What is Closing fee?

What it is

Marketplaces charge sellers in several layers. The commission or referral fee is a share of the selling price. The closing fee is a fixed amount per item or per order, whatever the price. Different marketplaces use different names for it, such as fixed fee or collection fee, and some fold it into other charges.

The amount usually depends on:

• the item's price band, with higher bands paying a higher flat fee;
• the fulfilment method: the marketplace's own fulfilment, seller-shipped through the marketplace's courier, or seller's own shipping;
• sometimes the category.

Marketplaces revise their fee schedules often. Check the current rate card in your seller dashboard for each SKU, not a figure from a past month.

GST on the fee

The marketplace charges GST on the closing fee, as on its other fees. It is shown on the marketplace's monthly tax invoice to your GSTIN, and you can claim it as input tax credit if the usual conditions are met. In the settlement report, the fee and its GST are usually deducted together.

Returns and cancellations

Whether a closing fee is refunded when an order is cancelled or returned depends on the marketplace's fee policy and on when the order was cancelled. Some fees are kept on returns, and some are refunded minus an administration charge. Check the policy, and check the settlement report: refunds of fees often appear in a later cycle than the original charge.

Why it matters for pricing

Because it is flat, the closing fee takes a larger share of a low-priced item's revenue. For cheap SKUs it can decide whether the item is profitable at all. Ways to manage it:

• Sell low-value items as multi-packs or bundles, so one closing fee is spread over more revenue.
• Price just below a band boundary only if the lower fee is worth more than the price you give up.
• Include the closing fee in every SKU's CM2, not as a general overhead.