Commission fees work like a hidden tax collector - they silently skim from your revenue before you even see it. Too many food producers price their goods without factoring in these costs, essentially paying shops to sell their products. You need to calculate commission into your base cost structure, not treat it as an afterthought.
What is commission and how does it work?
Commission represents a percentage of your selling price that the shop or market keeps. Think of it as a sales cost - no different from your ingredients or labor expenses.
- Specialty shops typically charge 30-50% commission
- Market stalls usually take 10-25%
- Commission gets calculated on the consumer price
- You receive the consumer price minus commission
💡 Example shop commission:
You supply a cake to a delicatessen:
- Consumer price: €15.00
- Shop commission: 40%
- Commission in euros: €15.00 × 0.40 = €6.00
You receive: €15.00 - €6.00 = €9.00
How do you calculate your minimum selling price?
You must work backwards from what you'll actually receive, not the sticker price. Divide your cost price by your net receipt percentage.
Formula:
Minimum consumer price = Cost price ÷ (100% - Commission%)
💡 Example calculation:
You make quiche with these costs:
- Ingredients: €4.50
- Labor: €2.00
- Other costs: €1.50
- Total cost price: €8.00
- Desired margin: 25% = €2.00
Cost price + margin: €10.00
At 40% commission: €10.00 ÷ 0.60 = €16.67
Minimum consumer price: €16.67
Different commission structures
Every shop and market operates differently. Know exactly what you're paying before you commit:
- Fixed commission: Flat percentage on all sales
- Stand fee + commission: Daily/monthly fee plus percentage
- Minimum turnover: You pay at least X euros, regardless of sales
- Excluding/including VAT: Commission on pre-tax or post-tax price
⚠️ Note:
Always verify whether commission calculates on the price with or without VAT. This significantly impacts your numbers. Food typically carries 9% VAT.
Commission vs. direct sales comparison
Smart producers calculate what commission actually costs versus selling direct. Sometimes you'll earn more selling fewer units yourself.
💡 Example comparison:
Scenario 1 - Via shop:
- 50 products × €9.00 net = €450
- Time: 4 hours (delivery, admin)
Scenario 2 - Direct sales:
- 30 products × €15.00 = €450
- Time: 8 hours (market stand)
Same revenue, but scenario 1 requires half the time
Administration and VAT with commission sales
Commission sales create specific requirements for your bookkeeping and tax returns. Based on real restaurant P&L data, many operators underestimate these administrative costs:
- You typically invoice the shop, not individual customers
- VAT applies to your selling price to the shop
- Maintain all invoices from shops and markets
- Track actual receipts per product
⚠️ Note:
With consignment sales (shop pays after selling), you risk spoilage and theft. Build in an extra 5-10% cost buffer for these losses.
Tools for commission sales tracking
Modern food cost calculators let you compare different sales channels side by side. You can instantly see what each channel nets you and adjust prices accordingly. This prevents commission from silently destroying your profit margins.
How do you factor commission into your selling price?
Calculate your total cost price including desired margin
Add up all costs: ingredients, labor, other costs and your desired profit margin. This is the minimum amount you need to receive per product.
Check the commission percentage and any fixed costs
Ask exactly what you're paying: commission only, or also stand fees, minimum turnover or other costs. Also check whether commission is calculated including or excluding VAT.
Calculate your minimum consumer price
Divide your cost price + margin by (100% - commission%). For example: €10 cost price at 40% commission = €10 ÷ 0.60 = €16.67 consumer price.
✨ Pro tip
Track your commission costs weekly for the first 90 days with any new partner. Many shops quote one rate but add hidden fees that can push your real commission 5-8% higher than expected.
Calculate this yourself?
In the KitchenNmbrs app you can do this in just a few clicks. 7 days free, no credit card.
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Frequently asked questions
Can I use different prices for different sales channels?
Absolutely, and you should. Your shop price can exceed direct sales prices because shops provide service and customer reach. Just ensure your pricing remains logical for consumers.
What if the shop considers my price too high?
You have three choices: reduce your margin, cut costs, or find a different partner. Never sell below cost price - you'll lose money on every single unit.
How often should I adjust prices with changing commissions?
Review quarterly at minimum, but adjust immediately when supplier costs or commissions change. Inflation will steadily erode your margins if you don't stay proactive.
Is 40-50% commission normal for specialty shops?
Yes, specialty shops earn this through expertise, customer reach, and service. Supermarkets often demand 50-60% but offer much higher volume. Always compare your net receipts, not commission percentages.
Do I pay VAT on the full consumer price or just my receipt?
You pay VAT only on your selling price to the shop (your actual receipt). The shop pays VAT on their markup. This prevents double taxation on the same transaction.
How do I handle commission on products that don't sell?
Negotiate clear terms upfront - some shops charge storage fees for slow-moving items. Factor a 15-20% non-sell rate into your pricing for perishable goods to cover this risk.
📚 Sources consulted
- EU Verordening 852/2004 — Levensmiddelenhygiëne (2004) — Official source
- EU Verordening 853/2004 — Hygiënevoorschriften voor levensmiddelen van dierlijke oorsprong (2004) — Official source
- EU Verordening 1169/2011 — Voedselinformatie aan consumenten (2011) — Official source
- NVWA — Hygiënecode voor de horeca (2024) — Official source
- NVWA — Allergenen in voedsel (2024) — Official source
- Codex Alimentarius — International Food Standards (2024) — Official source
- FSA — Safer food, better business (HACCP) (2024) — Official source
- BVL — Lebensmittelhygiene (HACCP) (2024) — Official source
- Warenwetbesluit Bereiding en behandeling van levensmiddelen (2024) — Official source
- WHO — Foodborne diseases estimates (2024) — Official source
Food Standards Agency (FSA) — https://www.food.gov.uk
The HACCP standards shown in this application are for informational purposes only. KitchenNmbrs does not guarantee that displayed values are current or complete. Always consult the FSA or your local authority for the latest regulations.
Written by
Jeffrey Smit
Founder & CEO of KitchenNmbrs
Jeffrey Smit built KitchenNmbrs from 8 years of hands-on experience as kitchen manager at 1NUL8 Group in Rotterdam. His mission: give every restaurant owner control over food cost.
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