Payments & invoicing

VAT setup: tax-inclusive or tax-exclusive pricing?

One setting changes every price a customer sees — and its effect on conversion is real.


5 min read

Setting up tax asks a question that looks technical: are entered prices inclusive of VAT, or is it added on top? The answer changes the entire buying experience.

Tax-inclusive pricing

The displayed price is what the customer pays. No surprise at checkout, which is what Saudi shoppers expect. Its only drawback is that your numbers become untidy if you calculate backwards.

Tax-exclusive pricing

Tax is added at checkout. The advantage is a lower displayed price; the drawback is the customer watching the total rise at the final step — among the most common causes of abandonment.

The practical recommendation for consumer sales

Display inclusive prices. Any increase appearing at the last step reads as an unpleasant surprise, even when it is lawful and expected.

Business sales are different

If your audience is companies, they may prefer seeing the pre-tax price because they reclaim it. If you sell to both, show both figures clearly on the product page rather than picking one.

Do not change the setting after launch

Switching the calculation method on an existing catalogue recalculates every price. Settle it before uploading products, and if you must change, manually review a sample of prices straight afterwards.

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VAT setup: tax-inclusive or tax-exclusive pricing?