Core formulas
The formulas to keep straight
profit = revenue - seller fees - product cost - labor - packaging - shipping - ads - discountsseller fee = revenue x fee rate + fixed feeprofit margin = profit / revenuebreak-even price = cost basis / (1 - fee rate)What is the formula for profit after seller fees?
The formula is revenue minus seller fees, product cost, labor, packaging, shipping, ads, and discounts. Use the fee rate and fixed fee from the platform or payment provider.
This works across marketplaces because the structure is the same: start with revenue, subtract every cost tied to the order, then calculate margin.
The cross-platform example was checked July 3, 2026.
Profit after fees example, checked July 3, 2026
| Line | Amount | Note |
|---|---|---|
| Sale revenue | $50.00 | Buyer-paid sale |
| Seller fee at 6.5% | $3.25 | Example percentage fee |
| Product cost | $20.00 | Materials or wholesale cost |
| Labor | $12.00 | Owner production time |
| Shipping label | $5.00 | Seller-paid shipping |
| Packaging | $2.00 | Order packaging |
| Profit | $7.75 | Revenue minus costs |
Is seller payout the same as profit?
Seller payout is not the same as profit. A payout may already subtract platform fees, but it usually does not subtract product cost, labor, packaging, shipping labels, ads, or income tax.
Use payout as a cash-flow number. Use profit as a business-health number.
For handmade sellers, labor is the line most often missing from profit.
Payout vs profit, checked July 3, 2026
| Metric | What it includes | Use |
|---|---|---|
| Revenue | Buyer-paid amount | Top line |
| Payout | Revenue after some platform deductions | Cash flow |
| Profit | Revenue minus all order costs | Decision making |
| Margin | Profit as share of revenue | Pricing health |
How do fees differ by platform?
Fees differ by platform because some charge percentage fees, some add fixed payment fees, and some charge optional ad or marketplace fees. Use the actual fee stack for the channel.
Do not reuse an Etsy fee on a Stripe invoice or a Square card-present sale. The formula is reusable, but the fee input changes.
When in doubt, separate fee assumptions from product cost so the price can be tested by channel.
- Use Etsy fee inputs for Etsy orders.
- Use Stripe or Square rates for direct payments.
- Include optional ad fees when they apply.
- Include shipping label cost when the seller pays it.
Decision table
Seller-fee profit decision table, checked July 3, 2026
| Signal | Meaning | Action |
|---|---|---|
| Profit positive, margin healthy | Price works | Monitor fees |
| Profit positive, margin thin | Risky | Avoid discounts and ads |
| Profit negative | Price fails | Raise price or reduce cost |
| Payout high, profit low | Costs missing | Add labor and shipping |
| Fee spike | Channel changed | Reprice or change channel |
Worked examples
Examples you can compare against your own numbers
Example: $50 sale after costs
A seller receives a $50 sale and pays a 6.5% fee.
| Revenue | $50.00 | |
|---|---|---|
| Fee | $3.25 | |
| Product cost | $20.00 | |
| Labor | $12.00 | |
| Shipping and packaging | $7.00 | |
| Profit | $7.75 |
Takeaway: A sale can look healthy before the full cost stack is subtracted.
Action checklist
Before you use this number in the real business
- 1Start with sale revenue.
- 2Subtract platform and payment fees.
- 3Subtract product cost.
- 4Subtract labor.
- 5Subtract packaging and shipping.
- 6Subtract ads and discounts.
- 7Calculate profit margin.
Common mistakes
Mistakes that make the answer look better than reality
FAQs
Questions people ask before making the decision
How do I calculate profit after seller fees?
Subtract seller fees, product cost, labor, packaging, shipping, ads, and discounts from revenue.
Is marketplace payout profit?
No. Payout is cash after some deductions. Profit subtracts all order costs.
Should labor be included?
Yes, if the product depends on your time. Without labor, handmade profit is overstated.
Do shipping labels count as cost?
Yes, when the seller pays the label. Shipping charged to the buyer and label cost should be tracked separately.
Can this formula work for Stripe or Square?
Yes. Use the same structure and replace the fee inputs with the correct provider rate.
Sources and notes
Where the assumptions come from
General cost, margin, fee, and pricing workflow used in these examples.
Official Etsy source for marketplace fee rules used in fee-aware examples.
How FeeProofed checks formulas, examples, source notes, and calculator-backed guide content.