The largest marketplace in the country itself gives the following example. The average order value is one thousand hryvnias, the commission is ten percent, the margin is thirty percent, and the net profit is approximately two hundred hryvnias. The figure looks reasonable, and it is precisely on such calculations that the decision to start is based. The problem is that this calculation does not take into account at least five expense items, and after adding them, the result changes radically.

Let’s calculate honestly.

Full calculation of one sale

Let’s take the same initial data, that is, an order value of one thousand hryvnias and a margin of thirty percent, which means the cost of the product is seven hundred hryvnias. The marketplace commission is one hundred hryvnias. Payment processing, that is, the fee for processing the payment, is approximately from one to four percent, that is, about seventeen hryvnias. Packaging and consumables add approximately fifteen hryvnias.

Advertising inside the platform is necessary because without it the product is simply not visible among thousands of similar ones. Realistic expenses amount to from five to ten percent of turnover, that is, approximately seventy hryvnias. And the main thing that everyone leaves out is taxes. Under the simplified taxation system, the single tax at a rate of five percent is charged on turnover, not profit, that is, fifty hryvnias from one thousand. The military levy adds another ten. Let’s add it up. One thousand minus seven hundred for the cost of the product, minus one hundred commission, minus seventeen for payment processing, minus fifteen for packaging, minus seventy for advertising, minus sixty for taxes. Approximately thirty-eight hryvnias remain. That is, instead of the two hundred hryvnias stated in the example, the real result is less than forty.

The most important thing to understand about taxes

Here is the mechanism that breaks the economics of most product-based projects. Under the simplified taxation system, the tax is charged on the entire turnover regardless of your margin. This means that with a margin of thirty percent, a tax of six percent of turnover consumes approximately one-fifth of your gross margin. And with a margin of fifteen percent, which is a common situation in competitive categories, the same tax already consumes about forty percent of the margin. The practical conclusion is that low-margin products perform poorly under the simplified taxation system by definition, and no increase in turnover fixes this, because the tax grows along with it. That is why in product-based business, not the number of sales but the markup percentage is critically important.

Returns that change everything

The second expense item that is missing from optimistic calculations. Returns are normal in e-commerce, and in some categories, especially clothing and footwear, they account for a significant share of orders. It is important to understand that the seller pays for sending and returning the product, and this is directly stated in the marketplaces’ terms of operation. Let’s calculate. If one out of ten orders is returned, you pay for delivery in both directions, that is, approximately one hundred and twenty hryvnias, while receiving nothing in return. Dividing this amount by ten orders gives us an additional twelve hryvnias of expenses per order. Of our thirty-eight hryvnias, approximately twenty-six remain. In categories with a high return rate, the economics becomes negative.

Entry conditions on the main platforms

Now for the practical part about how much it costs to start. On Prom, registration is simple, that is, it is enough to provide a phone number, email address, and store name. The commission depends on the category and selected mode and amounts to approximately four to twenty-four percent. There are modes with an increased commission for a larger number of impressions, that is, plus twenty-five or plus fifty percent, and a mode with a reduced commission for the best sellers. An annual subscription can exceed eleven thousand hryvnias. On Rozetka, the conditions are stricter. You need to have the status of an individual entrepreneur in the second or third group or be a legal entity, store activation costs one thousand one hundred hryvnias, the subscription fee is approximately one hundred and twenty hryvnias per month, and the commission depends on the category and, according to different sources, ranges approximately from three to twenty-seven percent. An important detail is that you will only find out the exact commission amount after submitting an application, which means it is impossible to calculate the economics before contacting them. It is also worth considering that Rozetka does not work with dropshippers and requires a warehouse in Ukraine. Another practical detail. The commission is charged from your balance in the personal account, and there is a limited amount of time to replenish a negative balance, which means working capital is constantly needed.

About dropshipping

This direction is marketed as a business without investment, and formally this is true because you do not purchase the goods. There are several problems here, and they are systemic. The margin is lower because you buy the product individually at a price higher than wholesale, and even the marketplaces’ own materials acknowledge this. You do not control the quality of the product, but you are responsible for it to the buyer. You do not control the shipping times, but you receive negative reviews for delays. You do not control availability, meaning the supplier may sell the last unit to someone else while your order is being processed. The largest marketplace in the country does not work with dropshippers at all, which narrows the sales channels. And most importantly. Since your markup in this model is the lowest, the turnover tax consumes the largest share of the margin, meaning the very model that is sold to beginners as the simplest one has the worst economics.

What else is missing from other calculations

The value of your time. Processing orders, communicating with buyers, preparing shipping documents, and handling returns take hours every day, and if you calculate this as work, the hourly rate often turns out to be lower than usual. Fiscalization. Sales require fiscal receipts, and this is a separate tool with its own cost and setup. Working capital. The product needs to be purchased before it is sold, and money from the marketplace arrives with a delay. Storage. Even a small batch requires space. Dependence on the platform’s rules. Commissions, visibility conditions, and rules change, and you cannot influence this, while rates have increased over the past few years.

When it still works

The material looks pessimistic, so it is worth talking about the other side as well. A marketplace provides traffic without investments in marketing, and this is its main value. For testing a niche, it is the cheapest way to understand whether people buy your product at all. A high markup solves most of the problems described above. A product with a sixty percent margin can withstand both the commission and advertising and the turnover tax.

In-house production or a unique product provides an advantage because you are not competing on price with a dozen sellers offering the same thing. A large average order value improves the economics because some expenses are fixed per order. A low return rate in the category also significantly changes the picture. As an additional sales channel for a business that already has its own website, a marketplace works well.

How to calculate your own case

Take the price at which you plan to sell. Subtract the cost of the product. Subtract the marketplace commission for your category. Subtract payment processing. Subtract packaging and consumables. Subtract the planned advertising expenses. Subtract six percent of the full sale price for taxes. Subtract the expected losses from returns, that is, the cost of delivery in both directions divided by the number of orders between returns. Multiply what remains by the number of orders you will realistically be able to process each day, and subtract fixed expenses, that is, the subscription fee, subscription, and fixed social contribution. If the result looks questionable already on paper, in practice it will be worse.

Typical mistakes

Calculating the margin from the cost of the product rather than from the selling price. Planning without advertising expenses because without advertising the product is not seen. Not taking the turnover tax into account. Entering competitive categories with a low markup. Starting with a large purchase before testing demand. Not taking returns into account.

Working without formal registration, because marketplaces are transparent to the tax authorities by definition.


Sources

Official Prom and Rozetka materials regarding tariffs and operating conditions, publications by The Page, Horoshop, Checkbox, Artbrain