A - Product prices and delivery costs
Producers are free to set product prices as well as the amount of possible delivery costs without any intervention of TERROIR en OR. This is done not to impose to producers a pricing that will not be sustainable over time for them.
B - Renumeration of the platform TERROIR en OR
TERROIR en OR is the marketplace that rewards best its producers by charging a commission among the lowest of the market and with its willing of not pulling down their margin.
To turn these words into actions, TERROIR en OR has set the following rules:
> The platform charges its remuneration only on producer sales (excluding delivery costs).
> Delivery costs are free of commission.
> No subscription neither fees are charged for the creation and the management of their online store by the producers themselves.
The purpose is to avoid that producers take risks in paying costs even before they have started to sell.
The TERROIR en OR commission charged on sales by the platform consists of two components that add up:
1) TERROIR en OR variable fees, by charging 7% of commission on producer sales excluding delivery costs
2) TERROIR en OR fixed fees, called "TERROIR en OR contribution to costs", of 1 euro pre-tax being 1.20 euro including tax for each order, regardless the number of producers involved or the amount.
These variable fees do not enable the platform to be remunerated correctly and this is the reason why TERROIR en OR adds up fixed fees.
These fixed fees are also done in a purpose of fair trade to spread the platform operating cost between producers and customers. Indeed, these fixed fees are not taken on product prices but added directly on the amount of customer cart. If the platform charged its renumneration only on variable fees, they would be higher and their cost would be borne by the producer only because he is not likely to pass any increases on to its prices if he wants to remain competitive...
This commission is very low compared to competitors who charge from 15% to 25% of commission. But, in general, it is rather between 20% and 25%.
C - Example
A customer buys products for 100 euros including tax to a producer with extra delivery costs of 10 € including tax.
To these 110 euros, the TERROIR en OR fixed fees of 1.20 euros including tax have to be added.
The customer will pay at the end 111.20 euros including tax.
On his side, the producer receives:
- the full amount of delivery costs being 10 euros including tax,
- 93% of the product prices (100% minus 7% of TERROIR en OR variable fees) being 93 euros including tax.
At the end, the producer earns 103 euros including tax.
We have then in amount all tax included:
- for the customer 111,20 euros spent,
- for the producer 103 euros earned,
- for TERROIR en OR, a commission of 8,20 euros representing 7,37% of the transaction total amount in this example.