Etsy offers sellers a cost-effective way to start an online business by providing a platform to reach a large customer base with low upfront costs.
Whether you sell handmade, vintage, craft supplies, or second-hand items, Etsy can be an incredible place to sell your items without the hassle of having a brick-and-mortar store.
However, like most marketplace platforms, they take a cut of your sales in exchange for providing the traffic and infrastructure that allowed you to make the sale in the first place.
So How Much Does Etsy Take From Sales?
Although the answer varies based on the number and types of fees that apply to the transaction (find a full list and calculator here), the general rule of thumb is that Etsy will take 6.5% + $0.20 (the listing/relisting fee).
However, since most sellers use Etsy Payments for their transactions on the Etsy platform, you would also need to account for the transaction fee of 3% + $0.25 that they charge.
This means, if you want a rough estimate of what Etsy will take from your sale, you would need to account for both of those fees, resulting in Etsy taking 9.5% + $0.45 of your total selling price, in exchange for selling the platform.
In addition to keeping this “base” fee in mind, there are a few other fees you may want to know about before you start selling on Etsy.
The first fee a seller must be aware of is the Etsy listing fee. The site charges a fee of $0.20 for each listing of an item for sale. Kindly note that every time you create a new listing or renew an expired one, you must pay a fee of $0.20. The listing lasts for four months, after which it expires. The fee applies regardless of whether an item sells or not.
Etsy has an auto-renewal feature that automatically renews your listings after the four months lapse, and your item hasn't sold. They charge you an extra $0.20. Which you can choose to opt out of. This setting can be found under your listings managers tab. You can have it on manual mode only to avoid getting charged every time.
Multi-quantity Listing Fee
Another fee sellers must be aware of is the multi-quantity listing fee. If a customer buys several units of the same product from your store, you will be charged $0.20 per item. This is in addition to the original $0.20 for the listing.
Once you make a sale, Etsy will charge a transaction fee of 6.5% on each item's sale price, including shipping and gift wrap charges. The platform calculates this fee from the pre-tax sale amount for Canadian and US-based sellers.
Sellers on Etsy should keep in mind that the platform charges a transaction fee for each sale made, so it's important to factor this into the overall cost of doing business.
Additionally, the transaction fee can quickly add up if a seller makes many sales, so managing these costs carefully to maximize profits is essential.
Payment Processing Fees:
In addition to the transaction fee, Etsy also charges payment processing fees. These fees are charged to the seller on each Etsy payment transaction. This fee consists of a fixed rate plus a percentage of the overall sale amount. Different countries vary.
Etsy allows its sellers to print out shipping labels in some geographical regions.
This cost depends on the box's origin, carrier, destination, weight, and dimensions.
If you choose to have signature confirmation or insurance at the time of purchase, the shipping label's total cost will include the corresponding fees.
As a seller, you have the option to purchase parcel insurance through authorized insurance providers.
US sellers who choose a USPS shipping return label will incur the charge after delivering the package.
To buy shipping labels through Etsy, you must have either Etsy Payments or PayPal as your payment method. It's important to factor in shipping costs when setting the price of your items to ensure you're making a profit.
Extra fees will be incurred if you opt to utilize Etsy's advertising and marketing services to boost your store visibility. The costs associated with advertising services through Etsy are as follows:
- For Etsy Ads: Etsy calculates the fees for Etsy Ads based on the budget you have set.
- For Offsite Ads: You are only charged if your advertisement leads to a sale.
Regulatory Operating Fees
In certain countries, sellers will be charged a regulatory operating fee on every transaction. This fee is a fixed percentage of the price you have displayed for each listing plus the amount you charge for shipping.
Another additional fee that sellers need to be aware of.
If you offer international shipping, you need to be aware of certain customs taxes and fees charged by certain countries.
While in most cases, the buyer is the one to handle these charges, it's always a good idea to be aware of these charges.
In some countries, sellers will incur a regulatory fee on every transaction they make through Etsy.
You may also need to invest in photography equipment and tools to create high-quality product listings.
Selling on Etsy can be a great way to start or grow an online business, but it's important to manage costs effectively to maximize profits. Here are some cost-saving tips for sellers,
- Utilize sales and promotions: Participating in sales and promotions, such as holiday sales or “cyber week” events, can help drive sales and increase visibility for your shop. Additionally, offering discounts or promotions through Etsy's coupon feature can help reduce costs for both you and your customers.
- Keep listing fees low: To keep listing fees low, consider using Etsy's bulk upload feature to list multiple items at once and take advantage of relisting options to renew items that haven't sold.
- Offer free shipping: Offering free shipping can be a great way to attract customers and reduce costs. To make this more cost-effective, consider including the shipping cost in your item prices or offering a threshold for free shipping (e.g., “Free shipping on orders over $50”).
- Use flat rate shipping: If possible, consider using flat rate shipping, which can simplify shipping costs and save money for both you and your customers.
- Use a cost-effective payment processor: To reduce payment processing fees, consider using a payment processor other than Etsy Payments. Many alternatives, such as PayPal or Stripe, offer lower fees and more flexible payment options.
- Optimize your shop's appearance: A well-designed and organized shop can help attract customers and drive sales. Consider investing in a professional shop banner, product photography, and well-written product descriptions to showcase your items.
- Minimize waste: Consider using lightweight packaging materials to reduce shipping costs and minimize waste.
- Craft an engaging about me page. One of the key ways to do this is to talk about why you started your business and what makes your store unique. While crafting this might feel unnatural at first, this can help your customers understand why you do what you do and help build your community.
- Reduce listings. When you're just starting out, it's easy to be excited and create numerous items and list them. While this is a great way to showcase your talents and different goods, it also racks up Etsy listing fees. Instead, consider only creating a few high-quality pieces, list them, and get the statistics necessary to go on.
Following these strategies can reduce costs and increase profits when selling on Etsy. It's also important to regularly review your expenses and adjust your strategy as needed to ensure that you stay competitive and maximize profits.
Is it worth selling on Etsy?
Whether it's worth selling on Etsy depends on several factors, including the type of product you are selling, the size of your target market, and your personal goals and preferences.
Here are some pros and cons to consider when deciding if Etsy is the right platform for you:
- Large audience: Etsy has a large and active audience, making it a great place to reach potential customers.
- Low startup costs: Etsy has low startup costs compared to other e-commerce platforms, which makes it accessible for many small business owners.
- Marketing support: Etsy offers various marketing tools and resources, such as advertising options, to help you reach more customers.
- Flexibility: Etsy allows you to run your business on your own terms, with flexible hours and no pressure to make sales.
- Limitations: Etsy has restrictions on the types of items a seller can sell, and its policies on intellectual property and handmade items can be restrictive for some sellers.
- Dependence on Etsy: Success on Etsy can make it hard to launch a standalone website or brand without losing customers.
Selling on Etsy can be an excellent opportunity for many small business owners. However, it's crucial to weigh your personal goals against the potential advantages and disadvantages before making a decision to start selling on Etsy. Start small on Etsy, and monitor product performance before committing more resources.
Overall, selling on Etsy is inexpensive compared to other online marketplaces, and costs vary based on business size and type. Understanding and budgeting for Etsy fees can ensure long-term profitability for your business.