Day 117

10:59 AM

Got rug pulled.

Great motivation to work quicker.

Main % of e-com sales come from UK.

Problem is VAT is 20%.

Therefore, for any e-commerce business with net profit margins less than 40%, the government makes more than you make per sale.

Ha... ha...

ha..

Absolutely fucked.

My margins are less than 40%

COGS

12.50+1.70+2.90 = 17.1

TRANSACTION FEE

2

TOTAL FEE PER ORDER = 19.1

REVENUE = 43.98

43.98-19.1 = 24.80 === $32.82

AD COST == $20-25

$7-8 profit per order, yes?

No

VAT 20%

Now we're losing money every sale

Include VAT in price?

Sure sure, now conversion rate decreases.

Cost per purchase now $32

Which idiot came up with VAT is beyond me.

Is 20% of net profits w/ corporation tax not enough?

You can reduce it slightly with subtracting VAT from suppliers but that's not even close.

Solution:

Don't sell in the UK.

Sell digital products in the US. Subscription. Repeat purchases. As I was planning on doing...

Edit:

Solved VAT by including VAT in price. Will only have to pay £6.60 ish and then I’ll figure rest out by increasing average order value by upsell/cross sell.