# How are fees calculated?

## Before you begin

There are several parts that make up fees on Frosting and Stripe.

• Cost of Products: This is the base cost that a baker sets when creating an item. It could be increased by Variations or quantity or it could be decreased by a sale price or Promotion.
• Promotion: If you create a promo code and the customer uses it, this will decrease the price of the order or item.
• Shipping: Pickups are free for customers but you might have other shipping costs for Local Delivery or mail shipping.
• Order Total: Product, shipping, and sales taxes.
• Charged Amount: Order total plus Frosting's Service fee. This is the amount passed to Stripe.
• Payout: This is the amount that Stripe will deposit into your account.

## Service Fee

Let's break down how we come up with the Service Fee.

#### Order Total

Order Total = ((Cost of Products - Promotion) + Shipping) + Tax

#### Charged Amount

Customers pay a service fee for using Frosting. This service fee ranges from 9 - 13% of the Total Price.

Charged Amount = Order Total + Service Fee

#### Bakery Commission

We want to help as many small business owners as we can so we are waving the commission till June 2021. Normally bakery's get a 95% commission.

## Stripe transaction fee

Payout = (Charged Amount - 2.9%) - .30

## Example

This looks complicated, so let's take an example.

Let's say your bakery is here in Bentonville and you sell a cake for \$25. The customer wants local delivery which you charge \$5 for. To further complicate things you are giving 10% off for your top customers.

Cost of Products: \$25
Promotion: -10%
Tax Rate: 9.5%
Shipping: \$5
Service Fee: 9%

Cost of Products - Promotion = A
\$25 - 10% [\$2.50] = \$22.50

A + Shipping = B
\$22.50 + \$5 = \$27.50

B + Tax = Order Total
\$27.50 + 9.5% [\$2.61] = \$30.11

Order Total + Service Fee = Charged Amount
\$30.11 + 9% [\$2.71] = \$32.82

Order Total = \$30.11

Charged Amount = \$32.82

##### Now to Stripe and the Payout

\$32.82 - 2.9%

(\$25 - 2.9% [.73])

\$24.27 - .30 = \$23.97

The bakery's payout would be \$23.97