The REAL Cost of Selling on Etsy
We break down the Real cost of selling on Etsy - Mum Maker's Edition.
So you’ve got an Etsy store, you’re excited, you’re ready. You’ve got all your products listed, you’ve paid their little $0.20 cent fees, your photos are on point. Maybe you’re waiting to make your 1st sale, or maybe you’ve made a few already. Or perhaps you’re a seasoned pro that’s made quite a few sales.
Are you making money? Are you sure?
In this article we show you just how much you’re making, spending and what the REAL cost of selling on Etsy is.
The Sales Hope:
Picture it, you’re selling a braid on Etsy. Let’s say it’s a new braid and you’ve finally mastered the technique. For this example, we will call the braid, The Whirly Braid. You’ve listed The Whirly Braid for $20 and offer free shipping.
A customer orders the braid, on Etsy and you get a notification that you’ve made a sale for $21.20. Sweet! Let’s go fill the order.
- 7/8 Lustre Ribbon 5 yards x 2 $0.596
- Diamond Dust 5 yards x 2 $0.303
- Shipping cost via USPS $4.27
- Time it took to braid – 20 mins.
- Paid Yourself for 20 mins at $20 an hour $6.67
- Shipping Box, label misc packing items $1.25
- Etsy’s cut 6.5%
Total Cost – $14.45
Did we make money?
Yes, since the customer paid $21.20 and after our costs, including paying ourselves we made about $6.75.
Or did we?
If we’re being real with ourselves and not doing “what I tell my husband” math. Then let’s try this again, for real this time.
After looking at the costs you might say, “well I don’t need a box I just use one of my old amazon boxes” or even “I don’t pay myself THAT much.” or even “I pay less than that for shipping.”
Truth? No you don’t.
if you’re using an old box, you paid for that box somewhere. Whether it was rolled into the amazon product, or you paid it in shipping to your home. Someone got paid for that box, and you paid for it. So let’s get that money back.
Next, if you don’t at LEAST pay yourself $20 an hour, than you should be. So factor that one in or more. The profit is NOT yours’s, it’s your business’s and that is the money you need to buy inventory, pay costs, employees, your kids, that new cutter that you’re hoping to pay off your credit card. Yep! Make sure you’re paying yourself AND paying your business.
Now then, if you pay less for shipping, then you’re running the risk of your item being damaged and likely squished by the time your customer gets to it. Let’s not be too cheap and ship it the correct way.
And don’t forget that the item was listed for $20, the customer paid $21.20, and that the $1.20 sales tax doesn’t belong to us.
We’ve cleared all that up, but let’s take a deeper look at the real cost of selling on Etsy.
The Hidden & Extra Fees
If you use a software like craftybase, or QuickBooks, you might think you have this one covered, but we’re going to let you in on a few secrets after selling on Etsy for a few years now.
- Their Listing Fee
Etsy charges a listing fee, every quarter. No secret about that. This is $0.20 per listing, or $0.80 a year. Nothing horrible, but list 50 products on Etsy and now you’re up to $40.
- Is it really 6.5% fees?
Etsy likes to say that it is, but the truth is in the math. If you’re advertising with Etsy the fee is 12%-15%,
Well, which is it?
If you’ve been lucky enough to make over $10,000 a year on Etsy, then you’re paying the 12% if not, it’s the 15%.
- But wait!
That’s not all, the 12 – 15% is in addition to their 6.5% fee.
And one more thing, they estimate their fee of the TOTAL price the customer paid, including tax and shipping. Our customer paid $21.20 but Etsy will want 15%+6.5%+$.20 listing fee.
It get’s worse…
Yep, the real cost is more like:
$0.20 Listing Fee
$.91 materials (a penny for staples)
$1.25 Shipping label & Misc
$4.27 Shipping Cost USPS
$1.38 Etsy 6.5% Fee
$3.18 Etsy 15% Ad fee
$1.20 Sales Tax
Total Customer Paid: $21.20
Total You paid for the sale $17.86
Business Profit: $2.18
Really? $2 bucks? Unfortunately, yes. For years our accounting said one thing and the deposits to the bank said another. After much research we discovered the real cost of selling on Etsy.
The truth is when it comes to percentages, whether it’s Etsy your credit card processor or any other business expense that wants a percentage, you never really get it back. With percentages you can charge your customer 3% transaction fee to help cover the loss, but at the same time, you’ll always be chasing it. And the money on the congrats page isn’t the amount that hits the bank.
Mum Math Sucks
If you don’t like the math portion of the mum business, you’re not alone. Most mum makers with businesses like to design, make the mum, work with the students and parents. Forget the math! But like all businesses we have to care because if we don’t we won’t last long. You might be saying, “I just make mums for fun.”
And some more “good news” Etsy raises their percentages on some items and others they lower it. Sometimes if you charge more the fees are less but sometimes they’re not. Experiment when pricing.
What can We do?
Here’s a calculator that may help. We discovered this one a while ago. It has the fees and the rest. But remember when using this calculator, use the real pricing not the “what i tell my husband”, pricing.
Experiment with shipping:
Etsy allows a handling fee with shipping, but takes it away during free shipping. If you can charge a customer for HALF the cost of shipping, they will still buy the item, and you can recover some costs. They also have a pricing guide on the fee shipping area that helps you add more to your price to cover shipping. Be careful of their estimates though, some are rather low and some are rather high.
We hope this helps when pricing on Etsy. We know running a business is harder than it looks and sometimes we just wanna make the mum. But remember if we don’t focus on these things we won’t be around long, even if we think it’s just for fun.
Good Luck and Mum On!