Betting exchanges charge commission on your net winnings on a market, whereas traditional bookmakers do not because their commission has already been included in the calculation of the odds. So in order to make a comparison between the back odds offered on the exchange and a bookmaker's odds, you have to deduct the commission. This calculator performs that task for you.
The commission charged by betting exchanges is between 2 and 8%, but when choosing a betting exchange, you should consider not only its commission rate but also the liquidity of its markets.
The odds in the formulas are in decimal format.