What figures do you need?
Assume one dish sells for £12.00, including an explicitly assumed 20% sales VAT, and costs £3.60 per sold portion. That cost includes ingredients, packaging and any unsold-portion allowance chosen for this example, but excludes payment fees. No further waste adjustment is needed.
Costs exclude recoverable purchase VAT and include non-recoverable VAT. Assume the payment fee is 1.5% of the full customer payment plus £0.20 per successful transaction, with the resulting fee treated as the business's cost and no further adjustment in this example.
These are illustrative inputs, not a quotation for your business. Stripe's UK pricing page currently lists 1.5% plus 20p for standard UK cards: https://stripe.com/gb/pricing . In-person payments, other cards and other contracts can have different charges. Use your own payment agreement and statement.
All worked numbers were checked using Python 3. Money is displayed to pennies and percentages to two decimal places, retaining full precision during calculations.
What is the dish's GP before payment fees?
Net sale means the customer price before sales VAT. Gross profit is that net sale minus the entered portion cost. GP margin expresses gross profit as a percentage of the net sale.
Net sale = gross customer price ÷ (1 + VAT percentage ÷ 100). Gross profit = net sale − portion cost. GP margin = gross profit ÷ net sale × 100.
Here, net sale is £12.00 ÷ 1.20 = £10.00. Gross profit against the £3.60 portion cost is £6.40, and GP margin is 64.00%.
That percentage describes the stated cost scope. It is not a recommended target, and the £6.40 still has to cover payment fees and all remaining business expenses.
How much remains after the transaction fee?
For the assumed fee arrangement: Payment fee = customer payment × 1.5 ÷ 100 + £0.20.
On a £12.00 payment, the fee is £0.18 + £0.20 = £0.38. Subtracting it from £6.40 leaves £6.02 after the entered portion cost and payment fee.
Do not apply this example's fee percentage to the £10.00 net sale. That would calculate £0.35 and understate the assumed fee by 3p, because this arrangement charges against the full £12.00 payment.
Keep the £6.02 clearly labelled as the amount remaining after the specified costs. It is not net or take-home profit: remaining wages, rent, energy and other expenses still need to be paid.
What if two dishes share one payment?
Assume two identical dishes are paid for in one £24.00 transaction. Total net sales are £20.00, entered portion costs are £7.20 and gross profit before payment fees is £12.80.
The assumed fee is £24.00 × 1.5% + £0.20 = £0.56. The amount remaining is £12.80 − £0.56 = £12.24, or £6.12 per dish when divided equally.
Two separate £12.00 payments incur £0.76 in total fees and leave £12.04. The difference is one additional 20p fixed fee. Charging the fixed fee once per dish would therefore overstate fees when several dishes share a payment.
Across 100 identical dishes, 100 separate payments would incur £38.00 in fees; 50 two-dish payments would incur £28.00. This controlled comparison holds sales, prices and portion costs constant. It does not predict customer ordering behaviour or recommend changing how customers pay.
How can you use this in a menu review?
Open GP Calculator UK at / and choose Check my GP. Enter cost 3.60, customer menu price 12.00 and assumed VAT 20 to reproduce £6.40 GP and 64.00% margin. Calculate the transaction fee separately, then record the £6.02 remaining alongside the calculator result.
When testing another customer price, recalculate the percentage fee using that new payment amount. A fee allowance calculated at one price will not necessarily remain correct at another price.
For mixed baskets, calculate the fee for the whole transaction first. If allocating it between dishes, record your chosen allocation method and ensure the allocations total the actual fee. Avoid deducting it again if payment fees are already included in your entered cost.
Use /#guide for input help and /methodology/ for calculation assumptions and rounding. Review actual transaction counts and statements alongside recipe costs.
Which VAT assumptions must you replace?
The assumed 20% rate demonstrates arithmetic; it does not classify the dish. Use the treatment applicable to your actual sale. HMRC explains catering and takeaway distinctions here: https://www.gov.uk/guidance/catering-takeaway-food-and-vat-notice-7091 .
Keep purchase costs consistent by excluding recoverable VAT and including VAT you cannot recover. Recovery has conditions and exceptions, described by HMRC here: https://www.gov.uk/charge-reclaim-record-vat/reclaim-vat-business-expenses .
Use the actual cost of your payment service rather than assuming this example determines its tax treatment. This guide explains pricing arithmetic and provides no personalised tax advice.
Sources
Try the tools
Try your own figures
Use the free GP calculator to check selling prices, compare margins and save menu items on your device. Gross profit is before remaining business expenses.
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