How do AdvancePay payouts work?
Last Modified January 1, 2023
AdvancePay is a useful tool to both gain sales before picture day even begins, and to build interest as the big day approaches. However, how you get paid from AdvancePay purchases contains a few more steps than traditional photo purchases. Let’s go ahead and break them down here.
AdvancePay Credit Purchase to the Studio's First Payout
Here's a walk-through of a $40 AdvancePay credit transaction - from the time the customer purchases the credit to the studio's first deposit:
- Customer purchases a $40 AdvancePay credit
- Stripe charges 2.9% +$.30 for that transaction ($1.46)
- The 10% PhotoDay fee* also gets applied to the $40 total ($4.00)
- $1.46 + $4.00 = $5.46 gets deducted from the $40 total, leaving a post-fee total of $34.54.
- PhotoDay will deposit half** of the $34.54 into the studio's Stripe accounting, bringing the first payout to the studio to $17.27.
*For more information on PhotoDay's fee breakdown, see this article here.**The reason half the funds are held aside is to make sure there are funds to cover the lab costs at the time of the customer's order.
The Customer’s Order Experience
The second part of the transaction occurs once your photos are uploaded, and the customer views the gallery and places their order. Continuing on with our customer who had purchased $40 of AdvancePay credit, let’s assume they then place an order for a $50 package (where the lab costs for the items in the package are $10). What the customer will see at checkout would be close to this, assuming a non-taxable shipping rate of $4.50:
Total Before Taxes:
Total With Taxes + Shipping:
$3.50 (assuming a 7% tax rate)
$40.00 (this is the purchased credit being applied)
Total Due: $18.00
The Final Studio Payout
This final studio payout is calculated by temporarily disregarding the AdvancePay credit purchase.
- The 10% PhotoDay fee gets applied to the retail portion of $50 ($5) - however, this is just for math purposes. Please, bear with us...
- This $5 fee gets subtracted from the $58 (total with taxes + shipping above), leaving a difference of $53.
- The $10 lab cost and the $4.50 shipping costs are subtracted from the $53, leaving a balance of $38.50.
- Now, the AdvancePay credit purchase comes back into play. Stripe will calculate the credit card processing fees (2.9% + $.30) based on the $18 that the customer paid at checkout ($.82).
- The final studio profit from this transaction is $37.68 ($38.50 - $.82).
- Now, remember when the first payout resulted in $17.27 being deposited to the studio? We subtract that $17.27 and the original $1.46 Stripe transaction fee from the $37.68 profit (which includes the tax collected), leaving the second and final payout to the studio at $18.95!
BOTTOM LINE: The studio will see two separate payouts for this photo purchase. One initial one of $17.27, and then a second payout of $18.95 after picture day. This brings the total studio payout for this customer transaction to $36.22.