I added 3% to cover PayPal's fee and still came up short. Here's the math I got wrong.

When the author's first PayPal invoice arrived for $200, they miscalculated the amount they would receive. They expected around $194, assuming PayPal takes about 3%, but instead received $192.53. This $7.47 discrepancy puzzled the author more than the money itself. The issue stemmed from two factors: the actual fee rate of 3.49% plus a fixed fee of $0.49, not just 3%, and the fact that PayPal takes a percentage of the total amount, including the fixed fee.

The author made a simple mistake of just adding 3% to the target amount to receive $200. However, this approach doesn't account for the fixed fee, which is charged regardless of the total amount. As a result, charging $206 would only leave the author with $198.32, still short of the intended $200.

To avoid this issue, the author realized they needed to solve for the correct price instead of guessing. They discovered the formula to be: price = (target + fixed) / (1 - rate). Using this formula with a target of $200, a rate of 0.0349, and a fixed fee of $0.49, the author calculated that they should charge $207.74 to receive $200 after PayPal's deductions.

This same principle applies to other payment platforms as well. For example, eBay charges its fee on the entire order, including shipping and tax, which can significantly increase the fee compared to the item's price alone. Stripe also retains its processing fee even when refunds are issued. Similarly, Depop's US selling fee may seem minimal on its own, but it can add up quickly for smaller-priced items.

In summary, the author learned to always calculate fees accurately before listing items and to factor in the fixed fees and varying rates across different payment platforms. They developed a simple calculator to help with these calculations and avoid costly mistakes in the future.