Maximize Your Profit on TikTok Shop: A Breakdown of Commission, Transaction, Shipping & Processing Fees

For new sellers, beyond understanding the documents and requirements for opening a shop, it is crucial to learn what fees the platform charges and under what circumstances, as each platform has different regulations. Understanding the costs involved after joining TikTok Shop is essential for better controlling operational expenses and ensuring store profitability.

Apart from the deposit (up to $90) required during onboarding, TikTok Shop sellers are primarily responsible for four types of fees: Commission Fee, Transaction Fee, Shipping Service Fee, and Order Processing Fee. Notably, new sellers enjoy a 90-day waiver on commission and shipping fees. Below, we delve into the specifics of each fee.

I. Commission Fee

1. Definition

After a buyer places an order and the order is successfully delivered, TikTok Shop automatically deducts a fee from the final order/payout settlement. This fee is calculated based on the product price. The Commission Fee rate differs for Marketplace Sellers and Mall Sellers.

2. How to Calculate

The commission fee is calculated on the item price, minus seller discounts, and excludes shipping costs and platform discounts offered by TikTok Shop.

Formula:

Commission Fee* = Commission Rate % × (Item Price – Seller Discount)

*Commission fee is VAT inclusive.





Rates vary by product category and seller type (Marketplace vs. Mall). For more detailed commission rates, visit the TikTok Shop Seller Center via this link.



Example:

As a Mall Seller, I sell a pair of shoes.


	

	
Original Price (Tax incl.): PHP 2500
	
	

	
Seller Discount: PHP 150
	
	

	
Category: Footwear (Commission Rate: 7.9%)
	


Commission Fee = PHP (2500 – 150) × 7.9% = PHP 185.65



Tips:

For pre-order items, an additional Pre-order Service Fee applies.

Formula:

Pre-order Service Fee = (Product Price – Seller Discount) × 2%



Example (Continued):

If the shoes were a pre-ordered item:

Pre-order Service Fee = PHP (2500 – 150) × 2% = PHP 47

Thus, the total fee for this pre-order item would be PHP 47 + PHP 185.65 = PHP 232.65





 

II. Transaction Fee

1. Definition

After an order is successfully delivered to buyers, TikTok Shop automatically deducts this fee from the final order/payout settlement. The Transaction Fee rate is 2.24% (VAT inclusive).

2. How to Calculate

Transaction Fee = (Customer Payment – Customer Order Refund) × Fee Rate



Example:


	

	
Shoes Selling Price: PHP 2500
	
	

	
Seller Discount: PHP 150
	
	

	
Buyer-paid Shipping Fee: PHP 50
	

Transaction Fee = PHP (2500 – 150 + 50) × 2.24% = PHP 53.76

To view transaction fees for specific orders, go to: TikTok Shop Seller Center > Finance > Transactions > To settle > View Details.

 

III. Shipping Service Fee

1. Definition

This is a fee charged by the platform based on the product price to all sellers in the Philippines. It is capped at PHP 100 per item and is charged for all successfully delivered orders. The fee is not refunded for orders that are successfully delivered but later returned or refunded.

2. How to Calculate

The Shipping Service Fee Rate (tax inclusive) is 5% for Mall sellers and 5.5% for Marketplace sellers.

Formula: 

Shipping Service Fee = (Item Price – Seller Discount) × Fee Rate (capped at PHP 100 per item)



Example:

As a Mall Seller selling the same shoes


	

	
Item Price: PHP 2500
	
	

	
Discount: PHP 150
	


Calculated Fee: PHP (2500 – 150) × 5% = PHP 117.5

Capped Fee: PHP 100 (since PHP 117.5 > PHP 100 cap)

 

IV. Order Processing Fee

1. Definition

This fee is charged for all successfully delivered orders. It is not refunded for orders that are successfully delivered but later returned or refunded.

2. How to Calculate

For every successfully delivered order, TikTok Shop charges a fee, up to PHP 5 (tax inclusive). For local Philippine sellers, the fee is PHP 3. For example, a local seller pays only PHP 3 whether an order contains one item or ten items.

Tips:

The Order Processing Fee is charged when a successfully delivered order is settled. It is non-refundable if the order is later returned or refunded.



 

V. Conclusion

In summary, sellers on TikTok Shop are responsible for these four fees: a Platform Commission Fee (rates vary by category and seller type); a Transaction Fee (2.24% rate); a Shipping Service Fee (5% for Mall, 5.5% for Marketplace sellers, capped at PHP 100/item); and an Order Processing Fee (fixed at PHP 3/order for local sellers).



Let's calculate a full example:

I am a Mall Seller. I sell a pair of shoes (non-pre-order).


	

	
Item Price: PHP 2500
	
	

	
Seller Discount: PHP 150
	
	

	
Buyer-paid Shipping Fee: PHP 50
	
	

	
Order is successfully delivered and confirmed.
	


Total Fee = Commission Fee + Transaction Fee + Shipping Service Fee + Order Processing Fee

= PHP [(2500-150)×7.9%] + [(2500-150+50)×2.24%] + 100 + 3

= PHP 342.41

Therefore, operating a shop efficiently and allocating costs to the most revenue-generating activities is a long-term and crucial task for sellers.

 

FAQ

Q: Do I still need to pay a commission if the buyer requests a full return or refund?

A: No. Commission fees are only deducted from settled orders that are successfully delivered. Orders cancelled before shipment or fully returned/refunded are not subject to commission.



Q: Where can I view the commission fee charged for an order?

A: For unsettled orders: TikTok Shop Seller Center > Finance > Transactions > To settle > View Details > Estimated Settlement Details;For settled orders: TikTok Shop Seller Center > Finance > Withdrawals > Settled > View Details > Earning Details.



Q: Is the Shipping Service Fee inclusive of tax?

A: Yes. The Shipping Service Fee rates stated above are inclusive of tax.



Q: Under what circumstances is the Shipping Service Fee refunded to the seller?

A: The Shipping Service Fee can only be refunded if the order is not successfully delivered.


	

	
If the entire order is cancelled, the full fee is refunded.
	
	

	
If part of the order is cancelled, the fee for the refunded item(s) is refunded.
	




Q: Under what circumstances is the Order Processing Fee refunded to the seller?

A: The Order Processing Fee can only be refunded if the order is not successfully delivered.


	

	
If the entire order is refunded, the full fee is refunded.
	
	

	
If part of the order is refunded, the fee is not refunded.
	




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