Becoming an entertainment platform integrated with e-commerce, TikTok has become a sales platform that many businesses want to start doing business here. However, to prepare to build a booth on TikTok shop, you need to prepare a lot. And one of the important things that sellers need to pay attention to to ensure profits is the cost of TikTok shop.

The cost of TikTok shop will include fixed fees, payment fees, program registration fees and discount code registration fees. Quite a lot of costs make new sellers confused and hesitant in deciding on a pricing strategy for the business. In this article, we will analyze clearly the types of costs of TikTok shop and the strategies and tips so that you can minimize this cost.

What are TikTok shop fees?

TikTok shop cost is the cost that the seller will have to pay to the platform after each order is completed. Normally, e-commerce platforms will charge a fixed % of the order revenue. However, there is not just one type of cost, but sellers on e-commerce platforms will have to pay a number of different types of costs.

Platform commission fee: After the order is successfully delivered to the Customer, TikTok Shop will automatically deduct the fee from the final payment/order. This is the Platform Commission Fee and will be calculated based on the price of the product. Different product categories will have different Platform Commission Fees.

Transaction fee: After the order is successfully delivered to the customer, TikTok Shop will automatically deduct a fee from the Settlement Amount for this order. This fee is called the Transaction Fee, which is charged to all sellers when they have successfully transacted on TikTok Shop.

Advertising fee (optional): In order for your product to appear at the top of the search results page or your video to reach more people, you will need to run ads for that video or product. This type of cost is not mandatory and is not fixed, depending on each shop, there will be different costs.

Discount code registration fee (optional): The discount amount of the seller's co-sponsored voucher (subsidized by the seller) during their participation in the Co-sponsored campaign

Affiliate commission fee (optional): The amount the user is paid through the affiliate partner link multiplied by the affiliate partner's commission rate (This is the amount that the user is actually paid separately without counting the discount of any seller voucher or TikTok Shop voucher.)

Free shipping fee (optional): is the fee that the seller will have to pay after each successful order when participating in the shipping fee program.

How much are TikTok shop fees (Update November 2024)

Tiktok shop fees calculator

There are many fees that sellers will have to pay to the platform, but only a few fees are mandatory and the rest are optional. There are 2 mandatory fees: platform commission fee and transaction fee, all sellers on TikTok shop must pay these 2 fees.

Platform commission fee: From 1-3% from industry group and depending on shop type

Transaction fee: 5% of the amount the customer pays, minus the refund.

How to calculate: 

Advertising fee (optional): Each seller will have a different cost, you can refer to our guide on how to calculate TikTok advertising costs.

Affiliate partner commission fee (optional): This fee is not fixed and not mandatory, only products participating in the affiliate program have to pay this fee. And this fee also does not have a fixed level, sellers are allowed to set the commission level as a % of the selling price.

Shipping fee (optional): the registration fee for sellers is 4.5%
Is TikTok still subsidizing shipping?

TikTok has indeed been providing shipping subsidies to help attract sellers and encourage users to purchase on TikTok Shop. While these subsidies vary by region, they often cover a portion of the shipping costs for buyers or provide free shipping incentives for sellers to offer their customers. This can be highly beneficial, especially for new sellers looking to attract buyers without deterring them with high shipping fees.

Is selling on TikTok Shop worth it?

As for whether selling on TikTok Shop is worth it, many sellers find it advantageous, particularly if their target audience includes Gen Z and Millennial shoppers who are highly engaged on TikTok. TikTok Shop allows for direct in-app purchases, making the shopping experience seamless and integrated with TikTok's entertainment value. However, success can depend on factors like product appeal, understanding of TikTok's content style, and ability to create engaging, shoppable content.

Tips for managing TikTok Shop's fee

There are 2 fixed fees, platform commission fee and payment fee, which cannot be changed by the seller. Therefore, to be able to manage costs effectively, focus on the variable fees. However, sometimes TikTok shop will also change the fixed fee, which can increase or decrease, you should regularly monitor to be able to update this information in time.

Advertising fee (optional) 

Usually advertising fees will account for an average of 10-20% of revenue. It will be quite high if your item does not bring in much profit. If the business is just starting to run ads, this cost can be even higher. This cost can be said to be quite difficult to control.

There are many ways for you to reduce this cost. The purpose of advertising is to make more people know about your business. You can replace this cost by building a promotional channel for your brand on Tiktok. This is a way to bring the same effect as advertising but can easily control costs.

Another way is that you can hire KOLs, KOCs to promote your business. Although it will cost money, you can negotiate with them. In addition, hiring KOCs, KOLs will help you reach the right target audience better than running ads.

Discount code registration fee

Usually, to attract customers and encourage buyers to order faster, sellers often create discount codes for customers on the selling price of the product, which can be reduced by price or reduced by %. This is also not a fixed amount and sellers are allowed to customize it according to their business plan. However, most competitors implement this strategy, if your business does not have a discount code for customers, it is easy to lose customers.

Affiliate commission fee

This is a fee that you are allowed to adjust, you can join the affiliate program or not, even if you join, the commission % for partners is also set by you. However, if you set the % too low, no KOC or KOL will be willing to cooperate with you. Normally, shops will set from 5-15% depending on the product type.

There is a tip that we want to share after going through many cooperation plans with KOCs, that you should not let all products participate in the affiliate program, you just need to choose 10% of strategic products, and focus on it. When KOCs promote this product, your shop will also be known more, obviously the products in your store will also benefit. This is how you can save quite a bit of money for affiliate partners.

In addition, regularly monitor and check the % you spend on KOCs, you can change this level depending on your business strategy. If it exceeds the budget, turn it off.

Free shipping fee

This fee is only payable when you join TikTok's free shipping program, or when you create a shipping discount code for customers. Although this is an optional fee, the order rate will decrease if you do not reduce the shipping fee for customers. Because customers do not want to pay for this shipping fee.

You can join the free shipping program or create a shipping discount code to increase the customer conversion rate. Note that you can save on this cost by considering shipping options, slow shipping types will have lower costs, and you do not need to pay too much for this.

Conclusion

When starting a business on TikTok, there are many fees that you need to pay attention to, consider and calculate carefully. It is best to have a clear pricing strategy after recalculating a series of costs, because most e-commerce platforms, including TikTok, do not allow changing the selling price after posting the product.

To be able to reap the benefits of becoming a seller on TikTok, you will need a lot of knowledge, you can refer to our instructions on Titkok

TikTok Shop Product Certification

Business License ID on TikTok

How to Get Unbanned from TikTok

TikTok Community Guidelines Violation

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