How are fees calculated?
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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.
- Tax: If your jurisdiction charges sales tax you will add this to your order.
- 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.
Let's break down how we come up with the Service Fee.
Order Total = ((Cost of Products - Promotion) + Shipping) + Tax
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
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
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
Tax Rate: 9.5%
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