What does it cost to be a Freelancer?

July 15, 2011

If you are an international contractor, freelancer or a virtual assistant, then you have experienced the process of setting up a payment system, but have you calculated the cost of the alternatives? Each contractor performing outsource work has different needs and because of this, there are many different options available. It is important to know the best options available, as the cost differences between the services are quite significant. From our research many of the companies hide their charges and make it very difficult to calculate the complete costs.

For this article, we have chosen the three major choices: PayPal, a middleman service using Payoneer as a payout option, and ATMCASH. Calculating and comparing the various costs can be dizzying, so we have itemized and calculated the total costs for you. It is obvious from our research ATMCASH is considerably less expensive and transparent with their fee schedule. It makes sense, why hide your fees if you have the lowest costs. For certain contracting relationships ATMCASH may not be a viable solution.

In any outsource projects having the two parties agree on the project budget may be the deciding factor, however there are other considerations. At the onset, you need to establish a comfortable routine for relaying the work product and communicating with your specific outsourcer. To reduce your risk and build trust, regardless of which service you ultimately choose, you should pre-establish project milestones for exchanging payment and work product. Incremental payment staging will reduce the risk for both parties: the business outsourcing the work and the freelancer. Okay, let’s first look at the costs and charges by company.

PayPal Middleman Services

using Payoneer

ATMCASH
Fees Charged to Sender

Middleman Fee

none

10.00%

none

Credit Card Load

2.9% +.30

none

3% + $5

Checking Account Load

none

none

$5 for up to $1000

Cross Border Fee

1.00%

none

none

Fees Incurred by Recipient

Currency Conversion

2.50%

none

none

Currency Rate Charge

2.60%*

3.00%

2.00%

Monthly Maintenance Fee

none

$3.00

$0.99

first month free

Card Activation

none

$9.95-$24.95

none

ATM withdrawal

none

$3.00

$1.50

*As of 7/14/11 the average rate PayPal charged from a sampling of currencies.

Other Information

Availability of funds from moment of payment with:

Paypal

Middleman with Payoneer services*

ATMCASH

Credit Card

instant

4 days

instant

Check

5-7 business days

4 days

3-4 business days

Escrow Service

none

Yes

Yes

*Note for an additional fee this time can be expedited.

Cost Comparison of a $1000 Project

PayPal

Middleman with Payoneer Service*

ATMCASH

1st Transaction of $1000
Fees Incurred by Sender Paying by Check

$10.00

$100.00

$5.00

Fees Incurred by Sender Paying by Credit Card

$39.30

$100.00

$35.00

Fees Incurred by Recipient

$51.00

$53.90

$21.50

Total:

By check $61.00

with credit card $90.30

With check or credit card: $153.90

By check: $26.50

with credit card $56.50

Subsequent Transactions of $1000

Fees Incurred by Sender Paying by Check

$10.00

$100.00

$5.00

Fees Incurred by Sender Paying by Credit Card

$39.30

$100.00

$35.00

Fees Incurred by Recipient

$51.00

$36.00

$22.49

Total:

By check $61.00

with credit card $90.30

With check or credit card: $136.00

By check: $27.49

with credit card $57.49

*Assumed an average activation charge of $17.90

Cost Comparison of a $200 Project

PayPal

Middleman with Payoneer Service*

ATMCASH

1st Transaction of $200
Fees Incurred by Sender Paying by Check

$2.00

$20.00

$5.00

Fees Incurred by Sender Paying by Credit Card

$8.10

$20.00

$11.00

Fees Incurred by Recipient

$10.20

$29.90

$5.50

Total:

By check $12.20

with credit card $18.30

With check or credit card: $49.90

By check: $10.50

with credit card $16.50

Subsequent Transactions of $200

Fees Incurred by Sender Paying by Check

$2.00

$20.00

$5.00

Fees Incurred by Sender Paying by Credit Card

$8.10

$20.00

$11.00

Fees Incurred by Recipient

$10.20

$12.00

$6.49

Total:

By check $12.20

with credit card $18.30

With check or credit card: $32.00

By check: $11.49

with credit card $17.49

*Assumed an average activation charge of $17.90

Conclusions
ATMCASH
Best – lowest cost, serves the most countries, most transparent fee structure, faster funds availability
Drawbacks – Does not allow payment to multiple contractors, though the company said they were planning on adding this feature soon. Employer must be a US resident. Free shipping to 60 countries, $9 – $19 one time shipping fee for remaining countries.

Middleman Services with Payoneer payout.
Best for: trust issue, as service provides the most complete escrow service, can handle multiple contractors simultaneously. Service includes finding the contractor for the project.
Drawbacks: by far the most expensive

Paypal
Best for: US to US transfers, multiple contractors, and low cost projects.
Drawbacks; Employer and freelancer both need to have a PayPal account, high priced projects are much more expensive. PayPal restricts cash payouts in many countries.


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