The Real Cost of Payment Fees: What Freelancers Actually Keep

Two freelancers do the same R20,000 project. One takes payment through a big marketplace that charges a 20% commission and keeps R16,000. The other invoices directly and pays a card-processing fee of roughly 2.9%, keeping about R19,400. Same work, same price to the client — a R3,400 difference that goes entirely to how the money was collected.

Payment fees are the most overlooked line in a freelance business, precisely because they are taken off the top before you ever see the money. What you charge is not what you keep. Here is how to understand the gap and stop giving away more of it than you have to.

The two worlds of fees

Not all fees are remotely comparable, and lumping them together is how freelancers make expensive choices.

• Marketplace / platform commissions run high — commonly in the 10–20% range — because you are paying for the platform to find you clients and hold the relationship. That can be worth it early on. It stops being worth it the moment you would have kept the client anyway.
• Payment processing fees are a different order of magnitude — typically around 2.9% for a local card through a processor like Paystack. You are paying only for the plumbing that moves money, not for the client.

The critical insight: a 20% cut and a 2.9% fee are not "both just fees." One is a fifth of your income; the other is small change. Confusing the two costs real money over a year.

PayPal vs Paystack vs marketplaces

For a South African freelancer, the practical comparison usually comes down to a few routes, and the differences are stark:

• A global wallet like PayPal is convenient for international clients but stacks up costs — a percentage fee, a fixed fee, and then a currency-conversion margin when you withdraw to Rands. That conversion spread is the sneaky part; it is a fee you rarely see itemised.
• A local processor like Paystack charges a transparent per-transaction percentage, settles into your South African bank account, and does not bury a conversion markup in the withdrawal.
• A marketplace takes its commission before anything else, and often adds withdrawal or currency costs on top.

The lesson is not "PayPal bad, Paystack good" — it is read the whole path. The headline percentage is rarely the full cost; conversion spreads and withdrawal fees can quietly double it.

Subscription vs per-transaction

There is a second axis that matters as you grow: do you pay per transaction, or a flat subscription for the tools that run your business?

• Per-transaction costs scale with your revenue. A processing fee is fine — it is proportional and only charged when you actually get paid.
• Per-transaction commissions punish success. A 20% cut on R20,000 is R4,000; on R200,000 it is R40,000 for the same act of collecting money. That does not scale; it compounds against you.
• Flat subscriptions reward growth. Paying a fixed monthly fee for invoicing, payments tooling, and project management means your cost per Rand earned falls as you earn more.

The strategic move as you scale is to shift from revenue-share arrangements (which take more as you grow) toward transparent processing fees plus flat tooling (which take proportionally less).

How to price fees in — so you never eat them

Fees only hurt when they are a surprise. Build them into your pricing and they become the client's cost, not yours.

1. Know your real take-home rate. For every payment method you offer, work out what actually lands in your account after every fee and conversion. That is your true rate — not the headline price.
2. Price to your floor. Decide what you must keep from a project, then set the quote so that even after fees you clear it. A ~3% processing fee on a R20,000 project is R600 — quote R20,600 and you are whole.
3. Steer clients to the cheapest clean method. Make your low-fee route (a direct card link) the default, and reserve expensive routes for clients who insist on them.
4. Escrow the big ones. For large projects, milestone-funded escrow protects the whole amount; a small processing fee on secured money is a bargain next to the risk of not being paid at all.

The takeaway

What you charge and what you keep are two different numbers, and the distance between them is entirely within your control. Escape high marketplace commissions once you own the client relationship, favour transparent processing over buried conversion spreads, prefer flat tooling over revenue-share as you scale, and always — always — price the fee into the quote.

KAZI is built for keeping more of what you earn: transparent Paystack-powered payments, direct invoicing with a pay link, milestone escrow for big projects, and a cash-flow view that shows what you actually keep, not just what you billed. We are in early access: join the waitlist at kazii.ai and stop giving your income away at the checkout.