Mechanics
What counts as revenue for platform fees
A fee percentage is meaningless until you know what it is charged on. Two sellers with identical prices can pay materially different fees because their order composition differs.
The general rule
Marketplaces charge their commission on the total order value the buyer pays for the goods and delivery. That normally means item price plus shipping plus gift wrap plus personalisation fees. It normally excludes sales tax, because the platform collects and remits that separately and it was never your money.
The practical consequence: anything you add to the order to cover cost is itself taxed by the fee.
Line by line
| Order component | Usually in the fee base? | Why it matters |
|---|---|---|
| Item price | Yes | The obvious one. |
| Shipping charged to the buyer | Yes | The most commonly missed line. Charging shipping does not reduce your fee — it increases it. |
| Gift wrap / personalisation | Yes | Often treated as part of the item price. |
| Sales tax / VAT collected by the platform | No | Remitted directly; not your revenue. |
| Discounts and coupons | Reduced base | You pay fees on the discounted price, but the fixed fee does not shrink. |
| Refunded orders | Usually not refunded | The processing fee is typically kept by the processor even when the order is refunded. |
| Tips | Varies | Some platforms exclude tips from commission; check yours. |
Why “free shipping” is not a marketing trick
Sell a $40.00 item with $6.00 shipping and you pay commission on $46.00. Sell it at $46.00 with free shipping and you pay the same commission on $46.00. The fee is identical — but in the second case the buyer sees one number, and you stop thinking of the postage as free money that arrived separately.
The difference shows up when you compare platform fees for the same product. A $6.00 shipping charge and a $6.00 price increase look the same to the fee engine and completely different to the customer.
The fixed fee is the real regressive tax
Percentage fees scale with price. Fixed fees do not. On Etsy's US schedule, $0.45 of fixed fees ($0.25 payment plus $0.20 listing) is 0.9% of a $50.00 order and 4.5% of a $10.00 order.
This is why low-ticket products are so punishing: the effective rate climbs as the price falls, and the margin disappears before the percentage ever becomes the problem. If your catalogue is mostly under $15, the most valuable change you can make is bundling — not negotiating fees.
Check it against a real order
The fastest way to know your true fee base is to take your last five orders and compare the fee charged with what the calculator predicted. If the calculator says $5.30 and the platform charged $7.10, the difference is a line you have not modelled yet — usually tax, a category rate, or an ad attribution.
Put it into practice
The other guides: How to price handmade products without eating the fees · Reverse pricing: from target profit to price