Online Tool Store
· 4 min read
How to Work Out What You Keep After Fees
Manesh Jayawardhana
CIO & Co-founder
An item sells for 45.00 and the payout is 36.26. The commission was supposed to be 6.5%, which is 2.93, so where did the rest go?
Payment processing on the total including shipping, a fixed transaction fee, and the shipping you offered free. Three deductions, none of them the headline rate.
The fees that get left out
Commission is the one everybody knows and budgets for.
Payment processing is a percentage plus a fixed amount, and the percentage is usually charged on the full amount the buyer paid — including shipping, and in some jurisdictions including tax. That is the fee most often omitted from a seller’s mental arithmetic.
Listing or insertion fees, charged whether or not the item sells, which means they should be spread across your sell-through rate rather than charged to the sales that happen.
Shipping, if you offered it free. Free shipping is a cost you absorbed, not an absence of one.
Promoted listing fees, if used, typically a further percentage of the sale.
| Component | On a 45.00 sale |
|---|---|
| Sale price | 45.00 |
| Commission at 6.5% | −2.93 |
| Payment fee, 2.9% + 0.30 | −1.61 |
| Shipping absorbed | −4.20 |
| Item cost | −18.00 |
| Net | 18.26 |
Pricing to a target net requires division
The instinct when you need to net a specific amount is to add the fee percentage to your target. It always falls short, and for the same reason as a sales tax gross-up.
The fees are charged on the higher price, so raising the price raises the fees, which means you have to raise it further still.
price = (target net + fixed costs) ÷ (1 − total percentage fees)
To net 25.00 with 18.00 of cost, 4.20 of shipping and 9.4% in percentage fees, the price is not 47.20 plus a bit. It is around 55.30, and adding the percentages gets you to roughly 51.60 — over three pounds short on every sale.
The fee rate is not the whole comparison
Two platforms with identical headline commission can produce very different net proceeds.
What the payment fee applies to. Charged on the item price or on the full order total including shipping — the difference is real money on a low-value item with high postage.
Whether fees are charged on tax. Varies by platform and jurisdiction.
Listing fees and their refund policy when an item does not sell.
Buyer-side fees, which do not cost you directly and do reduce what buyers will bid.
Comparing platforms on headline commission alone is how sellers end up surprised by the payout.
Returns and disputes eat the margin
The costs that do not appear on a per-sale fee schedule.
A return costs the outbound postage, frequently the return postage, and the time to inspect and relist. On most platforms the commission is refunded and the payment processing fee sometimes is not.
A dispute or chargeback costs the item, the money, and on many platforms a fixed fee on top — regardless of the outcome.
Unsold stock carries the listing fees paid on every attempt.
A seller calculating margin per successful sale and ignoring these will find the account total does not match. Spreading the expected cost of returns and disputes across all sales gives a figure that reconciles with what actually arrives.
Common mistakes to avoid
- Forgetting payment processing, or applying it to the item price rather than the order total.
- Marking up by the fee percentage instead of dividing.
- Treating free shipping as free.
- Ignoring listing fees on unsold items, which are a real cost of doing business.
- Comparing platforms on commission alone.
How to do it with Marketplace Fee Calculator
The Marketplace Fee Calculator accounts for every deduction.
- Enter the sale price and every fee — commission, payment percentage and fixed, listing.
- Include shipping if you absorb it.
- Read the net, and the margin as a percentage.
- Use the reverse calculation to find the price for a target net rather than adding a markup.
Other pricing tools are in the tools directory.
Frequently asked questions
Why doesn’t adding the fee percentage to my price work?
Because the fees are charged on the higher price too. To net a target you divide by one minus the fee rate rather than multiplying by one plus it, and the difference grows with the fee percentage.
Is payment processing charged on shipping?
On most platforms, yes. The processor takes its percentage of the total the buyer paid, which includes shipping and sometimes tax. It is the fee most often left out.
Does free shipping cost me anything?
Yes — it moves the cost from the buyer to you. It often improves conversion, and the postage still comes out of your margin, so it belongs in the calculation either way.
Final thought
Work backwards from the net you need, dividing rather than adding. Every seller who prices by marking up the fee percentage is quietly short on every sale.