Collapse Menu
Docs Home
Extensibility Options
Contact Support

Gross Pricing Mode and Net Pricing Mode

Overview

Gross Pricing Mode and Net Pricing Mode for non-US taxes

When products are sold to consumers outside of the US, FastSpring automatically displays prices that include applicable taxes, and remits all collected taxes to the appropriate taxation authorities.

The calculation method for the final prices depends on whether your Store is configured to use Gross Pricing Mode or Net Pricing Mode. Each Store uses one mode or the other but never both at the same time.

Tax Exemption & Deferral

In some cases, consumers from tax-exempt organizations may enter a valid ID to prevent the tax from being collected on their order. This does not impact the income sellers receive for the order, as FastSpring remits the taxes to the applicable taxation authorities. The consumer still pays the net price for the product, just not the tax portion of the list price. 

Gross Pricing Mode

The default setting for FastSpring Stores is Gross Pricing Mode. FastSpring can handle currency conversions for you, based on the product's price in the base currency of your Store.

Alternatively, you can specify product prices in non-USD currencies. If you do this, you must enter the Gross Price, which includes all applicable taxes.

FastSpring displays and charges the specified prices to consumers who pay in those currencies, and deducts any applicable taxes from the net amount you receive. Since tax rates vary by location, the net amount you receive from FastSpring for the sale of a product also varies based on the consumer's location.

The amount you receive from FastSpring is equal to your specified product price minus each of the following:

  • Store discounts
  • Applicable taxes
  • Affiliate commissions
  • Split shares
  • FastSpring's processing fee

Orders Processed in USD

Gross pricing mode does not affect orders processed in US Dollars. For these orders, FastSpring adds applicable taxes to the USD price you have specified. The final price displayed to consumers outside the US includes applicable taxes.

Orders Processed in Non-USD Currencies without Set Prices

When a consumer orders using a non-USD currency for which you have not specified the product price, FastSpring automatically converts the base price (usually the USD price) to the selected currency. The consumer sees the final price (including applicable taxes).

The price decoration feature described in Currencies, Conversions and Taxes causes the price to increase so that the last two digits of the final price match the last two digits of the base price. FastSpring pays the amount of the increase to you.

Example with no Discount:

Suppose you set a gross price of € 10.00 for your product. When a consumer in Germany buys the product for € 10.00, a VAT rate of 19% is applied to the order. FastSpring calculates the VAT amount of € 1.60 and the net price (remaining amount) as € 8.40 (that is, € 10.00 - the VAT amount). The amount you receive is equal to the net price of € 8.40, minus any affiliate commissions, split shares, and FastSpring's processing fee.

DescriptionCalculationAmount
Gross PriceNet Price + Tax Amount€ 10.00
Net Price1.19x = Gross Price€ 8.40
Tax AmountGross Price - Net Price€ 1.60

Example with Included Discount

A consumer in Germany buys the same € 10.00 product, but enters a coupon code to receive a 20% discount, paying a total of € 8.00. FastSpring calculates the VAT amount based on the discounted order subtotal of € 8.00 instead of the gross price of € 10.00. The VAT amount is € 1.28, and the net price is € 6.72. The amount you receive is equal to the net price of € 6.72, minus any affiliate commissions, split shares, and FastSpring's processing fee.

DescriptionCalculationAmount
Gross PriceNet Price + Coupon Discount + Tax Amount€ 10.00
Coupon DiscountGross Price * 20%€ 2.00
Discounted PriceGross Price - Coupon Discount€ 8.00
Net Price1.19x = Discounted Price€ 6.72
Tax AmountDiscounted Price - Net Price€ 1.28

Net Pricing Mode

Upon request, FastSpring Support can configure your Store to use Net Pricing Mode or tax-exclusive mode. In that case, when you specify prices in non-USD currencies, FastSpring displays the final price to consumers with applicable taxes included.

FastSpring calculates that final price by adding applicable taxes to the prices you have specified. Since Net Pricing Mode is tax-exclusive, you receive the same base price for the sale of your product regardless of the tax rate in the consumer's country. The amount you receive from FastSpring is equal to your specified price minus any discounts, affiliate commissions, split shares, and FastSpring's processing fee.

The amount you receive from FastSpring for the sale of a product is equal to your specified USD price minus each of the following:

  • Store discounts
  • Affiliate commissions
  • Split shares
  • FastSpring's processing fee
The Price Decoration feature is not currently supported when Net Pricing Mode is enabled for your Store. If consumers order in non-USD currencies for which you have not set prices, FastSpring does not perform price decoration when converting the product's base price to the selected currency.

Orders Processed in USD

For orders processed in U.S. Dollars, FastSpring adds applicable taxes to the USD price you have specified. The final price displayed to consumers outside the US includes applicable taxes.

Orders Processed in Non-USD Currencies without Set Prices 

For orders processed in non-USD currencies where you have not specified the product price in the selected currency, FastSpring automatically converts the base price (usually the USD price) to the selected currency and displays the final price (including applicable taxes) to the consumer.

Example with No Discount

Suppose you set a net price of € 10.00 for your product. When a consumer in Germany buys the product, a VAT rate of 19% is applied to the order. FastSpring calculates the VAT amount of € 1.90 and displays a total of € 11.90 (that is, € 10.00 + the VAT amount). The amount you receive from FastSpring is your specified € 10.00 price, minus any affiliate commissions, split shares, and FastSpring's processing fee.

DescriptionCalculationAmount
Net PriceNon-USD Price You Have Set€ 10.00
Tax AmountNet Price * 0.19€ 1.90
Total PriceNet Price + Tax Amount€ 11.90

Example with Included Discount

Suppose another consumer, also in Germany, buys the same € 10.00 product but enters a coupon code and receives a 20% discount. FastSpring calculates the VAT amount based on the discounted order subtotal of € 8.00 rather than the net price of € 10.00. The VAT amount is € 1.52, and the amount displayed and charged to the consumer is € 9.52 (that is, € 8.00 + the VAT amount). The amount you receive is equal to the discounted price of € 8.00, minus any affiliate commissions, split shares, and FastSpring processing fee.

DescriptionCalculationAmount
Net PriceNon-USD Price You Have Set€ 10.00
Coupon DiscountNet Price * 20%€ 2.00
Discounted PriceNet Price - Coupon Discount€ 8.00
Tax AmountDiscounted Price * 0.19€ 1.52
Total PriceDiscounted Price + Tax Amount€ 9.52

Switching Between Pricing Modes

FastSpring Support can help you switch from one pricing mode to the other. If you do this, any consumers' subscription instances that were created while your Store was set to a given pricing mode will continue to be charged according to that mode. FastSpring stores the pricing mode for each subscription instance, thus existing subscriptions are unaffected by it.

Try FastSpring

Get a free account and see why FastSpring is the ecommerce partner of choice for software providers around the world. Try our full-service ecommerce solution today to unlock revenue growth for your online company.