The True Cost of Selling on Etsy

Table of Contents

1. Introduction
2. Understanding Etsy Fees
3. Listing Fee
4. Transaction Fees
5. Payment Processing Fees
6. Off-Site Ads Fee
7. Overall Business Expenses
   • Software for Admin and Marketing
   • Equipment and Cost of Goods
   • Education
8. Conclusion

How Much Does It Cost to Sell on Etsy?

Selling on Etsy has become a popular way for individuals to start their own online businesses. As an Etsy seller myself, I know firsthand the importance of understanding the costs involved in running a successful shop. In this article, we will break down the various fees associated with selling on Etsy, as well as the overall business expenses that come with running a small business.

Introduction

Hello and welcome to my YouTube channel! My name is Andrea, and I have been an Etsy seller for eight years. In this video, we will dive into the topic of how much it costs to sell on Etsy. Many aspiring entrepreneurs are often curious about the expenses associated with running an Etsy shop. In this article, I will break down the fees from Etsy itself and discuss the overall business expenses that are not specific to the platform.

Understanding Etsy Fees

Etsy fees can be a bit confusing for new sellers and even experienced ones. It is crucial for every Etsy seller to have a clear understanding of these fees to ensure accurate bookkeeping and profitability. There are four main types of fees that Etsy charges: listing fees, transaction fees, payment processing fees, and off-site ads fees.

Listing Fee

The listing fee is the only fee that you pay before actually making a sale on Etsy. It costs just 20 cents to list a new product or renew an existing listing. This fee is essential to keep in mind as it is charged for each sale. So, if an item is renewed multiple times due to multiple sales, you will be charged 20 cents for each renewal.

Pros:

• Low cost of entry, with only 20 cents per listing.
• Allows you to easily update and renew listings.

Cons:

• The fee can add up if you have a high volume of sales.

Transaction Fees

Transaction fees are incurred when you make a sale on Etsy. The current transaction fee is 6.5% of the total sale amount, which includes shipping and gift wrapping charges if applicable. This fee is how you pay Etsy for using their platform and the various tools and services it provides.

Pros:

• Covers the use of Etsy's platform, including shipping and marketing benefits.
• No monthly fees.

Cons:

• Transaction fees can take a significant portion of your profits, especially for high-value items.

Payment Processing Fees

Payment processing fees are not unique to Etsy and are charged by various payment providers. In the United States, Etsy's payment processing fee is 3% plus 25 cents per transaction. These fees are deducted from your Etsy payment account and are separate from the other fees charged by Etsy.

Pros:

• Comparable payment processing fees to other platforms.
• Convenient integration with Etsy's payment system.

Cons:

• Fees can vary based on the country you are selling in.
• Additional fees for currency conversion may apply.

Off-Site Ads Fee

The off-site ads fee has garnered some controversy among Etsy sellers. This fee is charged when a sale is attributed to an off-site ad campaign initiated by Etsy. If your total sales on Etsy are less than $10,000, you will be charged a 15% fee for these off-site ad sales. If your sales exceed $10,000, the fee is reduced to 12%. However, you do have the option to opt-out of these off-site ads if you prefer not to pay this fee.

Pros:

• Increased visibility and potential sales through off-site ad campaigns.

Cons:

• The fee can be a source of frustration for some sellers.
• Opting out of off-site ads may limit exposure to potential customers.

Overall Business Expenses

Aside from the fees charged by Etsy, there are other expenses that come with running a small business. These expenses can vary depending on the industry and the specific needs of your business. Here are three categories of overall business expenses to consider: software for admin and marketing, equipment and cost of goods, and education.

Software for Admin and Marketing

Every business requires various software tools to manage administrative tasks and marketing efforts. These tools may include Google Drive, Trello, Canva, and others. While these expenses are not unique to Etsy, they are important to keep track of to ensure accurate bookkeeping.

Equipment and Cost of Goods

The equipment and cost of goods category is highly dependent on the type of products you sell. This may include the cost of machinery, raw materials, packaging supplies, or inventory. These expenses need to be carefully calculated to determine the cost of producing each item and to set appropriate prices.

Education

Investing in education is crucial for both personal and business growth. Whether it's learning more about your craft or acquiring business knowledge, there are often expenses associated with courses, workshops, or online resources. These fees should be considered as part of your overall business expenses.

Conclusion

Understanding the costs of selling on Etsy is essential for every aspiring entrepreneur. By breaking down the various fees charged by Etsy and considering the overall business expenses, you can make informed decisions and ensure the profitability of your shop. Remember to keep track of your expenses, analyze your profit margins, and continuously assess the viability of your business. With a clear understanding of the costs involved, you'll be on your way to running a successful Etsy shop.

Highlights:

• Selling on Etsy incurs fees such as listing fees, transaction fees, payment processing fees, and off-site ads fees.
• The listing fee is 20 cents per listing or renewal, and it is the only fee charged before making a sale.
• Transaction fees amount to 6.5% of the total sale value and cover the use of Etsy's platform.
• Payment processing fees are charged by various payment providers and are separate from other Etsy fees.
• Off-site ads fees are charged for sales attributed to Etsy's off-site ad campaigns.
• Overall business expenses include software tools, equipment, cost of goods, and education.
• Each business will have unique expenses, and it's important to accurately track and calculate them for profitability.

FAQ:

Q: Can I opt-out of off-site ads on Etsy? A: Yes, if your total sales on Etsy are less than $10,000, you can choose to opt-out of off-site ads.

Q: Are payment processing fees unique to Etsy? A: No, payment processing fees are charged by various payment providers and are not specific to Etsy.

Q: Are there monthly fees for selling on Etsy? A: No, Etsy does not charge any monthly fees. The fees are transaction-based.

Q: Are there alternatives to Etsy for selling handmade items? A: Yes, there are other online platforms like Shopify, Amazon Handmade, and eBay that offer a marketplace for selling handmade items. Each platform may have its own fee structure and features.

Q: Do I need to pay listing fees for renewing an item on Etsy? A: Yes, each time an item is renewed on Etsy, a listing fee of 20 cents will be charged.

Q: What should I consider when calculating the cost of goods? A: The cost of goods includes the cost of materials, packaging, and any expenses directly related to creating or sourcing your products. It is important to accurately calculate these costs to determine your profit margins.

Q: Can I deduct business expenses for tax purposes? A: Yes, in most cases, you can deduct your business expenses for tax purposes. It's recommended to consult with a tax professional or accountant to understand the specific rules and regulations in your country or region.