"Marketplace commissions: what they really cost"
The commission line on a marketplace invoice is only the start; the real cost shows up in pricing, margins and who the customer thinks they bought from.
Marketplaces are an easy place to start selling. You list a product, someone buys it, the platform handles payment and often the delivery too. For a founder juggling everything else in a small brand, that convenience is real. What is less visible upfront is how much of every sale the marketplace keeps, and how that number quietly shapes every decision you make afterward.
The commission is rarely just the commission
A marketplace commission is usually quoted as a single percentage, but that number sits on top of other charges - payment processing, fulfilment if you use their warehouse, return handling, sometimes advertising just to be seen in search results within their own app. By the time an order is fully accounted for, the actual cut taken from a sale is often meaningfully higher than the headline commission suggests.
This matters because founders price against the commission they remember, not the one they actually pay. A product priced to leave a comfortable margin at a quoted 15% commission can end up barely profitable once processing fees, return costs and the occasional promotional deduction are added in.
It changes how you price everything
Once a chunk of every sale goes to the platform, the pricing pressure moves in one direction: up. But marketplaces are also where customers compare your product against a dozen similar ones side by side, often sorted by price. So you are pushed to raise prices to protect your margin, in a place that punishes you for raising prices. This tension is worth thinking through on its own - see price anchoring for small Indian brands.
On your own store, the same product can be priced to reflect your actual costs and a fair margin, without a slice being carved out before you even see the money.
You are renting shelf space, not owning a shop
A commission is really rent. You are paying for a spot on someone else's shelf, in someone else's shop, under someone else's rules on returns, ranking, ads and even how your product photos are displayed. Rent can be reasonable when you are starting out and need footfall. It becomes expensive precisely when your brand starts to have its own pull, because at that point you are paying a percentage of demand that your own name and effort created, not the platform's.
Where the money actually goes
Every rupee of commission is a rupee that cannot go toward better packaging, better raw material, or simply staying afloat during a slow month. For a small brand, especially one making things by hand or in small batches, margins are already thin. A commission that looks small in isolation can be the difference between a product that is worth making and one that quietly isn't.
It helps to sit down once and work out, honestly, what a marketplace sale actually nets you after every deduction, and compare it to what the same sale would net through your own store with UPI or Cash on Delivery. The comparison is often more stark than founders expect.
What this does not mean
This is not an argument to leave marketplaces altogether. They bring in customers who would never have found you otherwise, and for many brands that discovery is worth the cost, at least for a while. The point is to be clear-eyed about the commission as a cost of customer acquisition, not a cost of doing business, and to build a parallel channel - your own store - where the margin on a repeat customer, someone who already knows your brand, is not eaten by a platform they found you on once.
A practical next step
Pick your five best-selling products and work out their actual take-home after every marketplace deduction over the last month. Then imagine the same five products sold through your own store to a customer who already follows you on Instagram, paying with UPI or on delivery. The difference in margin on that second sale is money you are currently leaving on the table for every repeat customer. Setting up a simple store alongside your marketplace listings, as we cover in own your domain, own your brand, is one way to start capturing it. Early access can help if you want a hand.