How the calculation works
For a VAT/GST-style tax-inclusive price, subtracting the tax percentage directly is incorrect. Tax-exclusive revenue is found by dividing the inclusive amount by 1 plus the tax rate.
Tax-exclusive revenue = tax-inclusive sales ÷ (1 + tax rate)
Output tax = tax-inclusive sales − tax-exclusive revenue
Operating profit = tax-exclusive revenue − net product cost − net commission − net shipping − other costs
Profit margin = operating profit ÷ tax-exclusive sales revenue × 100
Because marketplaces may apply commission to either the tax-inclusive sale amount or tax-exclusive revenue, the calculator provides both commission-base options.
Frequently Asked Questions
How is tax removed from a tax-inclusive selling price?
For a VAT/GST-style inclusive rate, tax-exclusive revenue is the inclusive amount divided by 1 plus the tax rate. The tax amount is the difference between the inclusive and exclusive values.
Is tax on marketplace commission treated as an operating expense?
The calculator assumes recoverable input tax when a VAT/GST-style system applies. Under that assumption, the tax portion is tracked as input tax and the tax-exclusive commission is treated as operating expense.
How is the break-even selling price calculated?
Tax-exclusive fixed costs and the selected commission rate are combined algebraically. The calculator solves for the tax-inclusive unit selling price at which modeled operating profit equals zero.
Are marketplace commission rates filled in automatically?
No. Commission rates vary by platform, category, campaign and contract. You enter the current rate that applies to your account or product.
Does this result include income or corporate tax?
No. It is an operating-profit estimate based on the entered sale and direct costs. Income/corporate tax, returns, advertising, storage, payment processing and other unentered costs must be assessed separately.