Understanding Etsy Seller Fees: How Much Does Etsy Take
Understanding Etsy Seller Fees
Etsy has become one of the most popular online marketplaces for independent artists, crafters, and small business owners to sell their unique wares. With over 60 million active buyers searching Etsy every month, it offers an incredible opportunity to reach a large audience of buyers specifically looking for handmade and vintage items.
However, navigating Etsy's various seller fees can be confusing, especially for new Etsy sellers. Etsy charges several different fees that can really add up. So how much does Etsy actually take from each sale? What fees should you expect to pay when you sell on Etsy?
In this comprehensive guide, we will demystify Etsy's seller fees by answering the most frequently asked questions about Etsy fees and providing tips to minimize the amount Etsy takes from your shop's profits.
What are Etsy's seller fees?
Etsy charges three main types of fees:
- Listing fees - For each item you list in your Etsy shop, you pay a $0.20 USD listing fee. This listing lasts for 4 months or until the item sells.
- Transaction fees - This fee applies to each completed transaction. Etsy charges 5% of the item price plus applicable taxes as the transaction fee.
- Payment processing fees - This fee covers the cost of processing sales through Etsy Payments. It is 3% + $0.25 USD per order.
In addition to these main fees, Etsy also charges:
- Advertising fees if you use Etsy Ads
- Shipping labels fees if you purchase shipping labels through Etsy
- Pattern fees for downloading repeatable digital products
Let's break down each of these fees in more detail.
Listing Fees: $0.20 per listing
Every time you list a new item or re-list an expired listing in your Etsy shop, you will be charged a $0.20 USD listing fee. Listings last for 4 months before needing to be renewed.
This means you can expect to pay $0.20 per item x however many items you have listed in your shop. The key to minimizing listing fees is keeping track of expiring listings and only relisting items that have demonstrated decent sales volume or potential.
Be strategic about which items you invest listing fees in to keep your costs as low as possible. For example, if you have an item that has sat for months with no interest, let the listing expire instead of continuously relisting it and paying $0.20 every 4 months.
Transaction Fees: 5% of item price + applicable taxes
This is the fee Etsy charges from the sale price of each completed transaction. The transaction fee is 5% of the total item price including shipping cost plus any applicable sales tax.
For example:
- Item price: $50
- Shipping cost: $10
- Sales tax: $5
Total transaction amount = $50 + $10 + $5 = $65
Etsy transaction fee = 5% of $65 = $3.25
So for this example sale, you would pay Etsy a $3.25 transaction fee. The transaction fee scales with the total sale amount.
This 5% transaction fee brings in significant revenue for Etsy on high-ticket items. Strategies to minimize the impact of transaction fees include:
- Offering free shipping to keep item cost low
- Absorbing some of the sales tax yourself
- Increasing average order value to make up for fees
Payment Processing Fees: 3% + $0.25 per order
To process sales through Etsy Payments, Etsy charges payment processing fees of 3% of the item price plus $0.25 per order.
For example:
- Item price: $25
- Payment processing fee: 3% of $25 = $0.75
+ $0.25 per order
= $1.00 total payment processing fee
So for a $25 item, Etsy would take $1 in payment processing fees.
This payment processing fee can really eat into profits, especially on lower priced items. Some ways to minimize the impact include:
- Encouraging buyers to purchase multiple items to reduce the flat $0.25 fee per order
- Considering offsite payment processing options to avoid Etsy's payment fees
- Increasing average order value to make up for fees
Advertising Fees: 12-15% of total ad spend
If you run Etsy ads for your shop and items, you will also pay advertising fees to Etsy. They charge between 12-15% of your total advertising spend.
For example, if you spend $100 on Etsy ads, you would pay an additional $12-15 in advertising fees.
While ads can increase exposure and sales, they do chip away at your profit margins. Use them strategically and monitor your return on ad spend to ensure it makes financial sense for your shop.
Shipping Labels: Varies
When you purchase shipping labels through Etsy, they charge a small commission for the convenience of taking care of your shipping logistics. This fee varies based on carrier and shipping service.
For USPS shipping labels, Etsy charges:
- First Class Package Service: $0.22
- Priority Mail: 5% of postage cost
- All other USPS services: 10% of postage cost
Their UPS and FedEx commissions are around 2-7% depending on the specific shipping service.
While the shipping label fees seem small as a percentage, they can really add up over time especially for high volume sellers. Consider getting your own shipping account with USPS/UPS/FedEx to avoid paying Etsy's commissions. However, Etsy's labels do offer convenience if shipping logistics are a hassle.
Pattern Fees: $0.40 per pattern download
For Etsy sellers offering printable digital products such as patterns, templates, guides etc., Etsy charges a $0.40 fee each time a customer downloads the file.
This can quickly eat into profits on inexpensive digital products, so factor it in when pricing pattern/template products. Avoid going too low on pricing to account for the pattern fees.
To summarize, the main fees Etsy charges are:
- Listing fees: $0.20 per listing
- Transaction fees: 5% of total sale price
- Payment processing fees: 3% + $0.25 per order
- Advertising fees: 12-15% of ad spend
- Shipping label fees: Variable based on carrier
- Pattern fees: $0.40 per pattern download
How much does Etsy take from each sale?
To calculate exactly how much Etsy takes, you need to add up the applicable fees based on your specific sale details. Let's look at two examples:
Example 1:
- Handmade ceramic mug listed for $25
- $5 domestic shipping charge
- Purchase 1 mug
- Use Etsy shipping label for $3
- No ads or pattern fees
Fees breakdown:
Listing fee: $0.20
Transaction fee: 5% of ($25 item + $5 shipping) = $1.50
Payment processing fee: $0.25 + 3% of $25 = $1.00
Shipping label fee: $0.07 (2% of $3 label)
Total fees = $0.20 + $1.50 + $1.00 + $0.07 = $2.77
For this $30 order, Etsy would take $2.77 in fees, equaling 9.2% of the total order value.
Example 2:
- Digital planner listed for $15
- No shipping
- Purchase 2 planners
- Customer downloads patterns twice
- Ran Etsy ads equaling $50 ad spend
Fees breakdown:
Listing fee: $0.20
Transaction fee: 5% of $15 x 2 = $1.50
Payment processing fee: $0.25 + 3% of $30 = $1.15
Pattern fees: $0.40 x 2 downloads = $0.80
Advertising fees: 15% of $50 ad spend = $7.50
Total fees = $0.20 + $1.50 + $1.15 + $0.80 + $7.50 = $11.15
For this $30 order, Etsy would take $11.15 in fees, equaling 37% of the total order value.
As you can see, the percentage Etsy takes varies widely depending on the specifics of each order, with digital goods and ads increasing the fees.
How to minimize how much Etsy takes
While Etsy's fee structure can seem steep at first glance, there are things you can do to minimize how much Etsy takes from each transaction:
- Set competitive item pricing to build in room for fees
- Run promotions to increase average order value
- Offer free domestic shipping when possible
- Upsell customers to purchase multiple items
- Suggest add-ons to boost cart total
- Avoid relisting stagnant items that aren’t selling
- Only use Etsy ads selectively when ROI is clear
- Drive external traffic to your shop instead of relying solely on Etsy
- Consider offsite payment processing options if order volume is high
Following best practices with your Etsy shop pricing, promotions, and traffic strategies can help maximize your net profit while accounting for Etsy's fees.
Should you raise your Etsy prices to cover the fees?
With all the various fees involved, a common question Etsy sellers have is whether they should build the fees into their pricing by increasing item costs.
In most cases, it is not recommended to drastically increase your prices solely to cover fees for two main reasons:
1. Higher prices can dissuade buyers from purchasing if they seem exaggerated compared to item value.
2. Price perceptions and sticker shock matter. Even if a customer ends up paying the same total for an item + fees, a higher item price can appear inflated.
Instead, aim to grow your profit margins through factors you control. For example:
- Lower your material and production costs.
- Offer tiered pricing and product bundles.
- Focus on increasing average order value through marketing.
- Run sales and promotions to increase order volume.
With the right business strategies, you can maintain reasonable prices while earning strong margins and effectively covering Etsy fees. Drastically raising prices can negatively impact conversion rate and sales.
Should you include processing fees in the item price?
Related to pricing strategy is whether sellers should build payment processing fees into their item cost vs. separating it as its own line item.
Again, it is usually not advisable to lump these fees into your prices. Breaking out the processing fee improves transparency with buyers and prevents your item prices seeming inflated.
Research shows consumers respond better when fees are clearly broken out compared to being baked into opaque “all-in” pricing. The item cost feels more straightforward.
Highlight your efforts into the item’s components and design rather than emphasizing fees paid to Etsy. This helps buyers better appreciate the product value.
How do Etsy fees compare to selling on your own website?
A common question for established Etsy sellers is whether they should branch out beyond Etsy by setting up their own independent website.
Sellers often wonder whether they can save on fees by selling directly on their own website vs. paying Etsy's platform fees.
Realistically, selling on your own site simply shifts the fee structure - you still have to pay similar transaction, payment processing, and selling costs one way or another.
For example, expenses associated with selling on your own website include:
- Domain registration and hosting fees
- Website designer and developer costs
- Payment gateway processing fees
- Chargeback and refund processing costs
- Accounting software costs
- Email marketing software costs
- Cost of driving your own traffic and marketing
These expenses associated with running your own online store can exceed Etsy’s fees in many cases. By paying Etsy’s fees, you gain access to their built-in traffic, customer base, and selling platform.
For new sellers especially, Etsy eliminates a lot of the initial startup costs and hassle associated with starting an independent business. Leverage their systems while testing products and demand before launching your own website.
Pros and cons of Etsy fees
Let’s summarize the key pros and cons of Etsy's fee structure:
Pros:
- No monthly fees - only pay per listing and completed sale
- Access to Etsy’s large buyer base
- Handled payment processing and shipping logistics
- Built-in marketing and traffic sources
- No upfront setup costs like developing your own website
Cons:
- Fees can seem high, especially when first starting out
- Reduces profit margin on each transaction
- Not as cost effective for established high-volume sellers
- Little control over fee structure
For new and growing sellers, Etsy's fees are generally affordable in exchange for their services and marketplace reach. But for large sellers, the marginal profit from each additional sale eventually diminishes.
At a certain scale, graduating from Etsy to your own independent website makes more financial sense to eliminate fee payments. This threshold will differ for each seller.
Bottom line
While Etsy’s various fees can initially seem confusing or even excessive, understanding exactly how their fee structure works allows you to plan accordingly and maintain strong net profits.
Follow best practices around pricing, promotions, average order value, and cost management to cover Etsy fees successfully. Many sellers ultimately find that the benefits of reaching Etsy's huge buyer base outweigh the costs associated with selling on the platform.
Use Etsy as a launch pad for establishing your brand and testing your products. Once you’ve validated demand and dialed in your business operations, you can always expand to your own website and additional sales channels.
Etsy provides an invaluable service by allowing independent artists and small business owners to access a prime online marketplace for turning their craft into a thriving business. By mastering the fee structure and maximizing your store's performance, you can grow a highly rewarding Etsy shop.
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