Etsy is a wonderful eCommerce platform for artists and sellers who deal in handcrafted products. It’s full of high-quality, handmade items that can add a touch of personalization to your stuff, wearables, and space. Whether it’s a handmade pendant with your name’s initials engraved or a beautifully decorated vase that can elevate anyone’s mood, Etsy is known for connecting sellers and buyers worldwide. Let us understand Etsy fees and how much it costs to sell on Etsy in 2023
While the platform offers a host of exciting features for sellers to showcase their creativity, it doesn’t come for free. Etsy fees can take a toll on your financial health, as it’s not just the listing price, but every transaction costs you a small percentage of your product’s value. Add to this the advertisement fee, auto-renewal, and payment processing fee, and you will know why some people hesitate to start their business on Etsy.
That said, you will find many sellers gladly accepting its complex fee structure, as they believe the platform helps them connect with their audience and grow their business, so paying a few extra dollars in fees is not a big deal.
To know whether it’s worth paying the Etsy fee or you are better off without it, let’s understand Etsy’s fee policy. We will help you navigate the total you will pay in the long run. Let’s get started.
Different Types of Etsy Fees
When setting up your online store on Etsy or listing your product catalog on the platform, the different fees might seem overwhelming. Below we’ve explored each in detail.
Etsy Listing Fee
You are supposed to pay a flat $0.20 on every product you list on the platform—be it a physical item or a digital product. Now, this fee is payable irrespective of whether your product is sold or not. The moment you hit the publish button and list your product on the platform, a flat $0.20 will be deducted from your account. This listing is valid for four months. If you are unable to sell the product by that time frame, you will be charged an additional $0.20 to keep your listing active for the next four months.
Etsy has recently increased its transaction fee from 5% to 6.5% in April 2023. The transaction fee is surprisingly whopping and it’s not just the cost of the product, but Etsy charges a fee for customization, product wrapping, and delivery. Note that the transaction fee is different from the listing fee in that it’s charged to you when somebody makes a purchase. The listing fee, however, is deducted from your bank account irrespective of whether someone buys the product or not.
You get to choose from two options for advertisement on Etsy—the platform’s built-in advertisement or advertising outside Etsy. The former is better as it gives you more freedom and control over setting your daily budget for the ads and deciding on the audience you’d like to reach through its ad campaign. You are charged $0.02-$0.05 per click.
Likewise, the platform allows you to run your ads outside Etsy, i.e. on other social networking sites, like Instagram and Facebook. It doesn’t charge a fee for such ad campaigns until someone makes a purchase. A pre-paid off-site ad fee is only applicable when you have an established Etsy store with an annual income of $10,000. Etsy’s fee structure is based on a pay-per-click ad format. This means even if a customer clicks on the ad, but returns without buying, you will be charged a fee for each click. The good news is Etsy allows you to set a budget for its ad campaigns, so you can rest assured that you will spend more than you can afford.
If you sell your products globally, you will be charged an additional 2.5% of the currency conversion fee for every international transaction. Basically, you are charged this fee if the currency on your listed product doesn’t match your bank account currency.
Payment Processing Fee
Etsy Payments enables sellers to accept payments through different methods, including Apple Pay, credit and debit cards, etc. However, to qualify for Etsy Payments, you must pay $0.25 + 3 percent of the transaction value for payment processing. If you do not use its in-house payment processing services, you can link your PayPal account, but that too comes with its processor’s fee.
Regulatory Operating Fee
Etsy has imposed additional regulatory fees on sellers from certain nations, because of the high operating costs in these areas. France, Italy, Turkey, Spain, and the UK are a few such countries that pay regulatory fees for every transaction. The fee is decided based on the charges Etsy incurs in operating in these countries. The maximum is 1.1% of the product’s sale price (Turkey).
Sellers who want to access the advanced features of Etsy and get discounts on its ads, listing price, and other costs can subscribe to its Plus plan. It costs $10 a month, but you can cancel the subscription at any time. Note that the subscription is non-refundable.
Etsy has collaborated with Square, allowing businesses to sync their Etsy listings with their store inventory. You can also sell the products in your physical store. Use Square Reader to accept payments from each transaction at your store. Here, you only pay the listing fee, which is applicable to all products you have uploaded on Etsy, plus the processing fee charged by Square. You don’t pay the transaction fee.
Pattern is a web development tool that enables users to set up a personalized and customized store to bring more organic traffic to their Etsy website. Note that it doesn’t replace your Etsy account. It simply gives you more exposure by creating a personalized website where you can display your product catalog. You can test the Pattern website for free for up to 30 days. Once the free trial ends, you will be charged a flat $15 a month for a Pattern subscription. You can keep it or cancel the subscription anytime.
A shipping fee for the parcel is calculated based on different factors, like the weight of the parcel, the destination, and how you’d like the product to be shipped. If you choose to have the shipping label issued by Etsy, be ready for a 5% fee for shipping. To qualify for this, you must either accept payments through Etsy’s built-in payment system or PayPal. The amount is automatically deducted from your Etsy account balance, which will be reflected under the name “Shipping label”.
You pay a flat $0.20 for listing products. When a customer buys one item from a single listing, you are charged the $0.20 listing price. However, if they buy multiple products from the same or different listings, for instance, 6 pieces of handcrafted jewelry, you will pay $0.20 for each product. That’s because Etsy considers these products as separate transactions and charges individual fees for each.
Etsy Pricing Plans: Here’s What Each Plan Costs
Like any eCommerce store, Etsy has different pricing plans, allowing sellers to subscribe to the plan that best fits their requirements and ensures smooth business operations.
Standard Plan: When you sign up for an Etsy account, you will get its Standard plan, which comes for free and offers most of its basic features. The standard plan also offers paid services, like Pattern and Shipping Labels, so long as you pay for these services. The good news is you don’t have to upgrade to the paid subscription, i.e. Plus Plan, to access its paid services.
Plus: While the Standard covers most features of Etsy, the Plus plan comes with a few extras, such as customization tools for your Etsy store and discounts on Etsy services. If you are a regular seller or run a mid to large-scale business on Etsy, the Plus Plan is your best bet. You can save up to $3 on listing on the platform. You also get a flat $5 for advertisements.
Calculating the Total Etsy Fee
Considering the above-listed fees, it’s extremely difficult to give you a definitive value of how much you will pay in total. It depends on a number of factors, which may vary from one seller to another. For instance, the quantity of the products you put up for sale, your target audience, how you prefer to ship the products, your payment methods, and so on.
That doesn’t mean you should sign up for Etsy without calculating the total fees. Knowing what you will pay every month ahead of time will help you prepare your budget accordingly. This is especially important for small businesses or startups with a tight budget. For a regular transaction on Etsy, you will incur Etsy’s transaction fee, listing fee, and payment processing fee. Add to this the currency conversion fee if the product price you have entered does not match your bank account currency.
To make it easier, you can use an automated Etsy fee calculator. You only need to input the sales price and quantity purchased. The tool will give you an accurate picture of the total fees you will pay, the profit margin, and the returns. This will give you a clear idea of whether or not it’s worth setting up an Etsy account.
Ways to Lower Your Etsy Fee
As you can see from the above-listed fee structure, it’s obvious that you might end up with the risk of experiencing a very low margin, or worse, experiencing a loss in your business. The fee keeps adding up. Fortunately, there are ways you can save on Etsy fees. Let’s take a look at the different ways you can save on Etsy fees and increase your profit margin.
Raise Your Prices
At times, increasing your product price seems like the only way to generate maximum returns. Even though that doesn’t make any change to Etsy’s fee structure, raising the prices will increase your profit margin. This will help you pocket more money in the long run. Then again, this is only suitable for businesses that report steady sales and already have a loyal customer base that won’t switch to the competitors.
Offer Free Shipping
You can offer flat-rate shipping, and add that to your product price instead of charging it separately. Many customers abandon the shopping cart after the shipping price is added to their purchase price. If you have a standard shipping rate, include that in your product pricing and promote free shipping to your target customers. Experts believe that free shipping can increase your sales significantly, as customers do not encounter additional charges after they have set their mind to purchase your product at the listing price.
Group Different Products Into One Offering
Each product that you list on Etsy will incur a listing fee, no matter whether it gets sold or not. Instead of listing items for the same category separately, you can bundle these products together and sell them as a single unit. This will incur a one-time $0.20 listing fee, instead of a separate listing fee for each product. Likewise, you can save a lot on shipping by packing the different products ordered by the same customer in one package, instead of creating separate parcels for products from different categories.
Understand Its Advertising Before Investing In It
Etsy has a built-in advertising system that puts your ads on top of the search results, giving you better and wider exposure. While that’s great for those who want a solid reach, it comes with a hefty price tag. So, it’s important that you understand the ad terms before investing in it. Just like you’d optimize your ads with the right keywords, captivating photos, and short and compelling descriptions, you must do the same for the Etsy ads. Before investing in ads, learn to optimize them properly to ensure that your ads produce results and convert your visitors into customers.
Switch to an Alternative Payment Processor
Another way to save on your Etsy fee is by switching to alternative payment processors like Venmo or PayPal. Although they too come with a processing fee, using these alternatives is far better than Etsy’s payment processor. You can also consider manual payment processing, i.e. if you can handle the manual workload.
Use Etsy Gift Cards
You can add Etsy Gift Cards to your product listing to provide your customers with an option to send these cards to their loved ones during special occasions. The best part is these cards do not charge any transaction fee.
Do Not Renew the Same Product
Etsy’s listing fee remains valid for 4 months. Once the subscription has ended, the listing will be invalid and your product will no longer show up in the search results. You must renew the listing after this period. This will cost you an additional $0.20 per listing. If a particular product isn’t selling or showing the response you were expecting, it’s best to stop its renewal and list another product instead. Wasting your money on products over and over doesn’t make any sense.
Your Listing Price Must Match Your Bank Currency
Make sure you upload your listing at the same price as your bank account currency. You tend to incur a fee if there’s a currency mismatch. So, always double-check your bank currency and the currency for your product listing properly.
Avoid One-of-a-kind Products
As interesting as the idea of coming up with a one-of-a-kind product seems, it can be pretty expensive. Suppose you launch 50 new products, each from a different category and with a single unit. This will cost you $10 in the listing price. If your product quantity is 50 and product type is 5, each consisting of 10 units, your listing will drop to $1, as you can bundle these 10 products into one category.
Set Up Your Online Store
If you have tried all the strategies mentioned above, but couldn’t lower the fee, it’s best to switch to your own online store. Setting up an eCommerce store and creating a merchant account is an ideal and comparatively cheaper method than running an Etsy shop. You just need to find a suitable payment processor who can handle your credit card transactions and you are good to go.
The average cost of running your own ecommerce store is less than Etsy, which makes it a budget-friendly deal for small businesses that can’t meet the whopping expenses on Etsy. you can save the listing price, transaction fee, Pattern fee, and other such extras.
Of all the eCommerce sites that offer excellent growth opportunities, Etsy is the best for startups and large-scale businesses selling handcrafted products. If you have a passion for turning your creativity into a profitable business, Etsy is your best bet. However, it’s advisable to understand its pricing structure, calculate and compare your revenues with the fees, and set up your Etsy shop.