The effective fee rate shows the true cost of fees as a percentage of your total revenue.
While many payment providers advertise low percentage rates, the real cost often includes fixed fees and additional charges that increase the overall percentage you pay.
This calculator converts total fees into a clear percentage, allowing you to understand the real impact on your business.
It is especially useful for ecommerce, marketplaces, subscription businesses, and anyone using payment processors like PayPal, Stripe or Klarna.
The effective fee rate shows what percentage of your revenue is lost to fees.
This is often higher than the advertised rate due to fixed charges and additional costs.
Understanding this value helps you optimise pricing and avoid underestimating costs.
Formula:
Effective fee rate = Fees ÷ Revenue × 100
This converts absolute fee amounts into a percentage, making it easier to compare providers and pricing strategies.
This metric is critical when analysing profitability and scaling your business.
Example 1:
Revenue £1,000, fees £65 → Effective fee = 6.5%
Example 2:
Revenue £250, fees £12.50 → Effective fee = 5%
Example 3 (Small transactions):
Fixed fees increase percentage cost significantly
The true percentage cost of fees relative to revenue.
Because fixed fees increase the total percentage.
To optimise pricing and maximise profitability.