Add the cost of acquiring the customer to your own site's fees before comparing. A marketplace commission includes the traffic; your processing rate does not.

The comparison everybody makes

A marketplace takes some percentage of each sale. Your own checkout costs a much smaller percentage plus a small fixed fee.

Stated that way, direct selling is obviously cheaper and the marketplace is obviously expensive.

The comparison is wrong because the two figures cover different things. One of them includes finding the customer and the other does not.

Correcting for that changes the answer often enough to be worth the arithmetic.

What each figure actually includes

The last line is the entire difference, and it is the one left out because it is harder to measure than a percentage on an invoice.

Working out your acquisition cost

Cruder than the term suggests, and available to any business willing to spend twenty minutes.

Take everything you spent over a period on bringing people to your site: advertising, any agency or freelancer time, and a reasonable value on the hours you personally spent on content, listings, and social posts.

Divide by the number of direct orders in that period.

That figure, as a proportion of your average order value, is your real cost of selling direct, and it goes on top of the processing fee.

For many small businesses running any paid advertising, the result is uncomfortably close to a marketplace commission, and occasionally higher.

The hours are a real cost

The most common omission, and it makes direct selling look free.

Writing product descriptions, taking photographs, posting on social media, maintaining the site, answering pre-sale questions, and dealing with the platform are all work.

If you would pay somebody to do them, they cost money whether or not you do them yourself.

Put an hourly figure on your own time and count the hours honestly for one month. It does not need to be precise, and even a rough number changes the conclusion for most small sellers.

The point is not to conclude that direct selling is a bad idea. It is to stop pretending one channel has no costs because they do not appear on a statement.

A worked example

A seller with an average order around sixty dollars compared their channels properly for the first time.

The marketplace commission came to roughly nine dollars per order, and that was the whole cost of being found.

Direct orders cost about two dollars in processing. Their advertising spend, divided across direct orders, added about seven. Their own time on content and listings, valued modestly, added about four more.

Direct was therefore around thirteen dollars per order against nine, and had looked like two against nine.

They did not stop selling direct, because direct customers repeated and marketplace customers largely did not, which changes the calculation entirely over a year.

What changed was that they stopped treating the marketplace as the expensive channel and stopped resenting the fee.

Repeat purchase changes everything

The factor that usually decides the answer, and it is invisible in a per-order comparison.

A direct customer whose address you hold, who receives your emails and buys three more times, cost you thirteen dollars once and two dollars on each subsequent order.

A marketplace customer who buys again through the marketplace costs the commission every time, because you are paying for an introduction to somebody you have already met.

So the comparison is not per order, it is over the relationship, and it turns on whether your products are ones people buy repeatedly.

For consumables and anything with a replacement cycle, direct wins clearly over time. For genuine one-off purchases, the marketplace fee is closer to fair value.

Margin, not revenue

A distinction that catches people at the point of deciding whether a channel is worth running.

A commission is taken from the sale price, so its effect on your profit depends entirely on your margin.

On a fifty percent margin, a fifteen percent commission takes roughly a third of your profit. On a twenty percent margin, the same commission takes most of it.

Low-margin goods and marketplaces are a poor combination, and this is where sellers find themselves busy and not making money.

Work the fee against your margin rather than against your price, and check it per product rather than on an average, since the average conceals the lines that are losing.

The fees you forgot

Both sides have costs that do not appear in the headline rate.

On a marketplace: listing fees, monthly subscriptions, promoted placement, payment processing charged separately in some cases, and refund handling where the commission is not fully returned.

On your own site: the platform subscription, apps and add-ons that accumulate, transaction fees some platforms charge on top of processing, chargebacks, and the cost of a developer when something breaks.

Pull three months of statements from both and total everything rather than quoting the advertised rate, because the advertised rate is rarely what you paid.

The counter-case

This arithmetic can be taken too far in the other direction.

Some costs on your own site are investments rather than per-order expenses. A well-written product page keeps working for years, and charging its full cost against this month's orders understates its value considerably.

Your own site also has worth that does not appear in any per-order figure: it is an asset you own, it is not subject to somebody else's rule changes, and it is what remains if a marketplace account is suspended.

The arithmetic is for deciding how to allocate effort between channels, not for concluding that whichever number is smaller this quarter should be the only one you run.

Doing the comparison

  1. Total three months of fees from both channels, everything included.
  2. Add your acquisition spend to the direct side.
  3. Value your own hours and add those too.
  4. Divide by orders in each channel.
  5. Work the fee against margin, per product.
  6. Compare over the relationship, not per order.
  7. Decide effort allocation, not which one to close.

Step three is the one people skip, and it is usually the largest number on the direct side.

What card processing actually costs is covered in taking payment without handling card details.

Frequently asked questions

Is a marketplace commission expensive?

Not necessarily. It includes traffic, trust, payment, and dispute handling. Your processing fee covers moving money and nothing else, so the two figures are not comparable as stated.

How do I work out my cost of selling direct?

Add advertising, any paid help, and a value on your own hours over a period, divide by direct orders, and add that to your processing fee.

Should I count my own time?

Yes. If you would pay somebody to write descriptions, photograph products, and post on social media, those cost money whether or not you do them yourself.

What decides which channel is cheaper?

Repeat purchase. A direct customer costs the acquisition once and processing thereafter, while a marketplace customer costs the commission on every order.

How does margin affect the comparison?

A commission comes off the sale price, so its effect on profit depends on margin. On a twenty percent margin, a fifteen percent commission takes most of the profit.

What fees get forgotten?

Listing fees, subscriptions, promoted placement, and partial refunds on the marketplace side; platform fees, apps, transaction charges, chargebacks, and developer time on yours.

West Coast Media Solutions Inc. provides web design, web development, hosting, digital marketing, and business consulting to organisations across Canada, drawing on more than twenty-five years in the field.

Think direct selling is cheaper?

Add your advertising and your own hours to that side, then divide by direct orders. The gap is usually smaller than expected.

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