Fees, explained

A fee on one buy looks tiny. A fee on every buy, repeated hundreds of times, is a different story. The arithmetic is simple, and it is worth doing before any schedule runs.

Two kinds of fee

• Percentage fee: a share of each purchase, for example 1%. On a $50 buy that is $0.50; on a $100 buy it is $1.00. The share stays the same whatever the amount.
• Flat fee: the same sum on every purchase, for example $0.50. The share changes with the amount: $0.50 on a $10 buy is 5%, on a $50 buy it is 1%, on a $100 buy it is 0.5%.

That is why flat fees hurt small buys most. The fee is identical in dollars and ten times larger as a share of a $10 buy than of a $100 buy.

The cost across a schedule

A weekly plan runs 52 purchases a year, 260 over five years. At 1% on a $50 weekly buy, the fees total $0.50 times 260, which is $130 over five years. At a $0.50 flat fee on a $10 weekly buy, the fees total the same $130, but on $2,600 put in instead of $13,000: 5% of the plan instead of 1%.

The second cost: the Bitcoin never bought

Every dollar paid in fees is a dollar that did not become Bitcoin. So a fee has two costs: the dollars paid, and the Bitcoin those dollars would have bought at each purchase price. That is the column to watch in our fee calculator: run your schedule at the fee you would actually pay, then at 0%, and compare.

Questions

How do fees work on a recurring buy?

A fee is charged on each purchase, as a percentage of the amount or as a flat sum.

Why do flat fees hurt small buys most?

Because the same dollar fee is a larger share of a small purchase: $0.50 is 5% of $10 but 0.5% of $100.

What is the second cost of a fee?

The Bitcoin the fee dollars never bought, on top of the dollars paid.

Run your schedule in the fee calculatorBack to Learn

Education only, not financial advice. Past performance does not predict future results.