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Etsy is a marketplace where people can sell handmade, vintage, and supplies. It’s an excellent platform for creative entrepreneurs to start and grow their businesses. One of the things you need to be aware of as an Etsy seller is the fees. In this article, we’ll give you a simple guide to Etsy fees so that you can make informed decisions about selling on Etsy.
Fees, fees and more damn Etsy fees! That seems to be a common refrain from many Etsy sellers.
Etsy seems to get a bad rep for the amount and complexity of the fees 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.
Etsy fee types
Here is a list of the fees you could encounter when using Etsy. The values were correct at the time of writing this article:
- Listing Fees – There is a $0.20 fee (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 repeated if you make a sale and have chosen to auto-renew the listing or renew an expired one. 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, 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 be charged a 15% fee on the total order. In this scenario, you can opt out of the offsite ads. If you made at least $10,000 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 total.
- Etsy Ads – You have control over whether you choose to advertise within Etsy and how much you spend per day. You set your ad spend limit, and this amount is only consumed when a potential customer clicks on the ad. The amount used will be added to your Payment Account as a Fee. The cost per click is calculated by Etsy and varies.
- 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 percentage of the item’s total sale price. The item’s total sale price includes the shipping fees and any applicable sales tax.
You must consider possible currency conversion if you are based outside the US. 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 when the fee hits your payment account. This conversion may change if currency exchange rates change.
Also, suppose you list items in a currency other than the currency of your payment bank account. In that case, 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 usually more cost-effective 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.
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.
This means even though the customer pays £12.99, the net sale price I receive from Etsy 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 determine whether Etsy is worthwhile, you must consider whether you would make the same sales if you weren’t on Etsy.
If you generate the majority of your own traffic, you may direct these sources to your own website and save some of the fees.
If Etsy generates the majority of your traffic, then removing yourself from Etsy means you will lose this traffic. This means you must find another route to make up for the shortfall in traffic.
You could try another marketplace. This actually 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 precisely where the sales are from.
The bottom line is you need to determine what the sales cost is worth to you.
Etsy doesn’t cost much to get up and running. If you get sales, as long as you have priced to make a profit, then any sales are better than no sales. If you don’t make any sales, 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.
If you are an Etsy seller, there are some more specifics you might be interested in. Here is a series of posts to help you get on top of your Etsy financials to work out your Etsy earnings and the Etsy seller fees you will be charged.
- 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
By following these tips, you can take control of your bookkeeping and avoid feeling overwhelmed.