Take rate

Sara Heegaard March 3, 20222 minute read

Sara is a copywriter focused on lifting up Recharge's merchants, partners, and their customers. Before Recharge, her past lives included writing and editing at four different subscription... Full bio

What is take rate? Take rate & gross merchandise volume 

Take rate has multiple meanings within the ecommerce industry. It can refer to fees that third-party sellers or service providers (for example, payment services providers like PayPal) and online marketplaces (for example, Amazon or eBay) collect on their transactions. Here, take rate plays a key role in calculating revenue, as total revenue is calculated by multiplying take rate by gross merchandising volume. In increasing take rate, these sellers charge greater final value fees. However, doing this can leave sellers vulnerable to competing marketplace services who are looking to lure cost-sensitive users to their service.

Payment services providers typically take a cut of transactions as part of their service to transfer funds. For example, if a customer purchases an item for $10, using a payment services company to complete the transaction, and the payment services company charges a $1 fee, this would be a take rate of 10%. In certain situations, a provider’s take rate will depend on the payment method that is used—for example, personal payments funded with a bank account versus paid with a credit card or debit card.

Other meanings of take rate: visitor-to-lead conversion rate

In another sense, take rate refers to the number of users that complete a certain action—also known as visitor-to-lead conversion rate. For example, food delivery or meal kit subscription services might compare the take rates of different meals, or the percentage of subscribers who purchased a particular meal within a specified period of time out of the total number of subscribers who purchased any meal in that period. In this case, accurately forecasting take rate can play a crucial role in inventory management and net revenue forecasting, as well as increasing average order value (AOV), testing the viability of new products, and more.