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Hello! I’ve wanted to start a series on the behind-the-scenes of selling on Etsy. I’m excited to start that series this week. And we’re going to jump right in with one of the biggest questions we sellers get asked: what does Etsy cost?
If you were anything like me 3+ years ago (before I opened my shop), you might have fantasized at some point about opening your own Etsy shop. But one of the big questions you first need to answer is, how much will it cost me? It’s important to operate at a profit in order to stay in business for years to come.
I’ve read countless stories of Etsy shops that have had to close because their owners didn’t take the time to figure this out before they started. 😩 When I began, I thought I had figured out the costs pretty well. I have an MBA and even with that knowledge I still didn’t have my prices and shipping process set correctly. Since then, I’ve created tons of spreadsheets and tax documents to help me manage all of this.
So I’m going to break down a single example for you today!
First, let me say that there is no straight, flat percentage for Etsy costs. Some sellers may say that, but they are factually incorrect. The Etsy fees are broken down into a combination of both fixed and variable fees, which are largely determined by the cost of the item being sold, the country and/or U.S. state it’s being sold from, and the shipping cost for that item.
There are other platforms that will charge a flat fee. EBay, Facebook Marketplace, and other platforms usually charge a straight percentage. And there are other platforms like Etsy that charge a combination of fees.
However, it’s hard to understand all this without seeing a specific example. So I’m going to spell this out for you! Note this information is current as of June 2023.
You should know Etsy seller fees are available for public consumption. If you ever have questions about them, you can find the full explanation on Etsy’s website. Etsy does its best to make this information as transparent as possible for existing and potential new sellers.
I run a sticker and custom-cut notebook shop. So for this post, I’ll break down the costs for a single vinyl sticker, as I’m familiar with this product. To keep this relatively simple to understand, I’ll give a detailed example of a United States seller who is selling a single vinyl sticker to a United States customer in the local, USD currency.
Fixed Fees
The first Etsy cost to understand is the fixed fees associated with a single listing in an Etsy shop. There are 2 fixed fees that Etsy charges for a single listing. In this case, a single listing is one vinyl sticker.
$0.20 listing fee
$0.25 payment processing fee (varies by country)
TOTAL ETSY FIXED FEES: $0.45
So yeah, we’re already at nearly a half-dollar in costs for one vinyl sticker. We have many more to go! 😂
Variable Fees
There are several variable fees charged by Etsy for each listing as well. These are all based on the price of the listing + additional items:
6.50% transaction fee (based on the total of the item price, shipping, and gift wrap)
3% additional payment processing fee (varies by country—based on the total of the item price, shipping, gift wrap, and sales tax)
For this example let’s make the following assumptions:
the vinyl sticker is priced at $3.50
USPS currently charges $0.63 to send a single vinyl sticker in a regular first-class card; let’s assume that this is Etsy’s shipping cost as well
the buyer is from Texas and sales tax is 8.25% in the state of Texas
most people do not purchase gift wrap for this item
Therefore, the variable fees from Etsy would cost, at a minimum:
$3.50 vinyl sticker price + $0.63 shipping cost = a base price of $4.13 for Etsy’s transaction fees
x 6.50% = $0.27 (rounded)
$3.50 vinyl sticker price + $0.63 shipping cost + $0.29 sales tax = a base price of $4.42 for Etsy’s payment processing fees
x 3% = $0.13 (rounded)
TOTAL ETSY VARIABLE FEES: $0.40 (rounded)
However, Etsy doesn’t like it when you use regular postage stamps for orders above a certain amount. If an Etsy seller wants to include tracking on the order (which is important for maintaining Star Seller status, etc.), their shipping costs for this type of item will rise to at least $0.84 when using Etsy for shipping.
Other Costs
So we’re already at a minimum of $0.85 for a single listing, and we have not included the shipping and COGS (“cost of goods sold”) of that individual order and item! 😂 Here are some other costs to consider, and some of these are Etsy costs and some of these are expected individual shop costs:
COGS: a shop cost and it varies by shop—let’s assume the shop seller can secure vinyl stickers at $0.75 each when outsourced
Shipping cost: $0.63 (a USPS example—added to the costs if this is not charged separately to the customer as a pass-through; note that Etsy can sometimes secure a cheaper shipping cost when purchasing shipping through them)
Shipping packaging, labels, etc.: a shop cost and it varies by shop—let’s use an easy number like $0.25. This category includes how your Etsy item is packaged for shipping. Every little thing, including the stickers used to decorate your package, the shipping label on it, and the branding inserts that go into it, is a separate cost. They add up!
Freebies: a shop cost and it varies by shop—let’s use an easy number like $0.50. In my orders, I usually include a free, small package of stickers. The cellophane they’re stored in, the actual sticker freebies, and the decorations for that freebie package are all separate costs. They also add up!
Operating costs: a shop cost and it varies by shop. If making the sticker directly (instead of outsourcing), a seller would need to consider what it costs to run the printer and sticker cutter, replenish ink, blades, paper, etc. We will not include operating costs in this particular example since many shops outsource the production of their vinyl stickers. I outsource my vinyl stickers to ensure they are high quality and waterproof, dishwasher-safe, and weatherproof. 🙂
Labor: a shop cost and it varies by shop. Some poor Etsy shop owners forget to include this and then wonder why they can’t seem to make a profit after spending so much time on their shop. Many Etsy owners calculate this as an hourly rate. Let’s assume an Etsy shop owner charges minimum wage for their labor: $7.25/hour in the United States and it takes 10 minutes to process one vinyl sticker order. Therefore, the labor cost to process an order for a single vinyl sticker in this example would cost $7.25 * 0.17 (10 minutes) = $1.23 (rounded). ← This is actually undervaluing the labor cost. True labor costs should also include sticker design time (which can often take hours or days), ordering time if outsourcing, vinyl sticker management, etc. However, let’s keep it simple for now.
In the United States, sales tax is a pass-through that is charged directly to the customer and the seller has no control over this. This is actually a great offering that Etsy provides to its sellers, as we sellers would have to manage sales tax by state for tax purposes otherwise. Not all online platforms provide this service.
TOTAL OTHER COSTS: $3.36 (minimum)
Yep! We’re almost already at the vinyl sticker’s price, which, when combined with the other costs, means no profit. Yikes!
In addition, there can be additional Etsy costs associated with orders - currency conversion, international taxes like VAT, advertising, advanced Etsy services, and more. It depends on a variety of factors, as mentioned before. In general, you are charged more fees if you’re not United States-based.
*Note that the above costs, although similar, are generic and not necessarily reflective of my personal shop costs.
Putting It All Together
So if we were to add it all up, for a single vinyl sticker that is priced at $3.50 on Etsy and is sent through snail mail using USPS:
Fixed Etsy fees: $0.45
Variable Etsy fees: $0.40
^^ This means that Etsy’s take for a listing at this price point is 24%
Other costs: minimum of $3.36
TOTAL COSTS: $4.21
Based on this, you can see that the Etsy shop owner, if selling a single vinyl sticker at the above costs, would be operating at a loss. That’s why it’s so important for an Etsy shop owner to do detailed math on every item in their shop to figure out true costs.
My vinyl stickers operate at a loss to stay competitive. Based on my research, $3.50 is the going rate for high-quality vinyl stickers across Etsy right now. I hope customers will purchase my vinyl stickers in addition to another item, and so far they have. When that happens, they usually break even. I just like to be able to provide additional decorative items for my planner and notebook customers. 🙂
Tip for customers: it’s a cost-saving for most Etsy shop owners when customers purchase multiple items in a single order. This is because we can use one set of shipping packaging for multiple items, combine shipping costs, etc., which brings down the individual costs by item. Therefore, it’s appreciated when customers purchase more than one item in a single order. However, please don’t get hung up on this—smart shop owners prepare for all scenarios by averaging out the costs in their pricing.
#Controversial? Why Am I Sharing This?
I’m part of a number of online forums for Etsy sellers. I consistently read stories about how customers complain about the prices Etsy shop sellers charge. Usually, these customers are comparing Etsy shops to overseas manufacturers that mass-produce products.
Unless the Etsy shop is reselling items overseas with no handmade customization (which can be against Etsy’s terms of service), let’s be honest—it’s not a fair comparison. If an item is handmade (meaning, the Etsy shop designs and/or manufactures the item from start to finish), the costs will be higher than a mass producer simply because an Etsy shop owner can’t take advantage of economies of scale. It’s always disheartening to read these stories, but I understand why it happens. The costs of operating an online shop are not widely understood.
So, on the one hand, it’s important to educate customers about the pressures we Etsy sellers face and why items might have to be priced the way they are.
But I also want to share the behind-the-scenes details for anyone looking to start their own Etsy shop or for anyone who is just curious about what Etsy seller lives are like. If you’ve been thinking about starting your own shop, you can do it! Just be smart and do your due diligence first!
Do you have a question about the experience of selling on Etsy? Ask away!