Effective RateCalculator
Card processing fees take a far bigger share of profit than of revenue. A 3% fee on a business with a 10% margin consumes 30% of profit before processing costs. Effective Rate measures fees against your margin, because that is where every saved basis point lands.
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Enter card sales for a month or a year, your profit margin before processing costs, and either your effective rate or your total fees in dollars.
Use card sales and margin for the same month or year.
| Profit margin | At 2.0% rate | At 2.5% rate | At 3.0% rate |
|---|---|---|---|
| 10% | 20% | 25% | 30% |
| 20% | 10% | 12.5% | 15% |
| 30% | 6.7% | 8.3% | 10% |
A processor takes its percentage from the full ticket, whether the sale earned you a lot or almost nothing. Low-margin sellers, such as many ecommerce stores, feel this most: the same rate that looks small against revenue can be a large slice of what the business actually keeps.
Any reduction in processing cost needs no extra marketing, inventory, or staff. That makes it one of the few expense lines where improvement flows directly into operating profit, which is why Avendo focuses on keeping eligible processors competing on each online transaction.
See how that profit change can affect what the business is worth in the business value calculator, or start over with the credit card processing cost calculator.
Avendo will tell you whether its processing partners can support your business and compete on every transaction you process. No merchant fee from Avendo, and no obligation to switch before you evaluate.