Cost Price Commission

By default, the marketplace commission is calculated on the selling price — the price the customer pays. With cost price commission, the commission is instead calculated on the cost price — what the vendor pays for the product. This is useful when the marketplace sets the retail price independently from the vendor's cost.

When to use it

A common use case is when the marketplace sells products at a price higher than what the vendor charges. The marketplace controls the retail price and keeps the margin, while the vendor is paid based on their cost price. For example:

• Flash sale marketplaces that negotiate wholesale prices from brands and sell at their own discounted retail price.
• Curated multi-brand stores that source products from vendors at trade price and apply their own retail markup.
• B2B-to-B2C marketplaces that buy from manufacturers at cost and set consumer-facing prices independently.

In all these cases, the vendor's payout should reflect their cost price, not the marketplace's selling price.

How it works

1. Vendors enter a cost price for each product variant. This is stored in Shopify's inventory cost field.
2. The marketplace sets the selling price independently — this is what the customer sees and pays.
3. When an order is placed, Garnet reads each line item's cost price from Shopify and stores it on the order.
4. The commission is calculated on the cost price instead of the selling price.
5. Discounts are excluded from the commission calculation, since discounts apply to the selling price and not to the cost.

Vendor experience

When cost price commission is enabled:

• In the product list, the price column displays the cost price instead of the selling price.
• In the product edit form, vendors see and edit the cost price.

The selling price remains visible to customers on the storefront and is managed separately by the marketplace.

Example

	Standard commission	Cost price commission
Selling price	$100	$100
Cost price	$60	$60
Commission rate	20%	20%
Commission amount	$20 (20% of $100)	$12 (20% of $60)
Vendor payout	$80	$88

With cost price commission, the commission is lower because it is based on the cost rather than the selling price. The vendor receives a higher payout per order.

Enabling this feature

Cost price commission is enabled per store by the Garnet team. Contact us to request activation for your marketplace.

Related

• Commission and Payment — set up your commission model
• Finance computation — configure what is included in the commission calculation