How to Calculate Your Real Profit on Daraz: Commission, VAT, Shipping and Returns

Most new sellers work out their profit like this: selling price minus product cost. If you buy a product for PKR 600 and sell it for PKR 1,500, it looks like PKR 900 of profit. But on a marketplace like Daraz, several other amounts are taken out before any money reaches you, and some of them only appear later, when an order is returned. This guide shows you how to calculate your real profit per order, with a full example in rupees, so you know your true margin before you set a price or join a sale.

What gets taken out of your selling price

• Product cost: what you paid for the item, including what it cost to bring it to your door. Commission: a percentage of the selling price. The percentage depends on the product category.
• Payment fee: a percentage some sellers pay for payment handling. Check whether it applies to your account.
• VAT on fees: tax that may be charged on the commission and fees. Check your Seller Center to see how it is applied to you.
• Packaging and shipping: boxes, tape, labels, and any delivery cost you pay yourself.
• Returns and failed deliveries: the cost of orders that come back, which you only see after the sale.
• Vouchers, campaigns and ads: any discount or promotion you fund, and any money you spend on advertising.

The Daraz profit formula

The return allowance deserves a word of explanation. You do not know which individual orders will come back, but you can estimate how many will. Spreading that expected loss across every order gives you a more honest profit per order than ignoring returns until they happen.

A worked example in PKR

Take a product that sells for PKR 1,500 and costs PKR 600. Packaging and shipping cost PKR 60 per order. For this example we use a commission of 10%, a payment fee of 1.5%, VAT of 16% on those fees, and an expected return rate of 5%. These are example numbers only.

So the "obvious" profit of PKR 900 shrinks to PKR 564.90 once fees, VAT and an allowance for returns are counted. That is a 37.7% margin, not the 60% you would get by subtracting only the product cost.

What if your numbers change?

Small changes in rates or in your return rate move your profit more than most sellers expect. Here is the same product under four situations.

Notice the last row. A 10% price cut lowered profit per order from PKR 564.90 to PKR 442.41, a drop of about 22%, because your product cost and packaging stay the same. Before you join a sale, read How much discount can you afford to find the lowest price that still protects your margin.

Why returns matter so much

Many orders in Pakistan are paid for on delivery, and a delivery that fails or is refused can leave you paying for shipping and handling with no sale at all. A returned item may also come back damaged and impossible to sell at full price. That is why a return allowance is part of the formula and not an afterthought.

Use your recent history as a starting point. If you shipped 200 orders last month and 14 came back, your return rate is 7%. Enter that as your allowance, and raise it if each return also costs you extra shipping or damaged stock. The Return Rate Calculator works this out and estimates what your returns cost.

Find your break-even price and your target price

Your break-even price is the lowest price at which you earn exactly zero profit per order. It is also your absolute minimum for any campaign. The trick is to combine all the percentages into one number. In our example, the commission and payment fee with VAT take (10% + 1.5%) x 1.16 = 13.34% of the price, and the return allowance takes 5%, so 18.34% of every sale goes to fees and returns. That leaves 81.66% of the price to cover your product and packaging costs.

If you do not want to work this out by hand, add your commission, payment fee with VAT and return allowance into one percentage, enter it in the (/Product-Pricing-Calculator) with your fixed costs, and it gives you the price for your target margin.

Five mistakes Daraz sellers make

1. Counting only the product cost and ignoring commission, payment fees, and VAT on fees.
2. Using one commission rate for every product, when the rate can depend on the category.
3. Having no return allowance, so a month with many returns wipes out the profit of the month.
4. Forgetting vouchers, campaign discounts, and ad spend that you fund yourself.
5. 1. Setting a price once and never checking it again after a cost, rate, or discount changes. You're using the free version of ChatGPT. Upgrade for advanced models, better memory, and higher-quality image creation. Try Plus free

A simple routine you can repeat

1. Open your Seller Center and note the commission and fee rates for each of your categories.
2. Work out your return rate for the last month or two.
3. Enter your price, product cost, packaging, and shipping into the (/Daraz-Profit-Calculator), which works in PKR.
4. Check the profit margin. If it is below the minimum you want, raise the price or lower your costs.
5. Before any campaign, confirm the campaign price is above your break-even price.
6. Recheck your numbers every month, or whenever a rate or cost changes.

Try it with your own numbers

Start with the (/Daraz-Profit-Calculator) for your profit per order. Use the (/Profit-Margin-Calculator) to see how shipping and fees change your margin, and the (/Break-even-Calculator) to see how many sales you need to cover your set-up costs. To understand the difference between markup and margin before you set a price, read Markup vs profit margin.

Common questions