# What is Marketplace Commission?

What is Marketplace Commission? The percentage of a sale a marketplace charges on every successful transaction. Amazon: 8-15%. Etsy: 6.5%. eBay: 12.9%.

## How it works in practice

Marketplace commission is the 'rent' you pay to enter the digital mall. Sometimes it's worth it — massive traffic with no CAC. Sometimes it's not — margin after commission turns negative. Always calculate P&L by channel.

## Related metrics

- Gross Margin — commission directly lowers margin
- COGS — commission factors into true COGS
- Channel Mix — a high-commission channel means low margin
- FBA Fees — additional fees beyond the referral fee

## Common misconception

'All sales are equal.' A $100 sale on Amazon isn't equal to a $100 sale on your own store. Amazon: 15% referral + 12% FBA = 27% of the sale. Your own store: just 3% payment processing. A per-channel P&L is essential.

## How to fix it

Low margin due to fees? (1) Calculate a break-even price per channel's commission structure, (2) raise the marketplace price to offset commission (customers don't always know your store's price), (3) consider DTC as your primary channel and marketplaces as supplementary.

## Real-world example

A cosmetics manufacturer sold through a major retailer at a 40% commission. Margin after commission: 8%. The same product DTC: 52% margin. They positioned the retailer channel as brand awareness and DTC as the profit engine.

## Where to start

Calculate margin net of fees for every marketplace each quarter. If margin falls below 15% after all fees, consider raising prices, negotiating a lower commission, or exiting the channel.

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Category: Marketplaces · From the [Jimmy OS KPI Glossary](https://jimmy-os.com/glossary/kpi.md) · Source page: https://jimmy-os.com/glossary/kpi/marketplace-commission