Gross vs. Net Invoicing: Why You're Losing Money Every Month
Understanding the difference between what you invoice and what you actually receive is the first step to protecting your profit margins.
You Invoice
$1,000
Gross Amount
You Receive
$970.70
Net Amount (after 2.9% + $0.30)
The $29.30 difference is your processor's fee — every single time.
If you've ever sent a $1,000 invoice and been surprised to see only $970.70 deposited in your bank account, you've experienced the gross vs. net invoicing gap firsthand. For freelancers and small business owners, this gap adds up to hundreds or even thousands of dollars in unplanned losses every year.
What is Gross Invoice Amount?
The gross amount is the number you put at the bottom of your invoice — the total you are asking your client to pay. It's the starting point before any deductions.
What is Net Invoice Amount?
The net amount is what actually lands in your bank account after payment processing fees are deducted. When a client pays your invoice through Stripe, PayPal, or Square, the processor automatically takes their cut before transferring the remainder to you.
Most freelancers price their services based on the gross invoice amount, which means they're systematically undercharging by 2.9–3.5% on every single payment.
Use reverse fee calculation to determine the gross invoice amount that will result in your target net payout. That's exactly what our calculator does.
A Real-World Example: The Freelance Designer
Imagine you're a freelance graphic designer who charges $5,000 for a brand identity project. You send a $5,000 invoice and your client pays via credit card through Stripe. Here's what happens:
That's $145.30 you didn't plan for. Over a year of similar projects, that's potentially $1,743.60 in unplanned losses — or more than one full month's work given away for free.
How to Fix This Going Forward
Know your processor's exact rate before sending any invoice.
Use reverse fee calculation to find the gross amount that yields your target net.
Consider offering a bank transfer (ACH) discount to clients who pay without a card.
Build a 3% buffer into your base rates so fees are always covered.
Use the Invoice Fee Calculator to find the exact gross invoice amount you need to charge to hit your target net payout.
Open the Calculator →