Etsy often says that it only cost 20 cents to open an Etsy shop because that’s what it costs to list one item. However, there are more costs than that associated with running a business on Etsy, and understanding those fees is an important part of running an Etsy shop.
The fees for selling on Etsy include a listing fee, final sale transaction fees, payment processing fees, and potential fees from off site ads. In addition to those costs, there are also expenses when it comes to purchasing shipping labels, and if you choose to run ads on Etsy, you’ll have those costs to keep track of.
On top of the fees for using the Etsy platform, you’ll have to take the actual cost of making your products into account, including cost of materials, cost to have supplies shipped to you, and overhead costs.
The individual cost of running a business will vary widely depending on what products you’re selling, so those are calculations that you’ll have to make for yourself because they’ll be different for everyone.
For example, someone who sells digital downloads will clearly have fewer materials expenses than someone who sells handmade wood items, and the shipping charges will also be completely different between the two business models.
If you want to get a complete guide to calculating your expenses and how to set your prices the right way, I’ve written a pricing guide that’s aimed at handmade sellers.
If you follow this template, you’ll be sure to make a profit by pricing your listings correctly: Pricing Guide for Handmade Businesses
Let’s look at some of the mandatory fees on Etsy and how it all adds up.
Table of Contents
- How does Etsy collect fees?
- The Etsy listing fee.
- The Transaction fees.
- The Payment Processing fee.
- Currency Conversion fee
- Offsite Ads fees
- Regulatory Fees
- Optional Fees
How does Etsy collect fees?
Etsy collects fees by taking the amount owed out of the seller’s payment account before the payment is sent to the seller. That guarantees that they will receive their payments without having to rely on sellers paying them through an invoicing system. If a seller has a balance that’s higher than the payment account amount, Etsy will use the seller’s payment method on file to charge the balance amount.
In general, you won’t have to pay from your own account if you’re making any sales on Etsy, because the money in your account will cover your fees.
However, if your shop is really slow, or if there’s a month where you renew a lot of listings and don’t sell that much, you might owe a balance.
I have three Etsy shops, and two of them are a lot slower than my main one because I don’t pay as much attention to them. My digital shop usually covers its own costs, but since the prices are lower and I don’t sell as much, I’ll sometimes owe Etsy a fee at the end of the month if I renew a lot of listings that month.
The Etsy listing fee.
The fee for listing an item on Etsy is currently 20 cents for a period of 4 months. This applies every time that you list a new item or renew an item, and if you sell a quantity of X number of items, you’ll be charged a 20 cent fee for each individual item. This fee is charged every time a listing renews, but if the listing sells out the fee won’t be charged until the item is manually renewed by the seller.
The first time a listing is added to your shop, you’re charged 20 cents. If you add an inventory number that’s more than 1, though, Etsy only charges you for the first listing at that time.
If someone comes along and buys one of them, the inventory will drop to 9 available, and Etsy will renew the listing and charge you another 20 cents. This will continue until the listing sells out all of the inventory that’s listed, and at that point, it won’t renew until you go in and add more inventory to it.
So if you list something with an inventory of 10, you’ll pay 20 cents to start out. Then if someone buys three of them, Etsy will basically be renewing it 3 times, so you’ll pay another 60 cents in listing fees.
This fee is charged when the item is listed, so a renewal of any kind is what triggers this one. If you decide to renew a listing before it expires, you’ll be charged for a new listing fee. Each 20 cent listing fee is good for 4 months, so you can have a listing in your shop for that long until it expires and you’ll need to renew it yourself.
The Transaction fees.
Etsy charges a 6.5% transaction fee on every sale, including the cost of the shipping label that’s paid by the customer. This shows up on your shop dashboard in the payment account in the finances section as a fee next to the item, and a fee that’s marked “shipping” if shipping was charged separately. If the item shipped free, no shipping transaction will show up in the payment account details.
The shipping transaction fee is often misunderstood by people. It’s not a fee for using Etsy shipping labels, it’s a fee on the amount that the customer paid the seller for shipping.
So even if you don’t use Etsy shipping labels, you’ll still pay the transaction fee for 6.5% of the shipping amount that you collected from the customer.
The Payment Processing fee.
Etsy charges a payment processing fee on transactions that varies depending on the location of the shop. The current fee for US sellers is 3% of the total amount collected from the buyer (including shipping charges) plus 25 cents. The fee is different in different countries and is adjusted periodically by Etsy.
The chart that shows all of the payment processing fees is in the Etsy help section here: Payment Processing Fees
This fee shows up next to the “sale” line item in the payment account. If you look at the chart above, it’s the 63 cents on the bottom row.
It also shows up in the financial recap csv files that you can download from your shop dashboard in the Settings—Options—-Download Data section.
Currency Conversion fee
If your Etsy shop is set up to accept payments in a currency that’s different from the currency you chose for your payment account, you’ll have to pay an additional currency exchange fee. To avoid this, list your item prices in the same currency that your payment account is set up to accept.
In case you’re wondering, the reason that people set up their prices in USD is to avoid having prices displayed that look “strange” because of the current conversion rate fluctuations. If your main customer base is in the US, you might prefer that the prices look standard for those people.
However, doing that will make you have to pay the exchange rate fee when Etsy converts the USD payments to your local currency, so just be aware that it’s a trade-off.
To read another article that I wrote about the currency conversion fees that goes into it in more depth, click here: Should Non-US Sellers Set Their Prices In US Dollars?
Offsite Ads fees
Fees for offsite ads are 12% for sellers who aren’t able to opt out of the program, and 15% for sellers who are able to opt out. This fee is assessed against the entire amount of the sale, including the cost of shipping. Offsite ads include any ad that Etsy places on Google or other search engines, and in some social media channels. It’s charged to your account when traffic from an ad results in a sale in your shop, regardless of whether the initial item that was clicked on was what was purchased.
In addition, there’s a 30-day cookie on this fee. That means that any time someone clicks on an offsite ad anywhere, including on Facebook, Google, Bing, etc. and comes to your listing from that ad, you’ll pay the fee for purchases they make in your shop in the next 30 days.
That means that if someone clicks on an Etsy ad for your listing in Google, then buys it, you’ll pay the fee. If they then come back 29 days later and buy something else, you’ll also pay the fee again because of the tracking code on their account.
Before you get all riled up about that, 30-day cookies are pretty common for ads, and not just on Etsy. Make sure to build the price of potential discounts and fees into your pricing so that you don’t get a nasty surprise!
If you didn’t make over $10,000 in the past 365 days, then you can opt out of Etsy Offsite ads. Go to your shop dashboard, and in the setting section you’ll see a section called “offsite ads.” Click on that, and you should be able to toggle the switch off to keep your listings from being included in offsite ads.
If you made more than $10,000 in the previous 365 days, you’ll be opted into the offsite ads program permanently. Even if your income drops below $10,000 in the previous year, the ads will still be turned on, and you’ll pay a 12% fee if you sell something through an offsite ads click.
Regulatory fees are additional fees that are imposed on sellers in certain countries in response to financial laws that are specific to those countries. The governments of those countries charges Etsy for specific things, and Etsy passes the cost along to the seller. These fees will show up in your payment account as a regulatory fee if your country imposes those fees on Etsy.
We know that this stinks, but it’s not Etsy’s fault. Just keep it in mind when you set your prices if you’re in a country that’s affected. The information about this is here in the Etsy help manual: Regulatory Operating fees
Etsy has a few services that aren’t required for sellers, so they are optional fees. These include Etsy ads, Etsy Plus, and Pattern websites. Because none of these are mandatory I won’t be going into them now.
Depending on what your profit margins are, Etsy’s fees can take a chunk out of them. If your products are lower-priced, the percentage that comes out of your sale will be proportionally higher than if you’re selling more expensive items.
Make sure to take all of the potential fees into account when you’re pricing your items, as well as all of your other expenses! Again, get my pricing guide here if you don’t know what your prices should be: Pricing Guide
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