Fee Math: Per Contract vs Percent Fees and How to Convert
Why fee conversion matters
Prediction market venues often express fees differently:
• a fixed fee per contract
• a percent fee on notional
If you do not convert them to the same unit, you will mis-estimate all in cost and minimum required edge.
Two common fee formats
Per contract fee
A fixed amount per contract traded.
Example: 0.01 dollars per contract.
Percent of notional
A percentage of trade notional.
Notional is price times contracts.
Example: 1 percent of notional.
Convert percent fee to per contract
Per contract percent fee = price × percent_fee
Example:
• price = 0.55 dollars
• percent fee = 1 percent
• per contract fee = 0.55 × 0.01 = 0.0055 dollars
That is 0.55 cents per contract.
Convert per contract fee to percent of notional
Percent equivalent = per_contract_fee / price
Example:
• per contract fee = 0.01 dollars
• price = 0.50 dollars
• percent equivalent = 0.01 / 0.50 = 0.02
That is 2 percent of notional.
Worked example: compare two venues
You buy 100 contracts at 0.55 dollars.
Venue A: 0.01 dollars per contract
• total fee = 100 × 0.01 = 1.00 dollars
• per contract fee = 0.01 dollars = 1.0 cent
Venue B: 1 percent of notional
• notional = 100 × 0.55 = 55.00 dollars
• total fee = 55.00 × 0.01 = 0.55 dollars
• per contract fee = 0.0055 dollars = 0.55 cent
How to include fees in cost metrics
Execution cost and fees are separate layers.
One way all in cost = effective spread + fees one way
Round trip cost adds entry plus exit fees and execution.
Common mistakes
Comparing percent fees without price: percent fees depend on price level.
Ignoring maker taker differences: maker vs taker fees can change the math materially.
Mixing cents and dollars: keep one unit consistently in your calculator and logs.
Takeaway
Convert everything into per contract units, then add fees to effective spread to get all in cost. That makes fees comparable across venues, markets, and strategies.
Related
• Maker Taker Fees: When You Pay and When You Get Paid