Prices and taxes explained¶

A price is more than a number. You need to know its currency, whether it contains tax, and whether additional charges apply.

All percentages and amounts below are fictional teaching examples. They explain Isotope's calculation model and do not specify the tax treatment for your business.

Net and gross¶

Net means before tax. Gross means including tax.

For the Trail T-shirt at 22.00 EUR, with a fictional 10% rate:

To extract tax from 22.00, divide by 1.10. Do not subtract 10% of 22.00. That would remove 2.20 and give the wrong net price.

What a tax rate is¶

A tax rate stores a percentage and can refer to a rule that decides when it applies. Its backend name helps staff identify it. Its label explains it to customers.

For example, a fictional “Example standard 10%” rate might apply when the shipping address is in your domestic delivery area. Another rate could apply for a different destination. The appropriate address and conditions come from your business's tax setup.

Rates exist separately from products so you can reuse the same treatment without entering percentages on every product.

What a tax class is¶

A tax class connects a product price to its tax treatment. You might have “Standard goods”, “Reduced goods”, and a separate class for delivery charges.

In Isotope a class can specify:

• The rate already included in the number you enter.
• Other rates to apply when their rules match.

The class answers “how should this price be interpreted and taxed?” The rate answers “what percentage applies under these conditions?” A product type answers an entirely different question about product fields and behavior.

Entering net prices¶

Suppose you enter 20.00 and intend that number to exclude tax. Leave the class's included rate empty and add the fictional 10% rate under Apply tax rates. When it matches, the resulting gross price is 22.00.

Entering gross prices¶

Suppose you enter 22.00 and intend it to contain the domestic 10% rate. Select that rate as the class's Tax rate included with product price.

Isotope extracts the included tax to establish the net amount. When the included rate's rule matches, that rate also applies. You should not select the same rate again as an additional applied rate.

If the included rate stops matching, its tax is removed. If a different 20% rate then applies, the same 20.00 net becomes 24.00 gross. Changing the address can therefore change the displayed price.

Display choice is a separate setting¶

The store configuration offers Net, Gross, and Fixed price display. The examples above use Gross. That choice does not change what you meant when entering a tax-inclusive catalog price. The tax class still needs to describe the entered number correctly.

Before the customer provides an address, the shop has default address context. Checkout can supply more specific information. Test both browsing and checkout totals, especially when you use destination rules.

Fixed display¶

Fixed display keeps the entered customer-facing price and calculates applicable taxes as included in that amount. For an entered 22.00, a fictional 10% rate gives 20.00 net. At 20%, the same 22.00 gives approximately 18.33 net. Your net proceeds change while the displayed product amount stays fixed.

Use Fixed only when that is your intended pricing policy. It differs from Gross mode, which preserves the net basis in the destination example above. Currency factors and other price rules can still affect the starting amount.

Shipping, fees, and rounding¶

Shipping and payment charges can have their own tax classes. Product tax configuration does not automatically settle the treatment of every charge.

Rounding also matters. Rounding tax for each line can differ slightly from rounding combined tax at the end. Isotope offers horizontal and vertical calculation modes. See Tax rates for the practical implications.

Next: Rules, then Tax rates and Tax classes. The worked tax example is an optional exercise after the basic setup.