In order to determine your true profit when selling on Etsy, you need to be able to determine what your costs are. Multiple costs are involved with selling on Etsy. Here is an outline to help you understand.
Etsy Seller Fees:
It is free to start an account and register with Etsy. However, once you decide to get your handmade creations listed for sale, fees need to be considered.
What are these fees exactly?
You start off with a listing fee of $.20. Keep in mind that your product is only listed for four months before it expires. If it does not sell and you decide to renew your product, you are charged another $.20 at that time. If your item sells, you have an Etsy transaction fee of 3.5% from your sale price.
- Listed Sale Price of Product A – $10.00
- Etsy Fees for Listing – $.20
- Etsy Transaction Fees upon Sale – $.35
- Total Profit thus far – $9.45
Etsy Direct Checkout Fees:
Your payment fees are different from your seller fees. This is the cost charged to you for using Etsy Direct Checkout so you can accept credit card payments. Etsy gives you the option of using alternative methods such as Paypal or you can do things the old fashion way and conduct business via snail mail with a check or money order.
You will find it more common that your customer wants to spend their money as soon as possible and prefer an option of Paypal or Etsy Direct Checkout for convenience. This does comes at a cost though.
What are your payment fees?
You start off with an automatic $.25 charge for every transaction processed via Etsy Direct Checkout. On top of the flat rate for each transaction, you also pay 3% for a processing fee. This is based on your overall sale price. Let’s add this cost onto the previous example with Product A.
- Total Profit thus Far – $9.45
- Payment Processing Fee (3% of sale price at $10.00 plus $.25 fee) – $.55
- Total Profit thus Far – $8.90
This is not your end profit yet. You have to be sure to look at your shipping price and costs, cost per item for materials, and any additional advertising costs you absorb.
Etsy vs. Paypal:
While looking at your new Etsy business from a cost perspective can seem overwhelming, do not shy away from continuing your dreams. Even using Paypal as a payment method will charge you a $.30 transaction fee and 2.9% of your sale price. These fees are capped up to $3,000 in monthly sales where your transaction fee will slightly decrease in percentage as you move up the food chain. Whichever route you choose to go, be sure to keep informed with what you will be paying.
Now that you understand your basic costs for bringing your hobby into a business with Etsy, you can price your items to ensure you remain profitable. There are plenty of useful tools out there that help you calculate these costs at a click of a button. Feel free to look at the Best Etsy Fee Calculators for some suggestions.