SELLING ONLINE
What does a sale
really cost?
A supplier’s price is only one part of a sale. A product can look attractive until delivery and selling fees use up the profit. Start with one order and follow the money.
Write down what comes in
Use the total amount of revenue for the sale on the tax basis you are measuring. If the customer pays £20 for the item and £3 for delivery, the total is £23 before any VAT adjustment you need to make. The calculator’s selling-price field should include delivery revenue because delivery is part of the money coming in.
Make sure the percentage fee you enter applies to the same revenue amount. If the platform calculates its fee on a different basis, work out the fee separately and enter it as a fixed cost instead.
Collect the fixed costs for that order
- Product: the supplier cost for the quantity sold.
- Delivery: what you pay the supplier or courier to send it.
- Packaging: boxes, bags, labels and packing materials.
- Fixed fees: any per-order payment or selling fee.
- Other order costs: expenses that belong to this specific sale.
Put the product amount in “Cost price”. Add the remaining costs together in “Other costs per sale”. Do not count the product twice. If a supplier’s quote already includes delivery, you do not need to add the same delivery charge again.
Add the percentage fee
The optional fee field calculates a percentage of the full selling price entered. For example, a hypothetical 10% fee on a £20 sale costs £2. It is an example rate, not a statement of what eBay, Etsy, Amazon or a payment processor currently charges.
Check your own account and the platform’s current fee schedule. Rates can vary by category, subscription, payment method, advertising choice and tax treatment. If there are multiple percentage fees on the same basis, add them together. If their bases differ, calculate their amounts separately.
| Money in or out | Amount |
|---|---|
| Revenue | £20.00 |
| Product | £10.00 |
| Delivery | £3.00 |
| Packaging | £0.50 |
| Percentage fee | £2.00 |
| Profit after included costs | £4.50 |
| Margin | 22.50% |
To reproduce this, enter a £10 cost, £20 selling price, £3.50 other costs and a 10% fee. The result is a contribution after those costs, before expenses you have not entered.
Find a price that leaves the margin you want
Suppose the same costs apply and you want a 30% margin. The sale must cover 30% profit and 10% selling fees, leaving 60% for the £13.50 fixed costs. £13.50 ÷ 0.60 = £22.50.
Target price = fixed costs ÷ (1 − margin rate − fee rate)Enter these figures in “Find selling price”. If the target margin plus the fee is 100% or more, there is no finite price that covers positive fixed costs under this model. The calculator asks you to lower the rates.
Keep VAT separate and consistent
This calculator does not add VAT, remove VAT or determine which tax is recoverable. If you are VAT registered and want a profit estimate excluding recoverable VAT, use the appropriate VAT-exclusive revenue and costs. Include non-recoverable tax in costs. If you are not VAT registered, use the amount you actually pay and receive, including tax in your costs where applicable.
For a price subject to 20% VAT, HMRC explains that you add VAT by multiplying the VAT-exclusive amount by 1.20. To remove that VAT from a VAT-inclusive price, divide by 1.20. For example, £12 including 20% VAT is £10 before VAT, with £2 VAT. Subtracting 20% from £12 would give the wrong result.
Use the rate and treatment that apply to your business and product. See HMRC’s guide to charging and calculating VAT, and check uncertain treatment with your accountant.
Leave room for the wider business
Before listing a product, also consider returns, damaged deliveries, discounts, advertising and the time needed to handle orders. A single profitable order does not cover every business expense. You can add a reasonable per-order allowance in other costs when comparing scenarios, but keep a separate record of how you arrived at it.
Try a normal sale and a less favourable one: a lower selling price, higher postage or an extra fee. If the remaining profit is very small, those changes may decide whether the product is worthwhile.