Commission is the “sales tax” that the marketplace takes from each unit sold. The insidious nature of the commission is that it is often perceived as “just a couple of percent,” but in reality, it can eat up half of the profit—especially if the margin is thin, there are discounts, advertising, and returns.
In this article, we will cover:
- how commission affects profit and margin on marketplaces;
- which scenarios most often kill unit economics;
- how to quickly recalculate profit when commission changes;
- what to do if the commission has “eaten” into profit.
Marketplace Commission: What It Is and Why It Matters
Commission is the percentage (or rate) that the marketplace retains from sales. It usually depends on:
- product category,
- type of delivery/warehouse,
- platform conditions/programs,
- sometimes—product attributes.
Why commission is critical:
- it is taken “on top” of every sale;
- it increases with revenue;
- it is almost independent of your cost price—therefore, its impact is especially strong on low-margin SKUs.
Basic Formula: Where Commission Fits into Unit Economics
Management profit per unit (simplified):
Profit/unit = Actual Price − Commission − Logistics/Warehousing − Cost Price − Packaging/Labeling − Advertising ($/unit) − Losses from Returns (on average)
Commission ranks among the first deductions because it directly reduces the “contribution” from sales.
Why “+2% Commission” Can Kill Profit (Thin Margin Effect)
The most common mistake: thinking linearly. In reality, the commission affects the remaining amount, which may already be small.
Example
Let’s assume:
- Selling price (actual): $1,000
- Cost price + packaging: $650
- Logistics: $90
- Advertising: $80
Scenario A: 15% commission
- Commission = $150 Profit = 1,000 − 150 − 90 − 650 − 80 = $30
Scenario B: 17% commission
- Commission = $170 Profit = 1,000 − 170 − 90 − 650 − 80 = $10
The commission increased by only 2% (by $20), but profit fell threefold. This is the thin margin effect: the smaller the buffer, the harder the hit.
6 Scenarios of How Commission Affects Profit
Scenario 1: Commission Increased, Price Remained the Same
The most direct hit to profit.
What happens:
- profit/unit decreases by the amount of commission increase (in dollars)
- if the buffer is small—you go to zero or negative
What to do:
- recalculate margin under current conditions
- raise the price (if elasticity allows)
- optimize advertising (DRR) and logistics
- shift focus to more profitable SKUs
Scenario 2: Commission Increased, and You’re Also Offering Discounts
Commission is usually calculated from the actual selling price. If the price decreases and the commission (in percentage) increases—it's a double hit.
Example
- Price decreased from $1,$000 to900
- Commission increased from 15% to 17% Commission in dollars: $150 → $153 (barely drops), while profit falls sharply because revenue is lower.
What to do:
- calculate margin based on actual price after discounts
- limit promotions on low-margin SKUs
- target promotions selectively (on products with margin buffer)
Scenario 3: Commission “Ate” Profit Only on Part of the Assortment
This usually happens when you look at the “average margin of the store.”
What happens:
- one SKU becomes unprofitable
- it continues to sell and “pulls down” the overall result
What to do:
- calculate profit/unit by SKU
- rank by “total profit” (profit/unit × sales)
- identify “profit killers” and make a decision (price/advertising/removal)
→ see also: How to Find Unprofitable SKUs
Scenario 4: Commission is High, but the Product Can Still Be Profitable
Yes, this can happen if:
- high margin on cost price,
- strong conversion rate,
- low advertising costs,
- few returns.
What to do:
- don’t panic about the percentage
- look at profit/unit and total profit
- protect such SKUs (Hero) with availability and positioning
Scenario 5: Commission Increased Due to Category/Attributes (Common Hidden Reason)
Sometimes a change in category, attributes, type of product, packaging, or program leads to a change in commission.
Signs:
- profit suddenly dropped without changes in advertising/price
- retention rates increased in reports
What to do:
- check the correctness of category/attributes
- compare conditions with similar products
- document the “point of change” and reason (for regular monitoring)
Scenario 6: Commission is the Same, but Advertising Share Increased (DRR)
Commission itself may be stable, but profit drops because the overall “contribution” is consumed by advertising. On a thin margin, this looks like “the platform became more expensive,” although the culprit is the combination of “commission + DRR.”
What to do:
- calculate margin after advertising
- set target DRR by SKU
- clean traffic and lower bids stepwise
→ useful: DRR and Advertising: How to Calculate and Manage
How to Quickly Recalculate Profit When Commission Changes (Template)
Create a row for each SKU:
- Actual Price
- Commission %
- Commission $ = Actual Price × Commission %
- Other expenses (logistics, cost price, packaging, advertising/unit, returns/unit)
- Profit/unit
Then any scenario “commission became 17% instead of 15%” is just a change of one number.
Quick Hack
Calculate the “buffer”:
Buffer ($/unit) = Actual Price − (all expenses except commission)
Then the maximum commission you can withstand:
Max Commission (%) = Buffer / Actual Price × 100%
If the actual commission is higher—SKU is unprofitable under current conditions.
What to Do If Commission Makes SKU Unprofitable
- Raise the price (if demand allows)
- Lower DRR (clean advertising, semantics, bids)
- Optimize logistics/packaging (if possible)
- Remove SKU from promotions or change discount mechanics
- Transition SKU to “organic” (minimum advertising)
- Remove SKU or replace it with a more profitable alternative
The key: the decision depends on where you can regain the “margin buffer.”
Common Mistakes That Cause Commission to “Suddenly” Kill Profit
- calculating margin from “shelf price” instead of actual selling price
- not updating commission conditions when changing categories/programs
- looking at average figures for the store instead of by SKU
- ignoring the combination of “commission + DRR + discounts”
- not calculating profit/unit and total profit simultaneously
Related Materials
- Guide: Profit and Margin (Unit Economics)
- About Margin: How to Calculate Margin: Common Mistakes
- About Unprofitable Products: How to Find Unprofitable SKUs
- About Advertising: DRR and Advertising: How to Calculate and Manage