B2B / Retail Channel Settlement Calculator

Understanding the B2B and retail channel settlement — concept and principle

Selling through a retailer, distributor or marketplace usually means the channel keeps a commission or margin on each sale and may also charge an upfront deposit or listing fee. This calculator shows what you receive per unit, your total profit for the expected volume and how many units you must sell just to recover the fixed fee. It works with any currency.

How it is calculated

• Net price per unit = retail price × (1 − channel commission or margin).
• Profit per unit = net price per unit − your unit cost.
• Your profit = expected units × profit per unit − deposit or listing fee.
• Listing fee per unit = fee ÷ expected units.
• Break-even units = fee ÷ profit per unit, rounded up to a whole unit.

The principle

The channel's percentage is a variable cost that scales with every unit, while the listing fee is a fixed cost paid regardless of volume. Each unit sold contributes its profit per unit (its contribution margin) towards covering the fixed fee; once the fee is covered, every further unit is pure profit. This is classic break-even analysis: fixed cost ÷ contribution per unit.

Worked example

1. Net price per unit = $30 × (1 − 25%) = $22.50.
2. Profit per unit = $22.50 − $12 = $10.50.
3. Your profit = 1,500 × $10.50 − $2,000 = $15,750 − $2,000 = $13,750.00.
4. Listing fee per unit = 2,000 ÷ 1,500 = $1.33.
5. Break-even units = 2,000 ÷ 10.50 = 190.48, rounded up to 191. You cannot sell part of a unit, and 190 units would still leave you $5 short of the fee.

How to read the result

A large gap between expected units and break-even units means the deal can absorb a weaker sell-through. If break-even is close to or above what you realistically expect to sell, renegotiate the fee or margin, or raise the retail price. Remember that channels often add costs not shown here, such as promotional contributions, returns, chargebacks and payment terms of 30 to 90 days.

Common mistakes

• Confusing the retailer's margin on retail price with a markup on your wholesale price.
• Leaving freight to the retailer's warehouse or marketing fees out of the unit cost.
• Using hoped-for volume rather than a conservative estimate.

Frequently asked questions

Is channel margin the same as commission?

Both reduce what you receive. Here either is entered as a percentage of the retail price.

Why is break-even 191 and not 190?

2,000 ÷ 10.50 is 190.48. Selling 190 units recovers only $1,995, so the calculator rounds up to the first whole unit that covers the fee in full.

How do I include slow payment?

Long payment terms do not change the profit, but they tie up cash. Plan working capital for the period before you are paid.

Sources: Horngren, Datar & Rajan, Cost Accounting: A Managerial Emphasis (Pearson) — cost-volume-profit analysis