Like any online marketplace, Etsy charges fees to sellers. Understanding these Etsy fees is crucial for anyone considering selling on this platform. Here, we break down the various costs associated with running an Etsy shop.
Key Takeaways from this Post
Understanding Etsy Fees
Etsy charges several types of fees to sellers. These fees are part of the cost of doing business on Etsy and can significantly impact your profit margins. Here's a detailed look at each fee:
What if you're selling from a region outside the US?
If you're a seller from a country other than the US then luckily things won't be too complicated for you. Etsy tends to charge their base USD price to those from out of the US, so all you need to do is convert USD prices into your currency and you'll be able to get an accurate understanding of your fees!
If you're a UK Seller you may be able to claim back some of your Etsy VAT. However, this can be quite complex and we recommend that you consult with a UK Based Tax specialist
We also highly recommend you check on the official Etsy Website to ensure that there aren't region specific costs associated with selling on Etsy in your region.
Etsy charges a listing fee of $0.20 for each item you list in your shop. This fee is charged regardless of whether the item sells or not. The listing remains active for four months or until the item is sold. If you have multiple quantities of the same item, the listing fee will be charged for each item when it sells. It's important to note that if you list in multiple quantities or renew an expired listing, the listing fee is charged for each quantity.
When an item sells, Etsy charges a transaction fee of 6.5% of the total sale price, including shipping. This fee is automatically deducted from your payment account. The transaction fee is applied to the total amount of the sale, including the item price, shipping and gift wrapping fees, and taxes. It's important to factor this fee into your pricing strategy to ensure profitability.
Etsy's payment processing system, Etsy Payments, involves several fees:
Etsy Payments allows you to accept a variety of payment methods, including credit and debit cards, Etsy Gift Cards, and Etsy Credits. When you make a sale and the buyer pays through Etsy Payments, the money is deposited into your payment account. There is no fee to deposit money into your payment account, but there may be fees associated with withdrawing money, depending on your bank or credit card company.
- Processing fees: Etsy charges a payment processing fee for each transaction. This fee is taken from the total sale price of the item, including VAT or sales tax and shipping fees. For sellers in the US, the processing fee is 3% plus $0.25. For sellers in other countries, the processing fee may vary. This fee is in addition to the transaction fee.
- Currency conversion fees: If you list items in a currency other than your payment account currency, Etsy will convert the money for you for a fee of 2.5% per conversion. This fee is applied in addition to the payment processing fee.
- Regulatory operating fee: In certain jurisdictions, Etsy charges a regulatory operating fee. This fee is 0.25% of the sale price, including shipping and gift wrapping fees. This fee is used to cover costs associated with complying with legal and regulatory requirements, and is separate from the transaction fee and payment processing fee.
Postage Label Fees
Etsy offers sellers the option to purchase postage labels directly through the platform. The cost of these labels depends on the size, weight, and destination of the package. By purchasing Etsy Postage Labels, you can save time at the post office and access discounted postage rates. The cost of the label is then billed to your Etsy account, and the amount is deducted from your payment account balance.
Etsy offers an advertising platform, Etsy Ads, where sellers can pay to have their listings promoted in Etsy search results and other pages on Etsy. The cost of these ads varies based on the seller's budget and the performance of the ads. You only pay when someone clicks on your ad.
The cost of Etsy Ads is based on a cost-per-click (CPC) basis. This means you pay a certain amount each time someone clicks on your ad. The cost per click can range from $0.20 to $0.50. It's important to set a daily budget for your ads to control your advertising costs.
Etsy also offers an Offsite Ads program. When a shopper clicks on an offsite ad featuring one of your products and makes a purchase within 30 days, you pay an advertising fee on that order. The fee is 15% of the order value for sellers who made less than $10,000 in the past 12 months, and 12% for sellers who made $10,000 or more. The offsite ads fee is capped at $100 per order.
Etsy Plus Subscription Fee
Etsy Plus is a subscription service that offers additional Etsy tools and features to sellers for a monthly fee of $10. These features include restock alerts, advanced shop customization options, and discounts on marketing materials and shipping supplies. With Etsy Plus, you can also get 15 listing credits and $5 in Etsy Ads credits each month. This can help offset the cost of the subscription and reduce your overall Etsy fees.
Etsy Pattern Fee
Etsy Pattern is a service that allows sellers to create their own standalone e-commerce website. There is a monthly fee of $15 for this service, after a 30-day free trial. With Pattern, you can have a custom domain, sell items that aren't handmade or vintage, and more. Pattern sites also include built-in SEO, mobile-friendly design, and analytics. While there are additional costs associated with running a Pattern site, it can provide a more professional image for your business and help attract more customers.
Etsy Fees Breakdown
Here’s a quick & easy breakdown of Etsy fees:
Remember, if you're ever confused about your specific use case then you can always utilise an Etsy Fee Calculator!
How to Reduce Etsy Seller Fees
While Etsy's fees are necessary for the operation of the platform, they can add up and impact your profit margins. However, there are several strategies that sellers can use to reduce their Etsy fees:
- Reduce or Consolidate Services: The only way you could lower your Etsy fees would be to reduce or consolidate the services you use through Etsy. For example, you may be able to minimize listing fees by opting for an Etsy Pattern or Plus subscription, which come with extra listing benefits.
- Offer Free Shipping: You can reduce your Payment Processing Fee by offering free shipping to customers. This not only encourages shoppers to buy from you but also reduces the total cost of the transaction, thereby reducing the fee.
- Offer Private Listings: If a customer messages you asking a question about an item, consider offering them a private listing. This can help you save on listing fees.
- Adjust Your Prices: If your customers are letting you know they'll pay more, don't be afraid to raise your prices. This can help offset the costs of Etsy's fees.
- Evaluate Your Shipping Options: Look for the most cost-effective shipping options for your items. This can help reduce your postage label fees.
Share & Save Program: A New Way to Reduce Your Etsy Fees
Etsy, always looking for ways to support its community of sellers, has rolled out the "Share & Save Program." This initiative is not just a nod to the platform's loyal sellers but also an ingenious way to foster its growth. If you're an existing Etsy seller, this program is your ticket to earning credits, which can be a game-changer in offsetting your future listing and advertising fees.
How Does the Share & Save Program Work?
At its core, the program is all about sharing the love for Etsy. As a seller, you can earn credits by referring new sellers to the platform. Once your referral sets up shop and starts listing, you begin to accumulate credits. These aren't just any credits; they're your golden ticket to reduce those impending listing and advertising fees. Think of it as Etsy's way of saying "thank you" for bringing in more creative minds into their fold.
Reaping the Benefits of the Program
The potential savings from this program can be substantial, especially if you're an active seller with a vast network. Whether it's fellow crafters at a local fair, friends who've been on the fence about starting their Etsy shop, or followers on your social media, every referral counts. This program is an excellent addition to the arsenal of strategies mentioned in our blog to keep those Etsy fees in check.
Etsy Remains Committed to their Seller Experience
Understanding and efficiently managing Etsy fees is paramount for a profitable selling journey on Etsy. The "Share & Save Program" is yet another testament to the platform's commitment to ensuring its sellers thrive. So, while you're strategizing on optimizing your listings or considering advertising options, don't forget to tap into the potential of this program. After all, a little sharing can lead to a lot of saving!
Click the link to get stuck in to understand the finer details of Etsy's Share & Save Program
How Often Are Etsy Fees Updated or Changed?
Etsy periodically reviews and updates its fee structure. It's important for sellers to stay updated on these changes to manage their shop's finances effectively. Sellers are notified of any changes to the fee structure through Etsy's Seller Handbook, email notifications, and announcements in the Etsy forums. It's a good idea to regularly check these resources and adjust your business plan accordingly.
In Sum, How Much Does Etsy Make on a Sale?
The total amount that Etsy makes on a sale depends on the various fees applied, including listing, transaction, and payment processing fees.
For example, if you sell an item for $20 with $5 shipping, the transaction fee would be 6.5% of $25, or $1.63. If you used Etsy Payments, the processing fee would be 3% of $25 plus $0.25, or $1.00. The listing fee would be $0.20.
So, in total, Etsy would make $2.83 on this sale. However, this is a simplified example and actual costs may vary depending on various factors such as your location, the buyer's location, and any additional services you use like Etsy Ads or Etsy Plus.
Overall Financial Pros to Selling on Etsy
Selling on Etsy comes with several financial benefits that can make it an attractive platform for artisans, crafters, and vintage item sellers. Here's a more detailed look at these advantages:
- Access to a Large Customer Base: One of the biggest pros of selling on Etsy is the growing number of customers that shop on the platform. With over 96.3 million active buyers, there is a lot of potential for sales on Etsy. The platform is known for its unique, handcrafted items, attracting a specific demographic of shoppers who appreciate and are willing to pay for such products. This can significantly increase your potential customer base and sales.
- Low Start-up Costs: Starting an Etsy shop requires minimal upfront costs. The listing fee is only $0.20 per item for a four-month listing period, making it affordable for sellers to list multiple items. This low barrier to entry makes Etsy an accessible platform for new and small businesses.
- Ease of Use: Etsy's platform is user-friendly, making it easy for new sellers to set up their shop and start selling. The platform provides various tools and resources to help sellers manage their shop, list items, process orders, and interact with customers. This ease of use can save sellers time and effort, allowing them to focus more on creating their products.
- Built-In Marketing Tools: Etsy provides several marketing tools that can help increase your shop's visibility and attract more customers. These include Etsy Ads, which allows sellers to advertise their products directly on Etsy, and social media integrations, which make it easy for sellers to promote their products on various social media platforms. These tools can save sellers time and effort in marketing their products, potentially leading to increased sales.
- Niche Markets: Etsy is known for its unique, handcrafted items, attracting a specific demographic of shoppers who appreciate and are willing to pay for such products. This allows sellers to target niche markets that may be difficult to reach on other platforms.
- Etsy Seller Community: Etsy has a strong community of sellers who share advice and support each other. This community can be a valuable resource for new sellers, providing them with tips and insights to help them succeed on the platform.
Overall Financial Cons to Selling on Etsy
Despite the benefits, there are also some potential downsides to selling on Etsy. Here are some of the main financial cons:
- Fees Can Add Up: While Etsy's fees are relatively low compared to other online marketplaces, they can add up, especially for sellers with a large number of listings or high sales volume. These fees, which include listing fees, transaction fees, and payment processing fees, can take a significant chunk out of your profits.
- Increased Competition: With millions of active sellers on Etsy, the platform is highly competitive. Standing out among the multitude of other sellers can be a challenge, and may require significant time and effort in marketing your products, optimizing your listings, and providing excellent customer service.
- Limited Customizations & Branding: While Etsy provides some options for customizing your shop, these options are limited compared to having your own standalone website. This can make it more difficult to establish a strong brand identity on Etsy.
- Dependence on the Platform: When you sell on Etsy, you're dependent on their platform and policies. If Etsy makes changes that negatively impact your shop, such as increasing fees or changing their search algorithm, there's not much you can do about it. This can create uncertainty and risk for your business.
- Recurring Fees: Although Etsy has low initial start-up costs, listing fees, which recur every four months, can be a drawback for some Etsy sellers.
- Not All Types of Items Can Be Sold: Etsy sellers offer vintage and handmade goods. If you're selling items that don't fall into these categories, you might not be able to list them on Etsy.
FAQs about Etsy Seller Fees
Here are some frequently asked questions about Etsy seller fees:
Do I pay Etsy fees if an item doesn’t sell?
Yes, you will still be charged the listing fee of $0.20 even if your item doesn't sell. The listing remains active for four months or until the item is sold.
How do I reduce Etsy seller fees?
There are several strategies to reduce your Etsy seller fees, such as minimizing transactions, offering private listings, including shipping cost in the item price, adjusting your prices, evaluating your shipping options, and opting for an Etsy subscription.
Do I need a tax ID to sell on Etsy?
You don't need a tax ID to sell on Etsy. However, depending on your local tax laws and your business structure, you may need to provide a tax ID for tax purposes.
What percentage does Etsy make on a sale?
Etsy charges a transaction fee of 6.5% of the total sale price, including shipping. This fee is automatically deducted from your payment account when an item sells.
Are there discounts or fee reductions for high-volume sellers or long-time members of Etsy?
Etsy doesn't currently offer discounts or fee reductions for high-volume sellers or long-time members. However, sellers can reduce their fees by using strategies like minimizing transactions, offering private listings, and opting for an Etsy subscription.
What are Etsy Payments?
Etsy Payments is Etsy's payment processing system. It allows sellers to accept a variety of payment methods, including credit and debit cards, Etsy Gift Cards, and Etsy Credits. There are several fees associated with Etsy Payments, including processing fees and currency conversion fees.
Simplified Etsy Accounting
A key aspect of managing your Etsy fees is to make sure that you have quality Etsy Accounting Software that helps you monitor and organise the complexities of Etsy bookkeeping and accountancy. If you are a multi-platform vendor it's even more imperative you invest in this software, it will undoubtedly pay itself off in tax savings, and in valuable time that allows you to continue to grow your online business. Not to mention, the peace of mind from knowing your accounting processes are automated and produce accurate financials is both satisfying and comforting.
Keeping track of your Etsy fees and earnings can be a complex task. However, tools like Link My Books can simplify your Etsy accounting. Link My Books automatically imports your Etsy sales and fees, calculates your profit, and prepares your financial reports. This can save you time and effort in managing your Etsy finances and help you make informed business decisions.
Simplify Your Etsy Fees Calculations in 60 Seconds
With tools like Link My Books, you can simplify your Etsy fees calculations and save time on your accounting tasks. This tool automatically imports your Etsy sales and fees, calculates your profit, and prepares your financial reports, making it easier to understand your Etsy finances.
All you need to do to see how Link My Books can save you hours of time is sign up for our free trial!
Remember, understanding the cost to sell on Etsy can help you make informed decisions about pricing your products and managing your shop's finances. Please note that the information provided in this article is based on the Etsy seller fees as of Jan 2024. For the most accurate and up-to-date information, please refer to Etsy's official Fees & Payments Policy.