Fix the transaction assumptions before calculating
Record the product, destination, customer price, seller-funded discount, buyer shipping and the applicable VAT treatment. The simple example below has one standard-rated item, no discounts or shipping charged to the buyer, and no returns.
List product, fulfilment, packaging and acquisition costs on a consistent tax basis. If a supplier expense includes recoverable input VAT, determine the correct treatment before comparing it with a cost entered excluding tax. A price calculation cannot determine the seller's VAT obligations from the country selector alone.
Illustrative €120 order: calculate the three bases
Assume a €120 gross sale at 20% VAT. Revenue excluding VAT is €100 and output VAT is €20. With a 9% platform fee on the simple €120 gross base, commission is €10.80. These amounts answer different questions and should remain separate.
Assume €40 product cost, €8 fulfilment and packaging, €12 creator commission and €10 ads. Contribution is €100 − €10.80 − €40 − €8 − €12 − €10 = €19.20. On gross sales the margin is 16%; on VAT-exclusive revenue it is 19.2%.
| Measure | Amount | Meaning |
|---|---|---|
| Gross customer price | €120.00 | Sales including VAT |
| Revenue excluding VAT | €100.00 | Amount before direct costs |
| Output-VAT component | €20.00 | Gross less tax-exclusive revenue |
| Platform commission | €10.80 | 9% of the assumed gross fee base |
| Other entered direct costs | €70.00 | Goods, fulfilment, creator and ads |
| Contribution | €19.20 | Before unallocated overhead |
Spot the wrong-base mistakes
Subtracting 20% of €120 produces €96 instead of €100 of revenue. Calculating the platform fee on €100 produces €9 instead of the assumed €10.80. Doing both introduces errors in opposite directions that can partially hide one another.
Another mistake is to remove VAT from a payout as though the payout were the original taxable sale. Payouts already contain fees, refunds and adjustments. Reconstruct the customer transaction and tax basis before bridging the settled cash to contribution.
- Use division to extract VAT from a gross price.
- Keep platform order fields separate from accounting revenue.
- Label whether the margin denominator includes VAT.
- Do not remove the same VAT component twice.
- Treat payout as a cash bridge, not the original sale price.
Recalculate a discount using the final transaction price
Suppose the €120 price receives an illustrative seller-funded €12 discount and all percentage bases fall with the price. The new gross amount is €108, revenue excluding 20% VAT is €90, platform fee is €9.72 and 10% creator commission is €10.80. Holding €58 other direct costs fixed gives €11.48 contribution.
The €12 gross discount therefore costs €7.72 of contribution in this defined scenario. A platform-funded coupon may have different revenue and fee-base treatment, so inspect the campaign and order fields before applying the same result.
Discounted illustrative contribution = €108 / 1.20 − €108 × 9% − €108 × 10% − €58 = €11.48When does one VAT percentage stop being enough?
A mixed-rate basket or a destination with different treatment needs a line-level tax calculation. The price tool can still help after the taxable amounts and rates have been established, but it should not supply a guessed legal classification.
Decide whether the scenario is for pricing, cash planning or formal reporting. The same order can require all three views, with different timing and presentation, while still reconciling back to the same underlying sale.