Good news: Etsy fees can easily be factored in to your costs. Once you break them down.

It’s no surprise the whole Etsy marketplace can end up being pretty off-putting for sellers.
With the explanation in this article, you can make sure your pricing structure is in line with what you want the profit to be after those fees and other costs are taken off.

This blog is full of meaty info… we’ll cover…
✅  Etsy fees – are they a lot, or not?
✅  What are the different elements that make up Etsy fees
✅  How these fees will change from 11 April 2022.  What that will mean to your bottom line
✅  My easy calculation table! Includes examples of how fees stack up and what that represents as a proportion of your listing price
✅  Key takeaways as a summary. The important bits to remember

Let me begin by saying that I believe Etsy fees are worth it! The advantage of having an enormous audience of potential buyers viewing the site, knowing and trusting it to find quality artisan makes and for its secure payment system and customer service processes, an easy-to-use backend and upload system… these are all huge plus-points that we, as sellers, pay for through the fees.
In fact, I prefer to see fees not as a cost that we must pay for, but as an investment that serves us.

Other platforms may offer lower fees, sure, but do they offer the same returns? The awareness levels and audience size that Etsy boasts are certainly not to be beaten, and the assurance offered by a large and well-known organisation (for both sellers and buyers!) cannot be underestimated.

Similarly, bypassing the use of a marketplace platform and using your own channels – whether that’s relying on your own website, social media pages for direct selling and/or in-person popups and fairs – all of those definitely aren’t cheap.
Web hosting costs, security certification, web design and maintenance, SEO costs, greater in-bound marketing and/or advertising to generate the same amount of leads… the financial (and time) implications behind these factors, and more, will quickly add up.

In other words, that old saying ‘you get what you pay for’?…

For me, it holds true and that’s why I use Etsy.

So let’s break down what the fees cover; what’s mandatory and what’s not.
Having a shop on Etsy is free. There’s no registration fee, membership or subscription to pay for.

There are 4 elements that you *do* have to pay. And VAT is also payable on each one of those 4, so you’ll see that I’m breaking each one down, as a) the basic cost and then, b) the VAT to add on for that component.

1. Listing fee.

a) Every product unit will cost you 20c to list. That’s around 15p. This is the only mandatory charge incurred before you sell your item, and is fixed for every product, no matter what its value. The listing fee is charged on every item for the 4month listing period. If it re-lists (either auto or manual) then the fee will apply again, and if you have multiples of the item (quantity more than 1), the same fee applies for every single one of those units, even within the same listing.

b) VAT on the Listing fee – yes, all of your selling activity is subject to tax. (You can finding out more about registering your business for VAT here.) The current VAT rate is 20% so you pay that rate on business charges, including the Listing fee.
20% of the 15p listing fee is 3p.

2. Transaction fee.

a) This is Etsy’s cut for you to use their platform. It depends on the cost of the item, so is charged at 5% of the total sale (item cost+shipping+wrapping costs).
As of 11 April 2022, this will go up to 6.5%.
You will be charged this fee when the item sells, not before.

b) VAT on the Transaction fee – charged at 20% of 2a).

3. Regulatory fee.

a) This is the fee you pay for use of an online sales platform. It is the law to pay this – a kind of digital sales tax, so everyone selling online in the UK has to pay it. Whatever platform you use. Though some platforms do absorb it into other usage fees so in those cases, it’s ‘hidden’.
Etsy charges 0.25% of the total sale (item cost+shipping+extras, such as gift wrapping costs).

b) VAT on the Regulatory fee – charged at 20% of 3a).

4. Payment processing fee.

a) This is the fee incurred for using Etsy’s money-transfer system. If you used Paypal for your business, you’d have to pay commission; the Etsy Payments system is similar. For UK sellers, this charge comes in at: (4% of total sale + 20p).

b) VAT on the Payment processing fee – 20% of 4a).

Those 4 are the mandatory charges.
There are other optional fees too. The main ones are as follows:

Offsite ads – adverts which you pay for extra visibility and set up by Etsy, to promote your listings on other sites outside Etsy, eg in Google ads, Facebook ads etc. Etsy recognises there is a chance to capitalise on people interested in your item outside of the Etsy search, so it will show your item in those cases.
The fee for offsite ads is 15% of the total sale (item cost+shipping+wrapping costs) and only applies if the sale was made as a direct result of the buyer clicking on the specific ad.
All sellers are opted in to the offsite ad system, automatically.
Sellers who make less than $10,000+ (approx. £7,800+) can opt out.
> TIP! Opting out is one way to reduce the fees you might pay. Use your Settings in the Shop Manager to choose your offsite ads preference if you prefer your listings not to benefit from this extra visibility.
Sellers who make over $10,000+ (approx. £7,800+) are not eligible to opt out, and the fee is reduced to 12% for businesses with this higher turnover.

Etsy ads – a different type of advert which you pay for, still enabling extra visibility on your item(s). This allows your product to appear higher up in the search results within Etsy. You are paying for the product to have more prime real estate when a customer searches.
Your fee for this depends on what you want to pay – pay more and you show up more. Pay less, show up less. The rate of the fee depends on factors including the popularity of the search term and is only payable if a customer clicks on that promoted listing. (It’s called Pay Per Click.)

Etsy Plus – this upgrade service is paid for by monthly subscription ($10/m, approx. £7.80) within Etsy. It gives sellers extra benefits and functionalities, such as a set number of pre-paid listings, ad credits and greater shop customisation. There’s no evidence that listings in Etsy Plus stores enjoy better visibility than ones not in Etsy Plus. Find out more about the service here. 

One thing to remember! That Transaction fee is going up.
From 11 April 2022, the new fee will be 6.5% (and incurs a corresponding increase in VAT), so this £12 example, will go from 72p to 94p (78p+16p for VAT).
That’s an overall increase in the total fee from £1.76 to £1.98.
(And the total fee will become 16.5% of the listing price.)

It’s not hard to see that this increase will have a significant effect on overall profitability.
I definitely recommend that sellers take care to calculate what this increase will mean on their margins for different products and adjust the pricing to suit.

You are in control of what you charge, so if you don’t want to take that hit – you know what to do.
Up your pricing to cover it.

Look at this table to see how to calculate fees for your own listings. Grab a calculator and just substitute in your product price for the value “X” in the first column. I recommend you use a notebook to help with breaking down each component of the overall fee so you can tally up the 4 elements and the separate VAT for each. Take it steady and break up each ‘stage’ to end up with a really solid feel for where your fees come from!
Eg to calculate A, start by working out 2a). From that you can work out 2b). Add together 2a) and 2b) to get A. And so on.

Scroll across the table too, to check out the examples to see how the fees paid varies for different product price points – typically around 12-15% for lower-price points and then work out more cost-effective for more pricey ones. Also compare how the Transaction fee increase will affect things, how the same item would incur extra charges when sold via an offsite ad, and how you’ll also pay Etsy fees on shipping an item. Yes, Etsy charges you more if you charge for shipping.

– Etsy fees can soon take you by surprise unless you’ve bothered to do the calculations!
You are 100% in control of whether you absorb those as a business expense or pass them on to your customer. Customers aren’t daft, they know that many different costs affect how items are priced; it’s expected.
If you don’t want to pass on those charges in your pricing that’s ok, but there’s zero justification for any surprise or negativity when you make that as an informed choice 😉
Edit your listings to suit.

– Start to see Etsy fees as an investment.
I believe they represent good value in relation to the benefits returned. Many, many costs should factor into your product pricing calculation – materials, time, fees and other business expenses to name a few.
Business success comes from knowing all the numbers, not by keeping your head in the sand. Understand what value fees represent within that and get help if you need to.

– The % paid in fees will vary.
This difference is more keenly felt on lower-cost items. This is because the fixed fee elements (Listing fee and part of the Payment Processing fee) take up a greater proportion of the item cost for low-cost items. A high-cost item can ‘absorb’ the fixed fees more easily, so the overall fee total feels more affordable.
I make sure to calculate the fee for every product I list and fully understand the profit margin for each.

– Offsite ads can add a huge amount onto the fees that sellers pay.
Do your sums to be mindful of what that extra lump looks like. Then you won’t be caught out if your item incurs extra costs due to the success of an offsite ad. You are in control of that by opting out/in again, at any time, as needed.

Hopefully this will be helpful for you to check over your listing prices and being more aware of the profit margins concerned.
Leave a comment if you have any questions about Etsy selling, or about pricing confidence.
Until next time,
Ruth

PS. When setting my prices, I’ve created a formula that takes *all* the factors into account. Not just your materials, fees and your time. You’ll get access to this as part of my Etsy coaching programmes.
Email me if you want info on the options.