I just received an email from Patreon this morning and was shocked. Patreon has introduced a new fee structure. And this will affect you if you're supporting creators on Patreon.
This is their letter in full:
In order to continue our mission of funding the creative class, we’re always looking for ways to do what’s best for you - creators.
With that, we’re writing to tell you of a change we’re making so that all Patreon creators take home exactly 95% of every pledge, with no additional fees.
Aside from Patreon’s existing 5% fee, you may notice that your income on Patreon varies because of processing fees every month. Your patrons may not even be aware that you actually take home a lower percentage of their intended pledges because of it. Our goal is to make your paycheck as predictable as possible, so we’re restructuring how these fees are paid.
A new service fee of 2.9% + $0.35 will be paid by patrons for each individual pledge starting on December 18th. This streamlines fees for both creators and patrons to ensure that you pay no more than 5%.
Fee change visual explanation
Here’s what you can expect:
- On December 18th, we’ll apply the fee for patrons and notify them of this change.
- We’re also sending an email to all patrons tomorrow, December 7th, to share the information about this upcoming change.
- We ran experiments to understand patrons’ potential reactions and we found that many patrons were happy knowing that this change will send more money to creators.
- If you’d like to chat about this change with your patrons, we’ve provided verbiage in our FAQ here.
We want you to know that we approach every change with a creator-first mindset, aiming to help you grow your business and grow with your patrons. By standardizing Patreon’s fees, we’re ensuring that creators like you can get paid to continue creating high quality content.
Your patrons will have an email in their inbox with all of this information tomorrow. In the meantime, if you want to learn more or have any questions for us, please don’t hesitate to reach out here or visit our FAQ.
See you on the internet,
The Patreon team
I'm generally happy with the service that Patreon has provided but this move is disappointing.
In the old fee structure, Patreon takes 5% and PayPal takes 5% + $0.05. The old pay structure is mostly a percentage based structure. So the percentage doesn't deviate much from 10%.
In the new fee structure, Patreon's fee has dropped to 2.9%, but they have added a fixed $0.35 fee component to each pledge.
In both fee structure, PayPal still takes 5% + $0.05. And Patreon still takes 5%. Patreon is basically moving some of the credit card processing fees to supporters.
Take a look at diagram drawn up by ComicColorist:
The 1st bottom line is this: In the new fee structure, patrons will be paying the fees instead of the creator. It was the other way round previously.
The 2nd bottom line is this: Instead of the amount that patrons pledge, they are actually going to be pledging more because of the fees. Basically, if you want to pledge $1 as a patron , you're actually pledging $1.38 in the new system. $0.95 will go to the creator, and the rest to fees.
Chart from Tom Wakefield
I don't know about you but when I want to pledge $1, it means I want to pledge $1. But now it's going to be $1.38 because that $0.38 will be paying the fees. And $0.38 out of $1.38 is a significant portion.
I don't mind paying fees both as a creator and a patron (I support other creators on Patreon too). I just have a problem at the fees for low tier supporters, at how significant the portion is used to pay fees.
Let's apply the new fee structure to the tiers on my Patreon page:
$1: $1 + $0.38 (fees represent 27.5% of total amount)
$3: $3 + $0.44 (fees represent 12.8% of total amount)
$5: $5 + 0.50 (fees represent 10% of total amount)
$10: $10 + $0.64 (fees represent 6% of total amount)
If you look at the math, you can see that if you pledge $1, a significant percentage of that amount will be used to pay fees. The new fee structure penalises $1-patron heavily. That's sad.
Again, I don't know about you but when I want to pledge money to help a creator, I want to make sure that most of that money goes to the creator. The new fee structure does that, but it penalises patrons that pledge at lower tiers.
If you pledge at a really high tier, let's say $100, in the old system, the creator gets $90.20. In the new system, patrons pay $103.25, creators get $93.18.
Some creators have asked for the option to choose between the new and old fee structure. I prefer the old.
Some creators suggested building their own subscription model, and some said there should be more competition.
Some patrons have stated that they are going to keep supporting their creators. Good for them. Some patrons are dropping their $1 pledge. I can understand that too.
So how can patrons get around the fees
One way is to pledge a larger amount every few months instead of $1 every month, but it's really a hassle to remember that. Just the thought about it makes me tired.
Anyway, what do you guys think?
I've read that Youtube may be coming up with a Patreon competitor through the creator Youtube channel. I would love to see that soon. This move that Patreon has pulled off will be remembered by creators, and if there's a better alternative in the future, I'm sure some of those creators will move, and so will their followers. I will certainly consider alternatives very seriously going forward.
To my patrons
I've around 50 patrons supporting me at the $1 tier. I can understand if you want to pull out. It's fine. I still thank you all for your support so far. And if you're staying on, a big thank you as well. Your support really means a lot to me, regardless of the amount you pledge.
The money you pledge through my Patreon page is used to pay off the expense of running the blog, get art related products and books to feature, get a new monitor to replace my spoiled one, get a 4K capable camera so that all the art videos are now in 4K, and has also allowed me to go on some sketching trips and film them, and also cover the Urban Sketchers Symposium in Manchester. That's the impact you have made. So thank you all so much! :-)