Google Wants A BIG Piece of the PIE: Google Checkout Increases Fees 240% ?!?

Written by John Comments
Last Updated March 12, 2009

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Google fee increases for Checkout, what does that mean? Well the short end of it, Google wants a larger slice of the pie. Beginning May 5th the price for transactions handled with Google Checkout will be increasing.

This increase will move from a somewhat “assisted” spend to a fee based spend. What I mean it that right now Google Adwords spending do help defray some of the cost for using Google Checkout (see below)

So if you spent $100 in Adwords you would be able to transact up to $1000.00 in Google Checkout for FREE. But after May 5th that goes to “NOT Free”

Transactions for Google ads after the “free spend” were

NOW, all transaction will be going up to as much as 2.9% + $0.30 per transaction. So lets do the “Mary Math”.

Mary sells $1.00 apples on her website. Every month Mary drives traffic to her webstore advertising with Google Adwords. Mary spends $100 with Adwords and uses Google Checkout to process her sales.

Last month Mary sold $1500.00 worth of apples and had 150 orders (10 apples on each order) with Google Checkout…

OK,

So there is my example. Of course these numbers change with product prices, ad spend on Adwords, # of Sales. There are ALOT of variables to this equation.

But no matter how you slice it, this is a BIG increase for some, so do NOT get the bottom line twisted. That cute wording they have in the New Google Checkout FEES page does not adequately reflect the “devil of the details”.

Hey, but the economy sucks and everyone wants more money to offset losses. I am sure most companies have REDUCED Google ad spends, so that is no longer paying for the freebies we used to get. This drastic double wammy could explain how DEEP cuts have been for these Adwords spends on Google?!? I dunno, what do you think? Is my math correct?

colderice

Hey Cliff, I am surprised that Google raised pricing and removed the discounts on the SAME DAY. I guess they figured I would not notice, LMAO.

Hi Natha, the catch-22 is that if you reduce your Adwords spend the checkout badge shows up less too.

Henrietta, thanks for the clarity!

And Melinda, I really do not think Google Checkout is making a direct Paypal competitive move, I actually think Google will crush Pp in the open marketplace, IF they ever get into retail (as Scot Wingo hinted on our interview http://3rdpoblogs.com/colderice/2009/03/11/can-...)

Henrietta

@ Melinda
PayPal has always charged an additional fee on Cross Border Transactions which the rest of us call International trading!!

http://www.paypal.com/cgi-bin/webscr?cmd=_displ...

Then there is the additional 2.5% they charge in the currency exchange process and I quote:

If your transaction involves a currency conversion, it will be completed at a retail foreign exchange rate determined by PayPal, which is adjusted regularly based on market conditions. This exchange rate includes a 2.5% spread above the wholesale exchange rate at which PayPal obtains foreign currency, and the spread is retained by PayPal. The specific exchange rate that applies to your multiple currency transaction will be displayed at the time of the transaction.

The additional percentages can add up to take a hefty chunk out of potential profits!!

Melinda ~ Galleria Gifts

This doesn't seem to be a smart move if they want to compete with Payapal to me! Also, an important thing to note with the increase of fees on google checkout, they are charging an additional 1% for all international payments!! With DSR's already causing alot of sellers to not even offer international shipping, and ebay charging more for the option to appear on sites in other countries, the incentive to NOT sell internationally is growing like a snowball going downhill. Just my thoughts! You ROCK John! Love your site!

Natha

I guess the checkout badges might be driving some sales but basically this means I no longer have any incentive to offer Google Checkout and no incentive to choose Google over PayPal.

Cliff Aliperti

I'll ask what I previously tweeted you here, Are you surprised GC raised rates so much w/o making harder try to kill PP first? Or does this signal their growth flatlined? (ie: new sign-ups on the wane, so time to charge the regular users?)

Thanks,Cliff