Google Checkout vs. Paypal – $100 is the magic number

Lots of posts today about Google Checkout – best analysis by far from my colleague Charlene Li.  For a more tactical angle, by breaking out some algebra – unlike Shaq’s game, which is hard to figure out – it’s easy to see what this means to your bottom line vs. using Paypal.

Google Checkout is free up to 10x of your monthly Adwords spend.  Thinking realistically about a business budget, this should pretty much seal the deal, assuming that you’re spending money on paid search placement.  Focus on net margin, not revenue and expense separately.

So if you don’t buy AdWords (ignoring the fact that integration is the whole point) – say you’re a niche seller with great organic results – what to do?

If you do under $100,000 a month, use Google.  Otherwise, solve for x in this equation:  $0.20 + 0.2x = $0.30 + 0.19x.

If your average selling price is above $100, then you should use Paypal instead.

Two likely actions:  Someone will develop a user-friendly FAQ on how to integrate implement Google Checkout with  into eBay auctions now that it’s banned.  Then the Paypal fee structure will change to be more competitive.

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