Business finances are not always the most enjoyable business activity if you are a creative person, but making sure you know your financial numbers is vital to run a successful, and profitable, Etsy shop. So here is a series of posts to help any Etsy seller get on top of their Etsy financials so they can work out their Etsy earnings and the Etsy seller fees they will be charged.
- How much does Etsy cost?
- What do Etsy’s revenue figures mean?
- How to know if you are really making a profit on Etsy
- How to make Bookkeeping easy for your Etsy shop
Fees, fees and more damn Etsy fees! That seems to be a common refrain from many Etsy sellers, the Etsy seller fees just seem crazy.
Etsy seems to get a bad rep for the amount and complexity of the fees that they charge. And there is some truth in that. They do have a lot of different fees that apply under specific conditions. And if you haven’t done your homework, it can be a surprise when you make your first sale.
So I thought I would do a quick guide to all the Etsy seller fees that can occur so that you know what to expect.
Etsy fee types
Here is a list of the fee types you could encounter when you start using Etsy:
- Listing Fees – There is a $0.20 fee (which equates to roughly £0.15 in the UK) for every new listing you add. This applies whether the listing sells or not. A listing can remain active for 4 months without a sale before it expires. This fee is also repeated if you make a sale and you have chosen to auto-renew the listing, or if you choose to renew an expired listing. It is again repeated if you sell multiple quantities of the same item in one sale. In this scenario, you will be charged an auto-renew fee for each item sold, i.e. $0.20 per item.
- Shipping Label Fees – This varies by the shipping labels you choose so I won’t cover it here. You can find out more about Etsy Shipping labels here.
- Transaction Fees – This is 5% of the total item cost (including shipping and gift wrap).
- VAT – Depending on your business status and location, Etsy may collect VAT on seller fees. The amount of VAT varies by country/ You would need to check your local VAT rules for this.
- Pattern – If you have chosen to use Etsy’s Pattern service, then there will be additional Pattern charges. To keep things simple, I am not going to include them here.
- Offsite Ads Fees – Etsy now charges fees if it brings business your way from their offsite ads. If you made less than $10,000 on Etsy in the past year, you’d get charged a 15% fee on the order total. In this scenario, you can opt-out of the offsite ads. If you made at least $10,000 in the last year, you’d get a discounted fee of 12%, but offsite ads are mandatory. The Offsite Ad fee will never exceed $100 for an order, regardless of the order total.
- Etsy Ads – You have control on whether you choose to advertise within Etsy and how much you spend per day. The amount spent in a day is based on the number of potential customers that click on your Ad, up to your spend limit for the day. The amount spent will be added to your Payment Account as a Fee.
- Payment Processing Fees – And finally, whenever you get a sale, you pay Etsy a fee for processing the payment. This again can vary based on your country (see here). Payment processing fees are a set rate plus a per cent of the total sale price of the item. The fees are based on the item’s total sale price, including its shipping fees, and any applicable sales tax.
If you are based outside of the US, you also need to take into account possible currency conversion. All fixed cost fees, like listings and Pattern, are defined in USD. Etsy converts fees from USD to your payment account currency at the market rate at the time the fee hits your payment account. This conversion may change if currency exchange rates change.
Also, if you list items in a currency other than the currency of your payment bank account, Etsy converts your funds from Etsy Payments to the currency of your payment account on your behalf. A 2.5% fee is charged when currency conversion is required.
It is always best to have your shop currency in the same currency as your payment bank account.
A worked example
As an example, I’m based in the UK and get charged the following per sale:
- The listing fee is £0.15 + 20% VAT.
- The transaction fee is 5% of the sale price + 20% VAT.
- The shipping fee is 5% of the sale price + 20% VAT.
- The payment processing fee is £0.20 + 4% of the entire payment (including postage fees) + 20% VAT.
So, let’s imagine I sell something for £10 + £2.99 postage. It’ll cost me as follows:
- 15p in listing fees plus 3p in VAT = 18p,
- 50p in transaction fees plus 10p in VAT = 60p,
- 15p in shipping fees plus 3p in VAT = 18p
- 72p in payment fees ( 4% of £12.99 + £0.20) plus 14p in VAT = 86p.
This is a total of £1.82 in fees and taxes. So even though the customer pays £12.99, the net sale price I receive is £11.17.
Remember, this is the net amount to be paid. You still need to take off your expenses such as material, shipping, postage and labour costs and of course tax.
How do you know what Etsy seller fees you have been charged?
You can find out all your sales, fees and taxes in your Etsy Payment Account (Shop Manager->Finances->Payment Account).
I find the easiest thing is to download my monthly statement and order the rows by Type. I then do a subtotal for all the different types, and this will tell me how much I have paid for each type of fee. Here’s a quick video to show you this.
If you want to find out more on what the values in this spreadsheet mean check out this post.
Is Etsy value for money?
To work out whether Etsy is worthwhile doing, you must consider whether you would make the same sales if you weren’t on Etsy.
If you generate the majority of your own sales then maybe you can direct these leads to your own website and save yourself some of the fees.
If Etsy generates the majority of your sales, then removing yourself from Etsy means you will lose those sales. This means you need to find some other route to make up the shortfall. You could try another marketplace, and actually, that makes good business sense to diversify your income, but other marketplaces will also have fees.
You can find out from your stats (either in Etsy or Google Analytics) where your traffic comes from. Although you don’t know specifically where the sales are from.
The bottom line is you need to work out what the cost of the sales are worth to you.
Etsy doesn’t cost much to get up and running. If you get sales, as long as you have priced to cover all your costs, then any sales are better than no sales. If you don’t make any sales, then it hasn’t cost you much, other than time.
Personally, Etsy gets me more views than I have ever been able to get using my own marketing, so whilst this remains the case I am happy to continue to be on Etsy.