---
title: "Margin computed on a price that includes VAT"
description: "Where shelf prices include VAT or GST, margin worked out on the shelf price counts the tax as money kept. The tax comes almost entirely out of the real margin."
url: https://offersuite.io/articles/margin-on-a-price-that-includes-vat
updated: 2026-10-13
---

# Margin computed on a price that includes VAT

Where shelf prices include VAT or GST, margin worked out on the shelf price counts the tax as money kept. The tax comes almost entirely out of the real margin.

Spreadsheet mistake 7 of 9

## The mistake

In markets where shelf prices include VAT or GST, the number on the product page isn't the store's revenue. Part of it is tax, collected for the government and passed on.

The sheet computes margin from the shelf price: price minus costs, divided by price. The numerator counts the tax as money kept. The denominator is too large as well, which hides part of the damage.

## A worked example

One bottle of supplements at a shelf price of $37.95 that includes 20.0% VAT, shipped free. The store keeps $31.63, and $6.32 is tax.

On the shelf price, the sheet shows a margin of $11.69, or 30.8%. On the revenue the store keeps, the same order makes $5.87, or 18.6%.

The costs are nearly the same in both columns. Only the card fees and the refund reserve move, because they are a percent of revenue. So of the $6.32 of tax, $5.82 comes straight out of the margin.

One bottle at a tax-inclusive price, on the shelf price and on the revenue the store keeps

| Line | The sheet, on the shelf price | On revenue net of VAT |
| --- | --- | --- |
| Revenue counted | $37.95 | $31.63 |
| Costs | −$26.26 | −$25.76 |
| Margin | $11.69 | $5.87 |
| Margin % | 30.8% | 18.6% |
| Margin in a 20.0%-off sale | $4.70 | $0.04 |

The order's figures are computed by the margin engine in Offer Suite's own code, in whole cents. The sheet's are the same order with the mistake applied.

## What it does to the decision

The sheet's margin is 12.2 points too high, and a discount shows what that costs. Take 20.0% off the shelf price, to $30.36, and the sheet still shows $4.70 kept on every order. The store keeps $0.04.

The same error bends every comparison between a market where tax is inside the price and one where it is added at checkout. The tax-inclusive market always looks better than it is, so it gets the budget and the deeper offers.

## What prevents it

Offer Suite books [revenue](https://offersuite.io/glossary/gross-revenue) tax-exclusive. Each order line is read the way Shopify charged it, net of the tax inside a tax-inclusive price, and that was checked on real orders in both kinds of market: tax added at checkout, and tax included in prices.

Costs that are a percent of revenue use the same base, so nothing downstream is computed on tax either.

A spreadsheet is still the right tool for some of this. Where it is, and where it stops: [Offer Suite vs a spreadsheet](https://offersuite.io/compare/spreadsheets).

## Where the numbers come from

The example is not a real brand's offer. The 20.0% VAT rate and the 20.0% sale are made up. Every other input is sourced below, or marked there as an assumption.

|  |  |
| --- | --- |
| Price | $37.95, a bottle of supplements. [Nature's Sunshine homepage, read 23 September 2026](https://www.naturessunshine.com/) |
| Unit cost | $10.47. [Nature's Sunshine, fourth quarter and full year 2025 results, read 23 September 2026](https://ir.naturessunshine.com/news-events/press-releases/detail/267/natures-sunshine-reports-strong-fourth-quarter-and-full) |
| Refund reserve | 5%, Offer Suite's default assumption for consumables. NRF's all-category figure for online sales is 19.3%, but consumables are rarely returned; use your own rate. |
| Pick and pack | $3.20 per order and $0.48 for each extra item. [Fulfill.com, 3PL pricing benchmarks (The Fulfillment Advisor 2025 survey of 600+ warehouses), read 23 September 2026](https://www.fulfill.com/3pl-pricing) |
| Shipping label | USPS Ground Advantage, commercial, Zone 5, by weight rounded up to the pound: 1 lb $9.29 · 2 lb $10.50 · 3 lb $12.12 · 4 lb $13.89 · 5 lb $14.53. Packed weight is an assumption: 0.5 lb per unit. [USPS Notice 123, USPS Ground Advantage Commercial, Zone 5 (effective 4 October 2026), read 13 October 2026](https://pe.usps.com/text/dmm300/Notice123.htm) |
| Card fees | 2.9% + $0.30 per order: Shopify Payments' online rate for a standard card on the Basic plan in the United States. Higher plans pay a lower rate, and premium cards a higher one. [Shopify's pricing page for the United States, online standard card rates, read 12 October 2026](https://www.shopify.com/pricing) [Rates by plan and country](https://offersuite.io/fees/shopify-payments/united-states) |

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