What must you check before using this example?
Start with your agreement and fee statement: establish the commission percentage, the amount it applies to, any additional charges and the purchase VAT you can recover. A percentage alone does not define the cost.
Uber Eats’ UK pricing page distinguishes delivery, self-delivery and collection fees, and states that its displayed service fees exclude VAT: https://merchants.ubereats.com/gb/en/pricing/ . This supports checking the specific service and agreement; the example below does not reproduce an Uber tariff.
We assume a fictional commission cost of 25% of the VAT-inclusive item price. That is the final economic fee cost after any applicable purchase VAT recovery, with no further fee VAT to add in this model. Replace both the percentage and its calculation basis with your actual terms.
What are the menu and cost assumptions?
Assume one portion sells directly for £15.00 and costs £4.20. Its delivery version has exactly the same entered cost, including any packaging and unsold-portion allowance. No additional waste adjustment is applied.
Both sales use an assumed 20% sales VAT rate. This is an arithmetic input, not a classification of any food. Costs exclude recoverable purchase VAT and include non-recoverable VAT. There are no additional payment fees, discounts, refunds, fixed order charges or delivery costs in this controlled comparison.
Contribution here means net sale minus entered portion cost minus commission. It remains available for other business expenses; it is not net or take-home profit. The direct sale is assumed to have no channel fee.
How much does the £15 direct sale leave?
Net sale = customer price ÷ (1 + VAT percentage ÷ 100). Gross profit = net sale − entered portion cost. GP margin = gross profit ÷ net sale × 100.
The direct sale produces £15.00 ÷ 1.20 = £12.50 net sales. Subtracting £4.20 leaves £8.30 gross profit, a 66.40% GP margin. With no channel fee in this example, the contribution is also £8.30.
At the same £15 delivery price, the hypothetical commission is £15 × 25% = £3.75. The calculator’s GP against the £4.20 portion cost remains £8.30, but contribution after commission falls to £4.55. Keep those two results separately labelled.
Why does simply adding 25% fail?
Adding 25% to £15 produces a customer price of £18.75. Net sales become £18.75 ÷ 1.20 = £15.625, while commission becomes £18.75 × 0.25 = £4.6875.
Contribution is therefore £15.625 − £4.20 − £4.6875 = £6.7375, displayed as £6.74. That remains below the original £8.30.
The higher customer price increases the commission as well as revenue. Also, the assumed commission uses the customer price including VAT, while the business’s net sale excludes sales VAT. Both effects belong in the calculation.
How do you calculate the required delivery price?
Let P be the customer price, C the portion cost, T the desired contribution, v the sales VAT rate as a decimal and f the commission fraction applied to the gross customer price.
Contribution = P ÷ (1 + v) − C − f × P. Rearranging gives P = (C + T) ÷ [1 ÷ (1 + v) − f].
For this example: P = (£4.20 + £8.30) ÷ [1 ÷ 1.20 − 0.25] = £21.428571… . To meet at least £8.30 under the model, round upwards to £21.43.
At £21.42, unrounded contribution is £8.295, slightly below the target even though a penny-rounded display can show £8.30. At £21.43 it is £8.300833… . All worked numbers were checked using Python 3, retaining full precision until display. Actual invoice rounding may differ.
The denominator must be positive. This formula applies only to the stated gross-price fee basis; a fee based on net sales requires different arithmetic.
How can you check this with GP Calculator UK?
Open the calculator at / and choose Check my GP. Enter cost 4.20, customer menu price 15 and VAT 20. Record the £8.30 GP, then deduct the separately calculated £3.75 commission to obtain £4.55 contribution.
Repeat with customer price 21.43. Calculate commission from that actual customer price and subtract it from the unrounded GP. The calculator does not automatically model delivery agreements or classify VAT.
Read /#guide for input explanations and /methodology/ for cost scope, formulas and rounding. Keep portion costs separate from commission in your worksheet so you can see which assumption changes the result.
What should you review before changing a delivery menu?
The calculated £21.43 is a mathematical comparison, not a recommended selling price or a prediction of customer demand. Check contractual pricing conditions, customer response, packaging differences and kitchen capacity. Include any additional channel costs before relying on the result.
Choose the VAT treatment applicable to the actual sale using HMRC’s catering guidance: https://www.gov.uk/guidance/catering-takeaway-food-and-vat-notice-7091 . Purchase VAT recovery has conditions and exceptions; HMRC explains these at https://www.gov.uk/charge-reclaim-record-vat/reclaim-vat-business-expenses . This guide explains pricing arithmetic rather than personalised tax treatment.
Matching contribution per portion also does not guarantee matching total contribution: actual sales quantities and remaining expenses still matter.
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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