This calculator shows exactly how VAT affects your pricing by breaking down the VAT amount and final customer price from a net value. It is essential for ecommerce sellers, business owners, and anyone managing pricing or margins.
VAT directly impacts profitability because it increases the price customers pay while reducing the portion of revenue you keep. Understanding this relationship is critical when setting prices, running promotions, or analysing margins.
Use this tool to quickly see how VAT changes your pricing structure and ensure your business remains both competitive and profitable.
The calculator shows how much VAT is added to your price and the final amount your customer pays. It also highlights the difference between revenue and tax.
For VAT-registered businesses, the VAT portion does not belong to you — it must be paid to HMRC. This means your true revenue is always the net value, not the total price.
VAT = Net × (rate ÷ 100)
Total price = Net + VAT
The VAT is calculated from the net value and added on top to produce the final selling price.
VAT has a direct impact on your pricing strategy and profit margins. If you price products without accounting for VAT correctly, you risk underpricing and reducing profitability.
For example, a £100 product becomes £120 at 20% VAT, but your actual revenue remains £100. If you then deduct fees, shipping and advertising costs, your remaining margin can shrink quickly.
Understanding VAT impact is especially important for ecommerce businesses, where pricing must balance competitiveness with profitability. This calculator helps you make informed pricing decisions before going live.
Example 1:
Net £100 → VAT £20 → Total £120
Example 2:
Net £80 → VAT £4 → Total £84
Example 3:
Selling price £100 including VAT → actual revenue ≈ £83.33
Multiply the net price by the VAT rate.
The standard rate is 20%, with reduced rates of 5% and 0%.
No, VAT is collected on behalf of HMRC and does not count as revenue.