Calculate discount break-even with payment fees

A worked bundle example showing percentage fees, per-order shipping, contribution profit, margin and the correct price floor.

Start with contribution profit

Consider two products costing 8.00 each, sold together for 50.00. A 3% payment fee costs 1.50, a fixed payment fee costs 0.30 and seller-paid shipping costs 5.00. Contribution profit is 50.00 − 16.00 − 1.50 − 0.30 − 5.00 = 27.20.

Contribution margin is 27.20 ÷ 50.00 = 54.4%. It excludes fixed overhead, taxes, returns, acquisition spend and costs you have not entered. This is not a complete net-profit figure.

Why the price floor needs division

Adding product cost, shipping and the fixed fee gives 21.30. Selling at that price would still incur a percentage fee. The break-even price must solve for that fee: (16.00 + 5.00 + 0.30) / (1 − 0.03), approximately 21.96.

A target contribution margin

For a target margin of 40% under the same assumptions, required price is 21.30 / (1 − 0.03 − 0.40), approximately 37.37. If the fee rate and target margin consume the full price, there is no valid positive denominator.

Charge each cost at the right level

Component costs multiply by their own quantities. A per-order fixed fee and shipping cost apply once to the bundle, not once to each product. This version assumes percentage fees apply to merchandise revenue; customer-paid shipping and tax are outside the model. Check the fee basis in your own contract.