Unless I'm missing something, then if you expect to make around £80-120k (net of fees) per year on BF you might as well just not bother working for x% of the year in order to stay in the 20% band and actually take home more money? I know the advertised threshold is £100k but since that is gross and we obviously calculate the money we make in net terms, it's (at most) £80k in terms of money you get before moving up to the 40% band.
Someone who makes £90k gross per year will take net £72k
Someone who makes £120k gross will net £72k
Someone who makes £150k gross will net £90k
I've presumed there are no huge swings in the first 2 examples that would temporarily drag you into the other EF band (but even if that were the case it would very likely be brief)
So presuming you were working 40 hours per week to make the 90k, you'd make exactly the same money working 30 hours per week (or alternatively just taking 1/4 of the year off on holiday as long as you did it at the same time each year!) because of the way they've structured the EF bands. And again, even if you make ~£150k, why not just work ~40% less for a very small reduction in what you make. Even at 200k you could argue with work/life balance you'd be better staying under 100k gross/80k net across a 12 month period. Or of course, where possible, move to other exchanges.
The whole thing seems ill thought through from BF as all the large jump is doing surely for those who are in that "awkward" band of people who make 80-150k (arguably higher) is making them generate less commission to make sure they stay in the 20% band? I would have thought it's not a small % of people who pay EF that fall into this band? Obviously it's not possible to know exactly what you'll make over a year, and the exact amount used for the EF calculation is bound to vary somewhat week to week BUT you have a vague idea and can adjust accordingly.
It seems an extra 30% tier between 100k and 200k would largely solve this, or only charge 40% above a certain amount (but I realise that becomes pretty complicated when calculated based on a rolling 52 week period)
40% v 20% on Expert Fee
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jamesedwards
- Posts: 5453
- Joined: Wed Nov 21, 2018 6:16 pm
Yes, it's a poorly thought out system. They might have been better off scrapping the premium charge completely, and reverting to a tiered up-front commission fee based on 12-month profits.
It's a little worse than your notes suggest as the profit caps are based on gross profit, so before commission. Most profitable accounts will pay more commission than they generate, so £90k gross will take home somewhat less than £72k. For example, I pay 40.5% combined fees on my gross profits including commission and expert fee, so £120k gross would only net £74.4k.
It's a little worse than your notes suggest as the profit caps are based on gross profit, so before commission. Most profitable accounts will pay more commission than they generate, so £90k gross will take home somewhat less than £72k. For example, I pay 40.5% combined fees on my gross profits including commission and expert fee, so £120k gross would only net £74.4k.
Ah ok, so a little bit worse than I stated then - kind of crazy and they must know people who would fall just inside that 40% band are just going to stop generating commission as they will be fairly bright people who have worked this out!
I guess if you can make 200k or more a year the 40% is just something you put up with but for anyone in that 100-150k band it's a no brainer to work less and manage your hours to stay at 20%
I guess if you can make 200k or more a year the 40% is just something you put up with but for anyone in that 100-150k band it's a no brainer to work less and manage your hours to stay at 20%