vat and postage

John Hesketh · Jul 7, 2009

I will be selling products on-line shortly and I am trying to work out the selling price. I am vat registered and hence have to charge vat and postage. If for example I charge £44 per item vat inclusive, the postage cost to add would be £2.70. Do I need to add vat for the postage?

Also what is the best way to figure out a nice rounded price to include vat, i am no mathematician and it is very frustrating picking a price, adding vat and then it comes out at 44.3567p etc

Thanks in advance

Maslins · Jul 7, 2009

Why not pick the VAT inclusive price and work backwards?

Eg you want the product to be £50. As the VAT rate is currently 15% simply divide the £50 by 1.15 gives you the net price of £43.48.

You'll have a harder time if you want BOTH the VAT inclusive and exclusive amount to be "nice" figures.

Re: charging VAT on postage, in short you charge VAT if the products you are selling have VAT on them, so from the sounds of things you are selling standard rate goods, hence should add 15% VAT to your postage costs too.

John Hesketh · Jul 7, 2009

Thanks for the advice. It looks like the best method will be to quote a price which will include postage and vat and then break it down on an invoice. Makes the price at a glance look expensive though...any ideas?

Maslins · Jul 7, 2009

You take your pick.

Some people quote the net price without delivery. Potential customers go "wow that's cheap" go 75% of the way through the buying process when suddenly, upon checkout, it adds VAT & delivery, at which point they curse and leave the site.

...or you put the all inclusive price up front, which is inevitably a little higher, and perhaps get less initial interest, but you'll also have fewer people leaving the buying process midway through.

I tend to prefer the second option. People feel ripped off when you quote one price, then as you pull your credit card from your pocket a whole load of other charges are added.

Clodbuster · Jul 9, 2009

Maslins said:
You take your pick.

Some people quote the net price without delivery. Potential customers go "wow that's cheap" go 75% of the way through the buying process when suddenly, upon checkout, it adds VAT & delivery, at which point they curse and leave the site.

...or you put the all inclusive price up front, which is inevitably a little higher, and perhaps get less initial interest, but you'll also have fewer people leaving the buying process midway through.

I tend to prefer the second option. People feel ripped off when you quote one price, then as you pull your credit card from your pocket a whole load of other charges are added.

Would it be an option to quote both adjacent to each other but put the ex VAT in larger font?

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