Pro-Rating Payments? (More stuff / suggestions on fees)

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The concerns over fees have everyone rightfully worried. I figured I’d post this separately since the ‘Regarding Processing Fees’ post is getting long.

To get everyone up to speed who isn’t: the 2.9% + $0.35 fee model comes into play because Patreon is getting rid of the balance, and wants to be able to bill users the minute they pledge to a page. Patrons get 30 days of access right there. This’ll remove the issues with double-billing someone who pledges to an up-front page at the end of the month.

Unfortunately it also treats every pledge like an individual transaction and obliterates batch payments which reduces fees greatly. Multiple individual transactions means fees for every one of those, which wouldn’t be bad if it was just a percent, but the $0.35 flat portion of it really cripples those with multiple low value pledges.

I’ve suggested solutions involving hinging on the Patreon wallet to allow users to load up their account prior to sending out pledges, but I’ve also heard that that may subject Patreon to financial regulations as a money transmitter. If this is true then a solution that doesn’t hinge on the balance is needed.

So with that: has Patreon ever considered pro-rating payments?

Basically you pay a reduced rate for your first full-month pledge to a page, based on when in the month you initially pledge. Then your payments to ALL creators are cyclical on the first of each month, all at the same time.

To prevent abuse, the pro-rated payment wouldn’t come into play until the first complete payment cycle.

As an example, if you sign up at a $10 tier to get the rewards and you sign up on the 25th, your entry month you still pay $10 so you don’t get full rewards at a reduced rate. Then the next month is roughly $1.67 (before fees) for just that first complete month (maybe a little more depending on how the pro-rating is biased). From there on out it’s the expected $10 per month. This would prevent people from swooping in on the last day of a month and getting rewards at a 30th of the cost.

If you wanted to pledge at the end of the month, grab rewards, then leave, you’d pay the full price regardless and wouldn’t be included in the next month’s cycle (with the reduced rate). One other option might be if the payments are so low (e.g., a $1 pledge at the very end of the month), you instead sign up for the pro-rated month + 1 full month simultaneously.

This would also allow all payments to be processed on the same day without requiring Patreon to hold on to a balance for users.

Has Patreon ever considered pro-rated payments before?

Another option might be allowing patrons to pledge for multiple months at a time. Pledge for 3 months to batch those 3 payments into one.

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Lots of bad suggestions have been floated around (no user has ever liked a wallet solution) but this pro-rating idea is actually not a bad idea.

  • It is somewhat more complicated than the anniversary model and patrons will be confused BUT the surprise will be a somewhat positive one, and one that is somewhat easily explained. The invoice can say: “You are charged less this month because you paid for a full month last month even though you started on the 23rd”.

  • It does retain the ability to batch transactions which is one of the big benefits of Patreon over whitelabel solutions like Podia.

  • It does still significantly increase fees for the first month, because of the pre-charge. Might be offset by the charge aggregation.

  • It retains the weakness of fee unpredictability that the pure anniversary model would solve.

  • Creators will be absorbing the fees with this model. It is not actually clear to me what the majority of creator user base wants here. The forum comments here certainly indicate that creators want to pay the fees, but the judging from the Patreon blog post a huge amount of creators are dissatisfied with how much fees they are paying. Patreon fees are actually very low comparatively, so honestly I think a better solution would be to educate this part of the creator base that because of how credit card fees work, it’s a LOT more beneficial to have 500 x $2 patrons than 1000 x $1 patrons ($796 vs $621 after fees) and that $1 should only be relied upon as a stepping stone.

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On the note of creators absorbing the fees:

This model would still assume patrons would still be the ones paying the fees, like with the proposed one. It could honestly work either way, but the big deal atm is people who pledge to multiple creators get screwed.

If patrons absorb the fees or at least a part of them (and they’re batched so they’re not as severe), it’d eliminate the randomness for creators, like Patreon wants.

As for the confusion, it’d be pretty easy to explain. All it’d have to include is a short explanation:
“You are pledging X to [Creator]. As you are pledging in the middle of the month, to compensate on the first during your next payment cycle you will be billed a discounted, pro-rated charge of X if you decide to remain a patron.”

Maybe could have a little ? that just explains that “To keep fees down, we charge patrons for all their pledges at once on the first, preventing multiple individual transactions fees. As a result, your first full month when pledging to a patron is pro-rated to keep your costs fair to you if you pledge later in the month.”

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The system was fine as-is.
I feel like I’m one of the only creators who was fine without charge up front, people backing out at the last minute, declined pledges, etc. So, people flake out. That’s people. I’m not worried about it, because if you’re marketing yourself properly, the folks wanting something for nothing are few and far between.

However, most of my content is already available for free as it is. Not much is paywalled for Patrons, so maybe that’s the reason I don’t really care if anyone wants to ‘steal’ it.

This is the cost of doing business in an online market.

I really have no idea why the fee structure is such an issue. If creators are afraid of folks ‘stealing’ their content, remember that small thing called Karma. Besides, I kind of like the idea of ‘Try me for a month for free’, and is no different than most subscription services right now anyways. How this was such a huge problem for a majority of creators is mind-boggling.

It wasn’t broken. I really don’t know why it needed fixing.

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The system isn’t fine as is if Patreon is being subjected to scrutiny by financial institutions as a money transmitter. If they have to adhere to those kinds of regulations the current system basically goes bye regardless, and it means it is broken.

However this hasn’t been confirmed. If Patreon would be transparent if this is affecting things, I have a feeling people would be more than understanding.

However, Patreon has also had the goal for a long time of moving to a more responsive, immediate system. Even if you personally think the current system is fine, it’s still horribly confusing for newcomer patrons to the platform. I know for the first few months I didn’t even know how it worked as a creator, and every friend I’ve had that’s signed up has offered rewards to people preemptively, not knowing they hadn’t been charged yet, only for that person to withdraw their pledge before the next pay period.

If you’re on pay-up-front, patrons run the risk of being double charged if you pledge late in the month, and if you’re the default monthly, if they pledge at the start of a month it takes the full month before you start seeing posts. A more responsive and immediate system absolutely helps with this.

The fees are an issue because if it’s done in a manner that treats each transaction individually, which raises them. Patreon doesn’t stand to gain any money by doing it that way.

And this post has nothing to do with leaked content.

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This exactly. They really need to up their transparency.

I’m pretty sick of the “trust us! we know best!” attitude. It is hard to trust someone/something that cannot show you an iota of respect and actually be honest about what they plan or their needs.

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I find this whole thing is making me rethink my relationship with Patreon. Before I considered myself in partnership with them and as a partner I expected a more open communication and input into how I was running my art business in relation to the platform. It was mutually beneficial and I felt a large sense of loyalty, both from Patreon and for Patreon. Finally a place for artists! Finally a structure that supports what we’re doing in a way that, with some work, can become sustainable!

Now I feel it is more a business/customer relationship. Like if you go into a store and they no longer offer your favorite brand. “We don’t carry that anymore.” is disappointing, but not a slap in the face. There is no sense of loyalty; you either go to another store to get it or you take your lumps and just get their store brand or you just do without. It is infinitely less personal and there is no loyalty, only convenience. Patreon is the only store in town that offers that product even if we know the brand is inferior to what we were getting before.

With such a dynamic shift, Patreon is not only losing our patrons, they’re losing their biggest advocate, their creators. Before I was sharing Patreon posts, my successes, helping others set up their own creator pages, and overall building goodwill for the platform. Now I’m too busy apologizing for their actions, watching other creators lose their livelihoods, telling people they might want to hold off a bit before starting a Patreon, and looking into other options.

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Now I feel it is more a business/customer relationship.

100%. I think it’s wise to create your campaign presence elsewhere. Don’t make your Patreon page the link you share or the place you send all your traffic. Set up a separate page, and direct people to Patreon only once they’ve decided to support you - or as a place to sign up for updates.

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You misunderstood my statement.
My point is this - I’m confident enough in the value of my content that every Patron’s first month is free.
If they feel it’s not for them before the payment goes through they can drop it and not get charged. I’m not sure why this is such an issue for so many creators.
It’s a simple matter of not sending rewards to anyone before their first month.

What I don’t understand is the dire need to charge right away. Then all of these problems with the payment system vanish.

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Not everyone runs their projects the same and some people greatly rely on immediate pledges. Some people don’t. Some people prefer to send rewards through the blog and some send privately to prevent skimmers and bots from taking and reposting their content. Really it’s all up to preference and having the option and ability to not allow people to see content without pledging is great for many. (People can also get an idea of your content from your public posts so there is more than one way to go about it all.)

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Exactly.
It doesn’t have to be one way or the other.
So, why do we all need to be put under the umbrella of pro-rated payments, or charge-up-front?
I’d rather have the option of running it the way I want, than be forced to do it ‘this’ way because the majority wants it that way.

I want options to be able to set up and deliver the content in the manner that suits me best.
And charging up front, or pro-rated payments are not what works best for me. And that’s the crux here - allow me choice.

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That is what many of us have been asking for. Options. Many of the features that have been requested are based off our needs but having the option to do or not do them is what many people have expressed here on the forums.

Currently, you HAVE the choice to use or not use pay upfront. I have the option to use it and don’t because the way it is now doesn’t fix my issues or suit my project. Options is certainly what I want. I want to customize how a feature functions. One solution doesn’t fit all so I totally agree with you.

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As much as I like having options, I can also understand how multiple options can cause a lot of issues on the backend.

It is admittedly better for it to be more complicated for creators than patrons, however. But even then that’s where a bit of conflict lies.

Even if we like having options, a user gets a vastly different experience depending on what page they pledge to because of how these options are implemented. This isn’t big for people who pledge to a single person, but it is disruptive for those who pledge to multiple people.

Generally, with any model, you want clients to have a consistent user experience. (It’s why when fees were being discussed, giving patrons multiple options to choose between payment models or a few of the wallet suggestions may seem good on paper but almost could be guaranteed as bad ideas if implemented.)

Second best thing is clarity, maybe with the current instances more explanations of how the page works (for both patrons and patreons). Or give a Patreon page the ability to code up its own explanation when someone goes to pledge. (E.g., if you’re not on up-front, this is where you could include “When you pledge, you’ll be on the list once the next month rolls around and your pledge goes through” etc.)

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During this whole fiasco, one of my patrons for my monthly campaign was suddenly terrified that he was going to be charged his full monthly pledge plus fees every time I posted a note, because he kept hearing about per-thing consequences (from Patreon, it seemed), and there wasn’t any specifics says “but the only campaign you pledge to doesn’t work like this”.

So there is a down side to variety/choice, though I think it doesn’t have to be an issue – if communication from Patreon to patrons was better / more specific, it could resolve it.

I also wish Patreon would take on the burden of better explaining how Patreon works during the sign-up process. I don’t want to turn my campaign page into a description of Patreon’s business model, but I don’t want patrons to be confused from the start (I never realized this guy wasn’t completely clear on how it worked).

Couldn’t Patreon have a page saying “For this campaign, you’ll be billed your pledge on the first of the month every month, and nothing more. Other campaigns may work differently. But if you become a patron of multiple campaigns, we’ll bundle your payments together on the first of the month to lower the fees for you AND for the creators you support. CHECK OUT MORE CAMPAIGNS YOU MIGHT BE INTERESTED IN HERE!”…?

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I don’t think this is really avoidable in the end no matter what. Even if we all had the same things here on patreon and all the same features (which, we don’t) each project would be different anyways because it’s an open platform where people can use it how it suits them. I think mostly in this case, having better documentation on patreon’s end of things and the artists just doing what they have been, explaining a little bit about how they run their project, is probably still the best way. (Patreon does show you if you are going to get charged immediately for a pay upfront project, but it’s really not super noticeable to the average user. They could implement that sort of thing better for sure and help with that clarity.)

Having a consistent user experience is kind of impossible with a setup like this. Even kickstarter is not the same each time you support, because it is up to each creator to organize their stuff and explain/communicate with their user base about how they plan to run it, and to keep up with their deadlines, etc.

So i think overall, clarity is the only real option here. Creators are able to add information to their page (I know many who link to patreon FAQ for explanations or have done up their own diagrams and info sheets and they link to those off their about sections) and it helps a lot. Many artists using the pay upfront feature state so in bold at the top of their campaign and then link to what it means. We have the ability, perhaps, to help it along, patreon just needs to clearer documentation in some places. Maybe a clear popup to remind people “this is how your pledge is going to be processed” so it’s clear and not easily overlooked, maybe with links to some FAQ, that would help immensely.

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Boy do i agree. Patreon really needs to up their clarity game and put more time into their documentation. This wouldn’t be such a big deal if they actually used us as a testing ground here because we’d end up asking a lot of the questions they need to be asked to better fill out their FAQ’s better. Variety i don’t think is a problem at all as long as the patreon documentation writers can actually get the info down clearly, concisely, and not rushed.

Though no matter what, running a business requires us to answer questions about our platforms regardless. So it’s par for the course that we will have to do some of the explaining. (It would just be nice to be able to link to clearly written FAQ instead of having to make our own diagrams, which i’ve done for years now along with explanations.) I am thankful we have ways to write explanations into our projects though at least but i certainly don’t feel like there is much assistance from the FAQ here.

It kind of does, now. When you pledge to someone, it tells you if you will be charged immediately or on the first, and if it’s one charge or per creation, depending on the project. However yeah, as far as i can see your pledge page doesn’t tell you specifics of each pledge you make unless you click “edit pledge” - Then it tells you when you will be charged. It could certainly use a note saying, as you said, some projects may work differently. I think they need to update their pledge page to show that stuff immediately. Even if it’s just a simple data table.
Payment / first of the month - Status / Per month or per creation - yada yada. SOMETHING. Also yes, seeing more creators you might like is a huuuuuuuuge yes. Need more of that. Finding new creators is such a pain! It shouldn’t be!!