Payment Costs Belong in Order-Level Margin
A payment fee belongs in the same order-level calculation as product cost, shipping, tax and fulfilment. Revenue collected is not the amount available to keep. For your own order, use the GST portion recorded in your pricing records; business.gov.au (Australian Government) explains that registered businesses collect GST as one-eleventh of the sale price. If product cost, shipping, fulfilment and the payment fee are known, the amount left after these order costs and GST is the amount available for margin.
This view prevents a product from appearing profitable simply because its selling price exceeds its wholesale cost. Assess the order before judging the product: include every cost that changes when that order is sold, then divide the remaining amount by the relevant revenue base. A profit margin calculator can help test the arithmetic; keep GST treatment consistent with your registration and pricing records.
- Order economics: selling price, GST, product cost, shipping, fulfilment and payment fee; use this to decide whether the individual sale leaves enough margin.
- Product economics: aggregate those order results by product; use this to identify items whose margins need a pricing, bundling or range decision.
- Store reporting: use only after order-level costs are assigned; it describes the combined result, not the economics of a particular sale.
The Parts of a Payment Fee
A payment fee usually has several layers, and each affects margin differently. The percentage component scales with order value; the fixed component applies once to each successful transaction. Gateway or platform charges may be attached to processing, checkout or a subscription rather than to the product price. A currency-related cost can arise when the customer pays in one currency and settlement occurs in another, through a conversion spread or separate conversion fee.
Separate these lines before comparing providers. A percentage rate is the measure to watch when average order value changes. A fixed charge matters most when orders are small or split into multiple transactions. Gateway and platform charges belong in the store’s recurring or per-order technology cost. Currency costs should be measured against international sales and settlement currency, not assumed from the headline processing rate. Also check whether quoted fees include GST: business.gov.au says GST is 10% on most goods and services in Australia, and registered businesses collect the GST portion as one-eleventh of the sale price (Source: business.gov.au (Australian Government)).
| Component | How it is charged | Use it to assess |
|---|---|---|
| Percentage fee | A share of the transaction value | Effect of order value and pricing |
| Fixed transaction charge | A set amount per transaction | Impact on low-value or split orders |
| Gateway or platform charge | Per-order, subscription or account charge | Technology cost of the payment setup |
| Currency-related cost | Conversion spread or currency fee | Cost of international sales and settlement |
Worked example with sample numbers
This example is illustrative. It uses sample numbers for a craft beverages store selling in Australia. They are made up to show the method, they are not a benchmark, and your own figures will differ.
Formula: Payment fee = order value x percentage + fixed amount.
| Order value | Fee | Fee as share of order |
|---|---|---|
| A$20.00 | A$1.02 | 5.1% |
| A$39.99 | A$1.58 | 4.0% |
| A$79.99 | A$2.72 | 3.4% |
| A$239.97 | A$7.25 | 3.0% |
Run the same sum with your own numbers in the free calculator, or browse guides for sellers in Australia and more craft beverages guides.
General information only: tax, duty and import rules change and depend on your situation, so check with an accountant or the official source before acting.
Eligible Shopify stores can see these numbers for their own store through the Founding 10,000 offer.
Why Low-Value Orders Suffer Most
A fixed payment charge takes a larger share of a small basket because it does not shrink with the order value. The worked example shows the calculation: fixed-charge share = fixed charge ÷ order value. The same charge therefore consumes more margin on a low-value craft beverage order than on a larger one, even before considering product cost, fulfilment or advertising. The percentage component moves with the basket; the fixed component creates the disproportionate pressure at the bottom end. This is why an order can look profitable on revenue while contributing little after payment costs. Review the result at order level, not only as a store-wide average: a blended payment-fee rate can hide which basket sizes are absorbing the most margin. Use the profit margin calculator to test the fee against your own order values, then compare the resulting contribution across products and collections rather than judging performance from revenue alone.
Refunds, Chargebacks and Currency
A refund reverses the customer charge, but its margin effect depends on the provider’s rules. Verify whether the percentage fee, fixed fee, or both are returned, and whether the merchant still pays for shipping, fulfilment, packaging and any non-recoverable product cost. A $100 order refunded after dispatch can therefore create a loss even when the sale appears to have generated revenue. ORVX reports refund value against revenue and return rate by units, so owners can separate product or fulfilment leakage from payment-cost leakage.
A chargeback is different from a normal refund: the payment may be reversed while a dispute fee is charged, and the fee may or may not be refunded if the dispute is won. Check the dispute fee, evidence deadline, eligible reason codes and whether the provider debits the full transaction amount immediately. Include the product, delivery and payment costs when measuring the loss, not just the disputed fee.
For foreign-currency orders, verify the exchange-rate source, conversion markup, rate timing, settlement currency and any payout conversion fee. Compare margin in the currency collected with margin after conversion to Australian dollars; rounding and rate movement can change the result. ORVX keeps each merchant’s trading currency separate and never mixes currencies in one figure. Use its product and collection profitability reports alongside the provider statement, rather than treating the displayed customer price as settled revenue.
How to Read the Worked Example
Read the worked example from left to right. Assume a $100 order and an illustrative payment fee of 2% plus $0.30. The percentage fee is $2.00 ($100 × 2%), and the fixed fee is $0.30. Total payment cost is therefore $2.30. Fee share is total payment cost divided by order value: $2.30 ÷ $100 = 2.3%. Net proceeds are order value less payment cost: $100 − $2.30 = $97.70.
Net proceeds are not profit. You still subtract product cost, shipping, tax and fulfilment when calculating the order’s margin. Compare basket sizes using the same fee assumptions: the fixed $0.30 makes the fee share rise as the order gets smaller. Use the profit margin calculator to test your own order values and fee structure.
| Order value | Percentage fee | Fixed fee | Total payment cost | Fee share | Net proceeds |
|---|---|---|---|---|---|
| $25.00 | $0.50 | $0.30 | $0.80 | 3.2% | $24.20 |
| $50.00 | $1.00 | $0.30 | $1.30 | 2.6% | $48.70 |
| $100.00 | $2.00 | $0.30 | $2.30 | 2.3% | $97.70 |
How to Compare Providers Fairly
Compare providers with one fixed test, not each provider’s preferred example. Use the same order values from your own store and apply the same payment-method mix: card, digital wallet and any other method your store accepts. This shows both the fixed-cost effect on smaller baskets and the percentage-cost effect on larger ones.
Hold the operating assumptions constant. For each provider, record whether fees apply to the original charge, whether fixed or percentage fees are returned on refunds, and how partial refunds or chargebacks are treated. Use the same refund rate and refund value in every scenario. Treat settlement currency consistently: compare Australian-dollar settlement with Australian-dollar settlement, or show currency-conversion and payout fees separately rather than hiding them in the rate.
Also label every amount as GST-inclusive or GST-exclusive, and include the same fee categories for each provider: transaction, gateway, payout, subscription and currency-conversion charges where relevant. Report both the dollar fee and effective fee rate: a $1.50 fee on a $50 order is 3%, while the same fee on a $200 order is 0.75%. The dollar measure supports order-level margin decisions; the effective rate helps compare providers across basket sizes.
The right payment-fee measure depends on the decision: use fee share to assess order economics, total cost to reconcile cash, and scenario comparisons to test basket sizes, refunds and currency exposure. Apply the same assumptions to every provider so the comparison reflects your craft beverage orders rather than differences in the calculation.
Sources
- Register for goods and services tax (GST) (business.gov.au (Australian Government), checked 26 October 2026).
How this page was made: drafted with AI from a brief, then checked by automated rules for arithmetic, sources and duplication. The sample numbers were calculated, not reported.