Shipping collected is revenue; shipping paid is a cost
A buyer paying $5 for delivery does not automatically reimburse a $5 carrier bill. If the selling channel charges a percentage on shipping receipts, part of that $5 is deducted before you pay the carrier. Packaging and handling can add further costs even when the postage amount looks fully covered.
Etsy’s transaction-fee policy includes buyer shipping and gift wrapping in its transaction-fee base. Other channels can use different definitions, including tax treatment. Read the rule for the particular fee rather than assuming that every charge uses the item price alone.
Follow one order through the calculation
Imagine an item priced at $40 with $5 shipping collected. Product cost is $15, actual shipping is $6, and the illustrative combined fee is 10% of receipts plus $0.50. Revenue is $45. Fees are $5.00, leaving $19.00 after product cost and shipping. These numbers are a teaching example, not an Etsy fee quotation.
If the percentage fee were mistakenly applied only to the $40 item, estimated fees would be $4.50 and profit would appear $0.50 higher. Across 200 otherwise identical orders, that small error would overstate profit by $100. The mistake comes from the fee base, not from the percentage itself.
Work out the incremental shipping charge
If the order already carries its fixed transaction fee, and only a 10% percentage fee applies to additional shipping revenue, recovering a $6 carrier cost requires $6 ÷ 0.90, or about $6.67. Charging exactly $6 leaves $5.40 after that incremental percentage fee.
This shortcut assumes that adding shipping does not trigger a new fixed charge, a fee tier or another rule. Include packaging and any handling allocation in the cost you want to recover. If the carrier quote is uncertain, calculate more than one scenario instead of hiding the uncertainty inside an unexplained shipping charge.
Compare free shipping fairly
For the same $45 total receipt, an item at $45 with free shipping has the same arithmetic as a $40 item plus $5 shipping when all modeled fees depend only on total receipts. Buyer behavior, advertising presentation and platform rules may differ; the calculator does not predict those effects.
In FeeMargin, put buyer-paid shipping in Shipping charged and your actual delivery expense in Shipping, fulfillment & allocated overhead. Do not subtract shipping from the item price or enter the same carrier bill twice. Compare the final profit under both presentations before deciding which offer to test.
Sources
Official sources checked October 29, 2026. Confirm current terms for your account before using a published rate.