gross-up

Also called: grossing up, gross up

Finding the price that leaves a target net amount after a fee taken from the price: P = net ÷ (1 − f). For 400 net after a 20% fee, P = 500, not 400 × 1.2 = 480.

A gross-up answers the question "what price leaves me X after the fee?". If a platform keeps a share f of the price, the net is P·(1 − f). Set it equal to the target and solve:

$P = \frac{\text{net}}{1 - f}$

The tempting shortcut, net × (1 + f), adds the fee as a share of the net rather than of the price, so it always leaves you a little short. The gap grows with the fee: at 20% it is 4% of the target, at 30% it is 9%.

Multiplying by (1 + f) is right only when the fee is charged on top of the cost, like a markup or a tax added to a net price. So always ask: a share of what?

Example

A platform keeps 15% of the lesson price and a tutor wants 510 UAH in hand.

Right: P = 510 ÷ 0.85 = 600 UAH; 15% of 600 is 90, and 510 is left.
Wrong: 510 × 1.15 = 586.50; 15% of it is 87.98, leaving 498.53.

Common mistakes

Multiplying by (1 + f) when the fee comes out of the price.
Grossing up twice when two fees apply: divide by (1 − f₁)(1 − f₂) only if each is taken from what is left.
Forgetting VAT or payment fees that are also shares of the price.

Learn it in the course

Contribution margin and break-even · The unit-economics formulas as pure math: CM = P(1 − f) − T − V, CM%, break-even ⌈F ÷ c⌉, margin of safety, step costs, the volume a discount needs, gross-up and ROI.
Rearranging a formula: solve for what you need · Do the same to both sides and undo in reverse order: break-even Q = F/c, runway, the regression intercept, sample size, a fraction inside a denominator, and why a gross-up divides by (1 − f).