What is Take Rate?
The Take Rate refers to the fees collected by a third-party service platform, such as an eCommerce marketplace or payment services provider.
How to Calculate Take Rate (Step-by-Step)
The take rate is the percentage of a seller’s sales that a third party collects as part of an agreed-upon arrangement.
Namely, there are three different marketplace types where the “take rate” term is common:
- eCommerce Product Marketplace → e.g. Amazon, Shopify, Etsy, eBay
- Fintech Payment Provider → e.g. PayPal, Stripe, Block (Cash App), Zelle
- Service Marketplace Platform → e.g. Airbnb, Uber (and UberEats), Lyft, Grubhub, DoorDash
For marketplaces and payment providers, their primary — or one of their main sources — of revenue is from the fees earned on the sales and transactions processed on their platforms.
Conceptually, the take rate functions like a commission fee charged by a product affiliate, but the difference is that these business models are much more scalable, and the value-add is the platform/service itself.
Take Rate Fee Structure: Fixed Take Rate Fee vs. Variable Service Fee
The business models of marketplace companies tend to consist of two core components:
- Fixed Take Rate Fee
- Variable Service Fee
While the former is relatively straightforward, the variable service fee is contingent on numerous factors such as the product category, weight, and average order value (AOV).
The more active the marketplace is in facilitating the transaction between the consumer and the producer, the higher the take rate (and vice versa).
For product-oriented marketplaces, the take rates can range between 5% to 25% (but most pay ~15% on average), whereas service-oriented marketplaces are usually priced marginally higher.
The process of calculating the take rate is straightforward, as the amount charged (i.e. the revenue inflow to the marketplace) equals the product of the tax rate and the applicable metric, e.g., gross merchandise volume (GMV) or total payment volume (TPV).
