> For the complete documentation index, see [llms.txt](https://docs.violet.io/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.violet.io/prism/payments/payouts/commission-rates.md).
# Commission Rates
The **Commission Rate** is the percentage of a product’s subtotal that a Channel receives from a Merchant when an item is sold. Violet facilitates the transfer of this commission at the time of sale, but **does not dictate or manage the commercial agreement** between the Channel and Merchant.
Each Merchant can define a separate commission rate per Channel during onboarding or from their [Merchant Dashboard](https://merchant.violet.io/overview). This rate can be set between **0% and 100%**, and is exclusive to that Channel-Merchant pairing.
Channels can also set or lock commission rates programmatically via API or manually through the [Channel Dashboard](https://channel.violet.io/merchants). See the *Commission Rate Management* section for more details.
## How Commission is Calculated
Commission is applied **only to goods**: the subtotal after discounts. Tax, shipping and duty are never part of it. For retailers whose prices include tax, Violet removes the tax first. See [Commission Base: Tax, Duty and Discounts](/prism/payments/payouts/commission-base.md) for the full rules.
### Calculation Breakdown:
1. **Commission Base**: `Subtotal − Discounts` (net of tax for tax-inclusive retailers)
2. **Commission Amount**: `Commission Base × Commission Rate`
3. **Merchant Payout**: `Subtotal − Discounts + Shipping + Tax + Duty − Commission` (tax goes to the merchant only when the merchant remits it)
4. **Channel Net Distribution Amount**: `Commission - Stripe Fee`
{% hint style="info" %}
Payment provider processing fees are always deducted from the **Channel’s share**, not the Merchant’s payout.
{% endhint %}
> For contracts where the channel supplies the transaction fee and commission is taken on the net-of-fee basis, see [Net Receipts](/prism/payments/payouts/net-receipts.md).
The table below highlights which components are included in the commission calculation and how they are distributed:
| Component | Included in Commission | Recipient (in Distribution Amount) | Notes |
| ----------- | ---------------------- | ---------------------------------- | --------------------------------------------------------------------- |
| Subtotal | ✅ Yes | Merchant (net of commission) | Commission is only applied here |
| Discounts | Taken off first | n/a | Commission is charged on the discounted goods value |
| Tax | ❌ No | Varies (Merchant or Channel) | Depends on tax remitter configuration |
| Shipping | ❌ No | Merchant | Always passed through in full |
| Duty | ❌ No | Merchant | When reported as its own amount on the order |
| Stripe Fees | ❌ No | Deducted from Channel | Based on total order value, always subtracted from Channel commission |
For a deeper understanding of how funds are split between merchants, channels, and fees, visit our the [Distributions docs](/prism/payments/payouts/distributions.md).
## Example Calculations
Single-Merchant Order
**Order Summary:**
* Subtotal: $90.00
* Tax: $5.00
* Shipping: $5.00
* Commission Rate: 10%
* Stripe Fee: $3.20 (2.9% + $0.30 on $100.00)
**Step-by-Step:**
1. Commission = $90 × 10% = $9.00
2. Merchant Payout = $90 + $5 + $5 - $9 = $91.00
3. Channel Receives = $9 - $3.20 = $5.80
**Summary:**
* Customer Pays: $100.00
* Merchant Receives: $91.00
* Channel Receives: $5.80
Multi-Merchant Order
| Merchant | Subtotal | Commission % | Commission | Proportional Tax/Shipping | Payout |
| -------- | -------- | ------------ | ---------- | ------------------------- | ------ |
| A | $60.00 | 15% | $9.00 | $6.00 | $57.00 |
| B | $40.00 | 20% | $8.00 | $4.00 | $36.00 |
* Total Order: $117.00 (Subtotal $100 + Tax $7 + Shipping $10)
* Total Commission: $17.00
* Stripe Fee (2.9% + $0.30): $3.69
* Channel Receives: $17.00 - $3.69 = $13.31
## Refunds and Chargebacks
### Refunds
When a refund is initiated (full or partial):
* The commission on the refunded goods is worked out on the same base as the sale: the refund less shipping, tax and duty, at the sale's commission rate. It is capped at the commission the sale charged.
* What happens to that commission depends on the retailer's [return commission policy](/prism/payments/payouts/return-commission-policy.md). Under `REVERSE` (the default) it is reversed to the merchant. Under `RETAIN` the channel keeps it, and Violet [recovers it](/prism/payments/payouts/commission-recovery.md) from the merchant's payouts.
* To ensure accurate commission reversals, merchants must correctly specify the SKU amount, shipping amount, and tax amount when initiating the refund from their ecommerce platform.
* Stripe fees are refunded when applicable and automatically returned to the channel.
## Commission Rate Management
Violet supports flexible commission rate management across the Channel–Merchant relationship. Rates can be set during onboarding and updated anytime via dashboard or API.
### Channel-Controlled Rates
Channels can override or lock commission rates at the Merchant level based on the Channel’s business model or agreements with Merchants. This allows Channels to maintain control over commission structures while still providing Merchants the flexibility to set their own rates:
#### **Via Dashboard**
* Go to the [Channel Dashboard](https://channel.violet.io/merchants)
* Select a Merchant from the list
* Click into the “Commission Rate” field to edit
* Toggle the **“Lock Rate”** setting if you want to prevent merchant overrides
#### **Via API**
Use the [`Set Merchant/Channel Commission Rate`](/api-reference/apps/commission-rates/set-merchant-app-commission-rate.md) endpoint to:
* Set or update the commission rate
* Pass the `lock` parameter to restrict merchant changes
### Merchant-Controlled Rates
Merchants can define or update the commission rate for each Channel they’re connected to:
* Go to the [Merchant Dashboard](https://merchant.violet.io/overview)
* Locate the relevant Channel under “Connected Channels”
* Click the current rate to edit
* Enter the new percentage and confirm
> Each Channel relationship can have a unique commission rate. Updates apply immediately to future orders.
{% hint style="info" %}
**Custom rates at order creation:** You can override the standard commission rate on a per-order or per-line-item basis when using [Direct Order Submission](/prism/checkout-guides/guides/direct-order-submission.md). See the [Custom Commission Rates](/prism/checkout-guides/guides/custom-commission-rates.md) guide for details.
{% endhint %}
---
# Agent Instructions
This documentation is published with GitBook. GitBook is the documentation platform designed so that both humans and AI agents can read, navigate, and reason over technical content effectively. Learn more at gitbook.com.
## Querying This Documentation
If you need additional information that is not directly available in this page, you can query the documentation by asking a question.
Perform an HTTP GET request on the following URL with the `ask` and `goal` query parameters:
```
GET https://docs.violet.io/prism/payments/payouts/commission-rates.md?ask=&goal=
```
`ask` is the immediate question: it should be specific, self-contained, and written in natural language.
`goal` is what the user is ultimately trying to achieve, the reason they need the answer. Sharing it helps GitBook give you a better, more relevant answer. A goal is most helpful when it describes the outcome the user wants rather than restating the question. For example, with `ask=how do I create an API token`, a goal like `automate deployments from our CI pipeline` lets GitBook tailor the answer to that use case.
The response will contain a direct answer to the question and relevant excerpts and sources from the documentation.
Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.