FreshBooks is a widely used cloud-based accounting software designed for small businesses and freelancers. One of the key considerations when choosing any invoicing or payment platform is understanding the associated fees. If you’re wondering what percentage FreshBooks takes from your transactions, this article will provide you with a detailed breakdown of FreshBooks’ pricing structure and transaction fees.
Understanding FreshBooks Pricing
FreshBooks offers different pricing plans, each tailored to various business needs. While the actual subscription fees vary depending on the plan you choose, the transaction fees associated with receiving payments are also an important factor to consider.
Payment Processing Fees
FreshBooks integrates with different payment processors, primarily FreshBooks Payments (powered by WePay), Stripe, and PayPal. Each of these platforms has different processing fees, so the percentage taken from each transaction depends on which method your clients use to pay.
- Credit Card Transactions (via FreshBooks Payments): Typically, FreshBooks Payments charges 2.9% + $0.30 per transaction for payments made using Visa, MasterCard, Amex, or other major credit cards.
- ACH Bank Transfers: The fee for ACH transfers is significantly lower, usually around 1%, capped at $10 per transaction.
- Stripe: If you are using Stripe as your payment processor, the standard transaction fee in the U.S. is 2.9% + $0.30, though these rates may differ slightly based on country and additional Stripe services used.
- PayPal Transactions: PayPal fees are typically around 3.49% + $0.49 per transaction, depending on the region and type of payment.
Additional Fees
Aside from direct payment processing fees, FreshBooks does not take any additional percentage from your transactions. However, it’s important to consider a few other potential costs:
- If you use international payments, foreign exchange rates and currency conversion fees may apply.
- Higher-tier FreshBooks plans grant access to more advanced features, which could impact overall cost.
- Some third-party integrations, such as Stripe and PayPal, may have additional fees for currency conversion or chargebacks.
Is FreshBooks’ Fee Structure Competitive?
Compared to other accounting and invoicing platforms, FreshBooks’ transaction fees align closely with industry standards. Services like Stripe, Square, and PayPal charge similar rates for credit card processing. However, one potential advantage of FreshBooks Payments is its seamless integration with the platform, ensuring smooth bookkeeping and invoicing.
For businesses that rely heavily on bank transfers, the 1% ACH fee can be a cost-effective alternative to credit card processing.
Ways to Minimize Transaction Fees
While payment processing fees are a necessary cost in most online transactions, there are a few strategies you can use to optimize your earnings:
- Encourage ACH Payments: Direct bank transfers typically have lower fees than credit card transactions.
- Include Processing Fees in Your Pricing: Some businesses slightly increase their prices to account for transaction costs.
- Use the Right Payment Processor: Compare payment methods and choose the lowest-cost option for your business.
- Upgrade Your Plan if Needed: Higher-tier plans offer additional features that could save time and money in the long term.
Final Thoughts
FreshBooks does not take a percentage of your income beyond standard transaction processing fees. Depending on the payment method used, businesses can expect charges of around 2.9% + $0.30 for credit card payments and 1% (capped at $10) for ACH bank transfers. Understanding these costs can help businesses better plan their financial strategy and choose the most cost-effective payment methods for their clients.
By being aware of FreshBooks’ fee structure and implementing strategies to minimize transaction costs, small businesses and freelancers can maximize their revenue while benefiting from the platform’s powerful accounting tools.
