How vendor fees are calculated

When a customer places an order on FarmDrop, the order usually includes products from multiple vendors. The order as a whole might be referred to as a parent order and orders from individual vendors as suborders. For the most part, vendors only see the suborders that pertain to them. Vendors pay fees to FarmDrop and Stripe according to the dollar amount of their suborders and the proportion of their suborder to the parent order. 5% goes to FarmDrop for system maintenance and development, marketing initiatives, and support for all stakeholders. 2.9% plus a proportional amount of $0.30 goes to Stripe. The following example illustrates the fee structure from the perspective of a vendor.

Pat Customer places an order on FarmDrop in the amount of $212.30. The order includes products offered by several vendors. One of those vendors is Farmer Brown, whose suborder amounts to $28. 5% of that $28 ($1.40) goes to FarmDrop. 2.9% ($0.81) goes to Stripe. A proportional amount of the $0.30 charged by Stripe on the parent order also goes to Stripe, calculated by dividing the suborder amount by the parent order amount and multiplying by 0.30 ($0.04). After fees have been deducted, Farmer Brown receives a total of $25.75. Here is another way to look at it:

Total amount paid by Pat Customer for parent order: $212.30
Farmer Brown's suborder amount: $28.00
Farmer Brown's FarmDrop fee: $28 × 0.05 = $1.40
Farmer Brown's Stripe flat percentage fee: $28 × 0.029 = $0.81
Farmer Brown's portion of Stripe's $0.30 fee on parent order: $28 ÷ $212.30 × $0.30 = $0.04
Farmer Brown's revenue: $28.00 − $1.40 − $0.81 − $0.04 = $25.75

The $0.30 fee charged by Stripe on parent orders usually results in some variability in vendor revenue. This is because that fee is shared among all vendors involved with any given parent order. The portion of the $0.30 fee charged to a vendor depends on what proportion of the parent order is accounted for by the vendor's suborder. If parent order involves a single vendor, that vendor pays all of the $0.30 fee. If a parent order involves two vendors and each vendor receives exactly half of the parent order, each would pay 50%, or $0.15, of the $0.30 fee.