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Most shoppers who shop
online are going to order and pay for the
product with their credit card.
And if the customer pays for the
product by phone then you can enter the
customers billing and shipping information into
your shopping cart as if you were placing the
order online for them. After completing the order, your shopping cart
software will encrypt and deliver the customers’
credit card information via a secured payment
gateway processor.
The payment gateway processor will then send
that payment information to your merchant
account bank.
After a complex yet speedy transaction, those
credit card funds are then processed by your
merchant account bank and deposited directly
into your business or personal bank account
within 48 hours or less. |
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If the customer paid with their credit card
through PayPal then those credit card funds are
processed and deposited into your PayPal account
instantly.
Then you can manually transfer those funds into
your bank account or use those funds to pay for
products or business expenses. (Transfers from
your PayPal account to your bank account
normally take place within 2 to 3 business
days.)
After the customer pays you, then you can order
the product from the distributor. The
distributor will then ship the product directly
to your customer.
Whatever money is left over in your bank account
from the sale is your profit. For example:
The customer buys a Laptop from your business
for $797.95 with free shipping.
The customers’ credit card is charged for the
total price of $797.95
The merchant account bank or PayPal will deduct
a 2.5% (credit card processing fee) from the
total sales price of $797.95 which comes out to
$19.95. (Discount rates may vary).
Once the merchant account bank has deducted
their processing fees you are now left with a
total of $778.00.
$778 will be the total amount deposited into
your bank account within 48 hours or less.
If the customer paid for the product through
PayPal then that $778 will be available in your
PayPal account instantly. For example:
$797.95
- $19.95 (2.5% merchant
fees)
=$778.00 (total to be deposited into your bank
account or PayPal account)
Wholesale price of the product = $698.00 +
$11.00 for UPS ground shipping (which was free
for the customer but paid for by you, the
reseller).
In other words, you paid the wholesale
distributor $698.00 for the laptop plus $11 for
UPS ground shipping and sold it to the customer
for $797.95 with free shipping.
Your total cost for the product was $709.00 with
(UPS ground shipping included).
$698.00 your cost for the laptop
+$11.00 your cost for
shipping
=$709.00 your total cost paid to the wholesale
distributor for the product plus shipping
Sale price to customer =$797.95
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Determining your
profit
To determine your profit for this sale simply
subtract 2.5% (credit card processing fees) from
the total price of the actual sale, $797.95 and
then subtract your total cost for the product
with shipping included from the sales price
after the merchant fees have been deducted. For
example:
$797.95 total sales price
- $19.95 (2.5% merchant
account fees)
=$778.00
-$709.00 your total cost
for the product with shipping included
=$69 profit
$69 becomes your total profit for that sale.
Determining your profit after a sale has
been paid by check
Sometimes, a customer may pay for the order with
a cashiers or company check, and this is often
the case with small to mid sized businesses and
educational establishments as well.
The benefit of receiving payment by check is
that no merchant account provider or payment
processor is required to process the checks and
as a result no merchant account or credit card
processing fees are deducted.
The entire amount of the sales price goes into
your bank account without any processing fees
applied.
$797.95 total sales price
$797.95 total amount deposited into your bank
account
After paying the distributor $709.00 (with
shipping included) your profit will be $88.95
$797.95 total sales price deposited into your
bank account
-$709.00 your total cost of the product with
shipping included
$88.95 profit
$88.95 would be your profit for that sale if the
customer were to pay you by check. |
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Getting paid
At the end of the month you can write yourself a
check for the total amount of the profits or for
the amount of the salary which you wish to pay
yourself with.
If you choose to do so then you can deposit
those profit checks into your own personal bank
account in order to separate your personal
earnings from the earnings of the business.
You can also pay yourself a salary and leave the
rest in your business bank account for capital
and business expenses.
Payment formula
Total income from sales
Minus the cost paid to
the distributor for the product(s)
= your gross income
Your gross income
Minus all business
expenses for the month (including credit card
processing fees)
=your net profit
Your net profit is whatever money is left over
in your bank account after distributors and all
business expenses have been deducted and paid.
Then you can transfer your net profits into a
separate account or bank account if you wish to
do so.
You can pay yourself weekly, bi-weekly or in
whichever manner works best for you. And you can
also withdraw money from your profits daily as
well.
After the customer pays for the product then you
can order the product from the distributor. The
distributor will then ship the product directly
to your customer. Money from sales of the
products will be deposited into your bank
account daily and therefore allowing you to
withdraw funds from your account daily as well,
if necessary.
Whatever money is left over in your bank account
after products, distributors and expenses have
been paid, is your net profit. And that’s how
you get paid each and every day. |
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Dealing with Product Returns and Exchanges |
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Sample Return Policy and Procedures |
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Sample Privacy Policy |
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Sample Terms and Conditions Policy |
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