So we have a customer in Japan that has ordered rope in the past. They’ve already received 16 hanks of custom size rope from their first 2 orders. Etsy has raised its seller’s fee from 5% to 6.5% in addition to the 3.5% payment processing fee. So every sale made on Etsy, we lose 10% in fees automatically. Sometimes there are additional fees for marketing and miscellaneous “services”.
So our Japanese customer contacts me wanting to order 30 hanks of custom size rope! That’s a lot of rope. Like 837′ of rope. This is by far the largest order we’ve ever had. Last order I quoted him $24/hank but gave him 10% off for the large order and repeat business. Every customer receives a coupon code for 10% off future order when they receive their goods so this wasn’t exactly a deep discount. It turns out that the custom size rope actually requires less yarn despite being longer than a standard hank. This is because it is 0.5mm thinner in diameter. In fact, after the 10% off the $24/hank the rope was still more than the calculated price based on actual yarn required. So we didn’t lose anything with the discount and the customer felt good about the transaction. The $24/hank, which is $1 more than for a standard hank, was determined because it is a custom diameter and length. I’m pretty sure if anyone else was willing to make the special size that he would have ordered it closer to home.
$24 X 30 $720! 10% off brings us to $648 plus $120 for shipping. The total would be $768. Etsy gets $76.80 and didn’t do anything but provide an existing customer a way to contact me. So I asked the customer to email me so we could discuss his order in detail. He did and I asked him if using PayPal was okay for this and future transactions. That he could simply email me with orders from know on. He agreed.
PayPal charges 3.49% for basic accounts. There’s a couple other account types that have lower transaction fees but a flat monthly fee is required. That might be an option in the future but this is literally the first invoice sent on this PayPal account. The invoicing system is decent on PayPal and allowed me to put discounts in and all his information will be saved for future transactions. Since the fee using PayPal is 3.49% instead of the 10% at Etsy we get to keep more of our money and I decided to give the customer an additional 3.5% off for using PayPal. After the additional discount, we’re still right at the calculated price based on yarn required per hank. So no loss from the discount and less loss on the fees.
So the guy paid and thanked me for the discount. And PayPal put the funds on hold! Whaaaaaat? I’ve never had funds put on hold before so why now. I just had hundreds of dollars in PayPal transactions last year for car parts without any issues. Oh wait! I don’t use that account for business anymore. Twisted Jute has its own PayPal account now that has one automatic monthly transactions for $2 for web hosting. That’s literally the only activity on the account for the past two years. So this is the first payment received on this account. The funds will be held for 21 days. The company has money to pay for the shipping for the order and to order more natural yarn since this order will use most of what is in stock. Was hoping this transaction would get the bank account to the threshold to start paying back the additional capital added to the company after it was formed.
I added $1,000 of capital to the business to avoid bank fees for a less than $500 balance. I added another $1,000 to buy yarn last Fall. Any week that the business checking account has more than $2,000 and no liabilities to exceed $100, the business will repay $100 of that added capital. Once the $2,000 has been repaid then a paycheck will be issued to the operating business member each week that the same criteria are met.