Patreon user for about half a year, and I’ve loved it so far. When I got the email today about a bump in income for content creators, it sounded like a really sweet deal. However, everyone I’ve seen talking about it on social media, content creator or patron, sounds dissatisfied with it.

I implore you to reconsider this plan. It will hurt everyone involved - content creators and patrons. The plan punishes people for donating. Charities don’t make people pay more than they choose to at the time of the pledge, so why should Patreon go in that direction? Also, as I’ve seen mentioned on Twitter, a lot of patrons donate all they can reasonably afford to, so tacking on a fee might make them lower or even remove their donations entirely. This applies especially to people who contribute one dollar for the generally reward-less “thank you for donating!” tier, as the new fee would add over one-third of their donation, which doesn’t at all incentivize them to continue. This is especially detrimental, as the people who donate one dollar make up a large portion of patrons, as they may wish to show support without reward, or may not be able to afford more than that. Dissuading them from continuing would greatly impact content creators’ income.

Allowing content creators to get 95% of income instead of 80-88% sounds generous at first, but this is only going to do more harm than good in the long run, especially because the new fees apply to each individual pledge. For the one-dollar contributors, that will be a major problem, if they donate to multiple people. If they donate to just three, then the fees will add up to the cost of donating to a fourth. Not only are patrons going to be punished for donating at all, but they’ll be punished further for donating to multiple people. This seems to send the opposite message of what Patreon is intended for. I would much rather earn 80-88% of, say, 10 dollars, than earn 95% of 5 dollars because the people contributing the other 5 chose to leave.

I ask you again: please, please reconsider this new plan. It punishes people for donating money out of the goodness of their hearts. I’ll take Patreon’s old fees instead of lose far more revenue because patrons no longer have faith in Patreon. I have not seen a single person on social media support this new plan. I hope that you listen to literally your entire user base, and cancel this new plan.

Thank you for your consideration.

Lotus Prince

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Aaaand just seeing that there’s already a topic for this. I apologize for the redundancy.

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The 95% amount is misleading. The real number you should be watching is the percentage of patron spend that you’re getting. For campaigns like mine, as far as I can tell, Patreon’s cut is going UP.

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Hi @michaelprescott,

As I understand it, the new model means: if a patron pledges $1, then you get 95c, and whatever the fees are for processing are borne by the patron. Say that costs them $1.38 (for argument’s sake), your 95c is not a percentage of that, because they are not (technically) pledging $1.38 - that’s just the cost to them of supporting you for $1.

Now, I’m not currently a patron of anyone, so I don’t know how this compares to the current model, but I’d assumed the processing costs were currently not, or only partially borne by the patron. Under the new system, the patron will bear all costs, and it won’t come out of your pledge amount. So, from that point of view, isn’t it better?

However, as @jlfruhling points out, it does seem to me that (if I’ve understood it correctly), while this is better for creators, it may also lead to people ceasing support because of rising costs.

G.

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Hmm. I think our best solution in the wake of this news is to grandfather the $1 pledges and focus on the $5 pledge tier, which is a subtle shift in strategy.

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@gareth.southwell I think this business of who pays the fees is a distraction… and doesn’t actually mean anything important.

If you put $10 into a machine, and the machine gives me $7, I don’t care if you’re paying a $8 base price plus a $2 service fee, or $7 and a $3 service fee. In fact, there’s absolutely no difference between these. We can come up with any goofy breakdown we like. Neither is better for me, better for you, or fairer.

This is all just marketing jazz hands - as long as you’re putting in $10 and I get $7, and we both know this, we both know that the machine is keeping $3 / 30%.

So, what is actually happening:

Patreon is increasing prices. Everyone who was paying $1 (most of my patrons) is going to have a 38% price increase. This means fewer patrons. I’m not sure how much fewer, once the dust settles, but the #1 reason my patrons leave is belt-tightening.

I have pledged $48 to 23 creators. The new service charges is going to cost me an extra $9.44. Where is that going to come from, if money is tight for me? Pledges, obviously. I will need to reduce my pledges until I’m back down to $48 in spend.

Does this help creators? Maybe, it depends on how much of my reduced pledges actually make it to the creators. Again, it doesn’t matter what the machine calls the cut it takes, it only matters how much the total cut is.

Here’s the problem. For campaigns that have a lot of $1 pledges, a smaller percentage of what patrons pay will make it to the creators. The machine is taking more.

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Well, the business of who pays the fees isn’t a distraction, because that is actually the point in question: it was creators (effectively), and now it’ll be patrons; it is the switch which will raise the price. But I don’t want to get bogged down on this point, because I agree wholeheartedly with what you’re saying about what the effects of this will be (fewer patrons) - and this is I think the main issue.

I can see why Patreon has ostensibly done this - neater, more money for creators - but I wonder if they’ve really thought this through. It seems to me that it will effect the people who are struggling to get their project going, or who rely on a lot of small pledges. As usual, the higher earning creators will not be affected so much.

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I don’t think it’s truly thought through. Some countries, like mine, have VAT on top of the pledge - so $1 already wasn’t $1. There’s 21% VAT here. I think my $1 is now gonna be like $1,50, if not more. I didn’t mind the VAT since I get that’s how my country’s laws are set up, but I do mind Patreon shifting the fee to Patrons.

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I do a per-creation campaign.

I’m HOPING that this billing is based entirely on the end-of-month pledge total and not per creation? Because that flat 35c is a huge bump for those grandfathered in to my campaign at 5c per creation.

Can I get confirmation that the fees are assessed at end of / start of month as opposed to per creation? I’m getting a lot of flack, anger, and confused questions from my patrons.

I lost six patrons TODAY ALONE, all referencing the changes.

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Ditto. I’d also know how this is being handled as I use the per-creation model, too.

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Dyson, it’s $0.35 per-post. It’s really, really bad.

"As a per-post creator, your patrons will see the 2.9% + $0.35 service fee added to all paid posts. "

https://patreon.zendesk.com/hc/en-us/articles/115005631963

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Let’s say you have 440 x $1 patrons x 4 monthly posts. Let’s say half are PayPal.

In the old model, I think patrons are charged $1760. Patreon keeps 5%, then you pay $85.54 in CC fee to Stripe, and $170.87 to PayPal. You are paid $1415.60, which is 80.43% of the gross take.

In the new model, assuming you don’t lose anyone, patrons pay $628.76 extra in service fees. Patreon keeps 5% still, and your remainder is $1672. That’s more, but you’re now earning only 70% of gross payments.

As long as you only lose 74 of these $1 patrons, your take-home is the same.

Fun times!

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On the other hand, Dyson, if the community somehow follows my arbitrary “total payments from patrons will be the same before and after” rule, then you’ll lose 116 patrons, and your take-home shrinks to $1231.20.

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The Patreon product team continues to make poor business decisions at the expense of the user experience. The end user wants to pledge support – not get caught up in the details about fee structures. Make it easy for them to support creators. Adding friction and confusion doesn’t support this goal.

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Best solution is a wallet/credit system, not mandatory, but allows patrons to control how many transactions they do a month. For example:

Patron has 10 pledges at 1 buck each.

Every month they have Patreon charge $10 + fees to the Patreon Wallet.

Pledges come out of the wallet.

That’s 1 transaction a month.

Key is to make this optional so patrons who don’t want to bother or are uncomfortable with storing money in the wallet can choose to pay the transaction fees.

If patrons need the money they can get it back (minus fees of course)

You can also create gift cards with a wallet system.

Downside is complexity for patrons to manage a wallet (especially when they change how much they pledge a month) but that’s way better than the current system.

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I just want to point out that I think this change is detrimental to my (few) patrons, and that just as so many creators in the FB forum, I am looking into alternatives.

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25 patrons down and counting…

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From what I’ve seen, it’s detrimental to literally everyone. It might even be bad for Patreon itself, if enough people abandon ship.

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Really sorry, Dyson. I’ve only lost 2 today so far, but I have another who has given me fair warning that he will be pulling his pledge after Christmas. This is rough.

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