From affiliate marketing to dropshipping, selling goods, and more, there are numerous platforms to generate income online, Etsy being one of them.
Understanding the required fees for an Etsy payment is crucial to anyone who owns an Etsy shop.
Otherwise, you won’t be able to calculate your expected margin and will waste your resources and effort.
These fees include $0.20 per listing, a 6.5% transaction fee, and an $0.25 plus 3% payment processing fee.
Add to that taxes and fees for any additional services you invest in.
- How Does It Work to Sell on Etsy?
- How Much Does It Cost to Sell on Etsy?
- How Do You Avoid Fees on Etsy?
- Why Is It So Expensive to Sell on Etsy?
- Who Pays for Shipping on Etsy?
- Is It Worth It to Sell on Etsy?
- Wrapping Up
How Does It Work to Sell on Etsy?
As an eCommerce website, Etsy is an online marketplace for craftspeople to sell handmade goods, digital products (downloadable items like stickers), or vintage items to a diverse audience.
Etsy payments system guides these purchases. The website automatically deducts all fees from sales, which are listed on the payment accounts.
The most successful Etsy shops are the ones able to make a good profit after the deduction of fees.
As for buyers, Etsy deducts costs for customer purchases using any of the following payment methods:
- Credit Card
- Debit/bank Card
- Apple Pay
- Google PayCountry-Specific Payment
- Etsy Credits
- Etsy Gift Cards
How Much Does It Cost to Sell on Etsy?
Part of how to start an Etsy business is understanding the sale price. You should look at the different seller fees.
The mandatory ones are 0.20 per listing, a 6.5 transaction fee, and an $0,25 plus 3% payment processing fee.
Applicable taxes also come into play, but they aren’t fixed. Then, there are varied extra fees.
Is There a Monthly Fee for Etsy?
Yes, there are monthly Etsy seller fees. For one, the monthly cost of applicable taxes may vary depending on what you sell on Etsy, physical or digital products.
The VAT rate in Europe ranges from 15% to 27%, but it can be less in non-European countries. However, some digital products, including e-books and children’s picture and painting books are zero-rated.
People in most US territories get charged a monthly sales tax, which Etsy uses to collect the applicable sales tax and regional tax required by Government authorities.
For European Etsy shops, it collects sales tax fees and VAT on seller fees.
When it comes to Etsy plans, you can keep the free default option. However, upgrading to Etsy Plus means a $10 monthly subscription, enabling you access to:
- Etsy Ad Credits
- Personalized shipping rates
- Special shop customization options
- Access to promotional tools
- Restock requests from Etsy shoppers
Other Etsy services that increase the monthly costs of business are the $15 monthly pattern fee for a custom store website, the variable renewal fee for active listings to be automatically renewed each month, and the Etsy payments fee mentioned above.
Is Free Listing Available on Etsy?
No, listing isn’t free and comes with a flat rate of $0.20 per listing, which expires after four months. If unsold in that period, Etsy charges you an automatic renewal fee of $0.20 to keep the listing active (which you can disable).
Other listing fees are auto-renew sold fees allowing you to sell extra quantities of an item, multi-quantity fees to sell variations of the one product in one payment transaction, and private listing to sell to a designated target audience (all for the same price of $0.20).
How Much Does Etsy Take From a $100 Sale?
The website takes 6.5% transaction fees for each sale, including the product price, shipping costs, and gift wrapping fees.
For a sum of $100, that’s $6.5. Secondly, Etsy charges mandatory payment processing fees.
US residents pay $0.25 plus 3%, which amounts to $3.25. Payment processing rates differ in other countries, though (depending on the applicable sales tax).
Accordingly, Etsy subtracts $9.75 from a $100 sale on the Etsy account. Nonetheless, subscribing to any optional service can increase that cut.
How Much Is an Etsy Shop per Month?
There’s no one-size-fits-all answer to this question. It depends on the Etsy listing number, sold items, services that you subscribe to, and more. But let’s take an example of Etsy fees:
- Item Price: $15.00
- Number of Sold Items: 10
- Listing Fee: $0.20
- Transaction Fee: $9.75
- Processing Fee: $4.75
In that case, the seller will pay an overall monthly fee of $16.50. Any additional services they invest in will be added.
Are There Any Etsy Hidden Fees?
No, the website is transparent about its seller fees and taxes, including the Etsy payment processing fee, transaction fees, and more.
Etsy Selling Fees Calculator
If you find the different seller fees confusing, refer to an Etsy fee calculator. Using an updated one ensures that the calculator uses the most recent charge values.
How Do You Avoid Fees on Etsy?
There’s no legit way to not pay a listing fee, transaction fees, shipping costs, and other mandatory fees. Asking potential customers to buy items via another platform is prohibited by Etsy.
You can, however, avoid additional costs by not signing up for optional services (like shipping label services).
What Happens if You Try to Avoid Etsy Fees?
An attempt to evade these fees can get your shop suspended or shut down, which isn’t a risk you should take.
Why Is It So Expensive to Sell on Etsy?
Several factors make the costs of business high for Etsy sellers, including:
- Fees for Hosting: The platform charges fees to cover the costs of its operation and maintenance, such as hosting, bandwidth, and tool and service development.
- Fees Include Customer Service: Naturally, the ECommerce website needs to generate revenue so that it can pay its customer service team and, in turn, ensure that its users are receiving adequate support.
- Fees Include Marketing: Any ECommerce seller contributes to Etsy advertising fees that are used for marketing. Etsy ads are available on the marketplace, specifically the Advertising Dashboard. Also, Etsy has a multi-channel marketing strategy, purchasing offsite advertising from social networks and search engines.
- Fees Cover Payments: Etsy payments are the main way to get paid on the platform. When an Etsy seller enrolls in Etsy payments, they pay high fees to enable buyers flexible payment options. And there’s no need for the seller to set up an account on any of the available services.
Who Pays for Shipping on Etsy?
By default, payments from buyers include shipping costs. However, Etsy urges every ECommerce seller to cover the shipping fee.
But free shipping is challenging for craft businesses making a slim profit and not sustainable for items under $100.
At the very least, shipping should be reasonably priced, and turnaround time should be fast.
The Etsy shipping service gives its user base a 30% discount on the average postal shipping fee with USPS and UPS shipping.
Shipping costs vary according to the shipment type and courier used.
Typically, USPS rates are the best for local shipments, and UPS rates are the best for international ones.
Is It Worth It to Sell on Etsy?
To determine if opening an Etsy shop is worth the sale price, let’s look at its pros and cons for a shop owner.
Pros of Selling on Etsy
The highlights of opting for an Etsy storefront are as follows:
Easy to Set Up
Setting up an Etsy store is easy, thanks to the straightforward product listings. You add an item description, choose keywords for the site’s search engine, and upload images of items.
Otherwise, building a website means investing in website design and paying domain and hosting fees.
You sell items to an in-built audience of millions of Etsy active buyers on the Etsy platform, which facilitates attracting buyers.
To compare, you’d need to build a niche customer base when you make a website.
Protected Payment System
Etsy is a safe platform to sell items, thanks to its secure payment system and purchase protection program. They ensure that you receive your money and protect you against scammers.
You can select the Contact Support button at the bottom of the page for help with your shop, account, and Etsy payments.
The support team is available via phone, email, or chat depending on the question.
Cons of Selling on Etsy
The downsides of selling on the Etsy marketplace include:
Etsy doesn’t offer people much freedom when it comes to branding their products (font, layout, color, navigation, and shopping experience). Accordingly, they can’t give their brands distinguished images.
Lots of Competition
With over 5.3 million Etsy sellers competing over 90 million buyers, Etsy’s marketplace features some vicious competition.
Most Etsy products are handmade, so making your listings stand out is tricky, which calls for a successful marketing strategy.
Etsy takes a cut out of users’ profits. Your pricing strategies will need to accommodate that with higher prices so that you can keep your business running.
Not Having Full Control
Etsy shops aren’t the best idea for business owners who want full control. After all, Etsy acts as a mediator and third-party seller when it comes to payments, fees, rules, and potential customer disputes.
With these pros and cons in mind, you can make an informed decision. If you’re just getting into the business of handmade items, you’ll benefit from a platform that streamlines the selling process (as long as you market your products for profit).
When your business grows, it can be empowering to create a website and take full control.
Ultimately, you can categorize your fees into mandatory and optional fees. Mandatory ones include the listing price, transaction fee, payment processing service fees, and taxes.
Optional ones include the Etsy Plus plan, Etsy pattern, Etsy shipping labels, offsite ads, Etsy ads, and more.
Knowing which fees to anticipate will help you understand the sale cost and determine if Etsy is the right ECommerce site for them or not.