How Does Etsy Billing Work? (For New Sellers)

Any small business owner knows that there are going to be startup fees and costs that keep their business going – so they price their products accordingly.

Being a seller on Etsy.com is no different.

You will have to pay fees and consider your billing and shipping methods when you start an Esty shop, so make sure you are aware of the numbers.

Fees and billing on Esty.com are a little confusing and difficult to navigate for many new sellers – so we put them all in one place here!

How Do Fees Work on Etsy?

Fees

Etsy.com does charge fees for using their platform that manifests in three different ways:

• Listing Fee ($0.20)
• Transaction Fee (5%)
• Payment Processing Fee (3% + $0.25)

Every time you sell an item in your Etsy.com shop, you will be subject to these fees.

There are no additional monthly fees in regards to this, but every item you put in the shop costs $0.20 cents. As we mentioned in our article about shipping costs and tracking packages, you’ll want to make sure that you are listing your objects at prices that will garner you a profit.

Furthermore, you’ll want to remember that this is under the “Standard” Etsy plan. The EtsyPlus plan is $10.00 per month, and they are launching EtsyPremium in 2019, with prices to be determined.

Billing and Payments on Etsy

Setting up your preferred payment method is as easy as going into your shop’s “Finances” page and clicking “Payment Settings.”

Then you can choose from a few options to make your experience as quick and easy as possible!

There are a few ways to conduct billing and get paid on Etsy.com:

1. Etsy Payments

When customers buy a product on your site, their funds will directly store in the system and be transferred to your account after payment processes.

Depending on the payment methods you are willing to accept in your Etsy shop, your payments will be in your “payment accounts.” Then the funds will direct-deposit wherever you want it to go.

This method is generally linked to banking and billing information that you provide when you first set up shop.

2. Snail Mail Payments

You can create invoice orders or accept checks and other payments from customers in order to sell your work directly.

This requires giving out your business address – whether your own physical address or a PO box – and then waiting for payment from the customer before sending out your product.

Many customers don’t like this feature because they worry about extending their personal info and the long wait-time.

However, there are a few old-fashioned customers and sellers who don’t trust putting their financial info online with the upswing in credit card fraud.

In this case, this is the best method for them!

3. PayPal & Invoices

The final way to conduct business through Etsy is via PayPal.

This is especially popular with those who are in a country that doesn’t accept Etsy Payments.

You can use PayPal AND Etsy Payments, or just use PayPal.

Instead of inputting direct banking info and accepting direct deposits, you can work with customers to pay directly through PayPal!

If you don’t have Etsy payments set up, funds will go directly to your PayPal account. If you DO have Etsy payments set up as well, all funds will go into your Etsy account, and then you can send them to whatever bank account you’d like.

Do I have to Pay Etsy if I Don’t Sell Anything?

Etsy fees are always owed, even if you don’t sell something – so make sure you’re selling and pricing properly!

One thing I would like to expand upon is “listing fees,” which may have unintended consequences.

As we mentioned before, listing an item in your shop costs you $0.20 – but there’s more to it than that.

Every time you list something, you are charged that small fee.

That goes for an auto-renewal listing, too, so every time you sell an item in your shop, you are automatically charged another $0.20 cents to keep that listing on your page and prevent it from disappearing.

An Example

Let’s say you sell bookmarks, and you’re hoping to sell them in packs of five.

Because the pack of five is only “one listing,” you’re only charged the fee once.

However, every time you sell a five-pack of bookmarks, you will be charged another $0.20 to “renew” that listing again and again on your page. Otherwise, that listing will disappear.

Listings DO Expire

Now, let’s say you have ten listings of different five-pack designs for your bookmarks.

Each listing is only good for four months, or it will fall off your site and “expire.” Then, you have to re-list and be re-charged that small fee for each of those ten listings of bookmarks.

This is a common occurrence for new sellers who haven’t gotten their name out there yet.

Even if you have a lot of merchandise, you may be paying Etsy to host your products until someone comes along and purchases them.

What About Profits?

You will want to make sure that you are pricing your products high enough to take care of these earlier, slow-burn sales in your Etsy journey, or else end up owing Etsy.com more money than you earn.

For example, if it takes you $5.00 to make a five-pack of bookmarks, you may consider selling them for $10.00, plus a $2.00 shipping charge to the customer on Etsy.com (a total of $12.00 per pack).

However, you have to remember those earlier fees we discussed, including the listing fee, transaction fee, and payment processing fees.

At the end, when it comes to shipping costs, costs to create the product, and Etsy’s fees, you may end up earning less than the $5.00 it takes to make the bookmarks in the first place.

This means overcharging for your product – which customers sometimes don’t appreciate.

In this scenario, according to a 2019 Etsy fee calculator, you would have to charge at least $15-$18 for your one pack of bookmarks to make a significant profit.

What if I Don’t Make Enough This Month?

If you end up owing Etsy.com money by the end of the month, those amounts will be due in order to keep your shop going.

This is always a possibility for new sellers and is something you definitely need to consider when you are starting out.

Many sellers have an online or in-person following before they try to sell through sites like Esty.com. If you don’t have that fan-base first, you may struggle to make a profit in your first few months on the site.

How Much Does it Really Cost to Set Up an Etsy Shop?

Setting up an Etsy shop costs nothing at all – at first.

Like we mentioned before, there are different levels to Etsy – including EtsyPlus and the new EtsyPremium – which are paid plans that you can pay monthly or annually.

However, Standard Etsy is completely free with added fees after startup.

For example, if you’re a customer on Etsy, you can “favorite” items or browse all you want without paying. If you sell something on Etsy, you will have to pay for listing fees for each “item” or listing you post to the shop. If you start out with 100 items, you’ll owe $20.00 to set up your shop before you’ve even sold anything.

This doesn’t sound like a lot, but if you don’t sell anything your first four months, you’ll owe another $20.00 to renew all those listings, so they don’t disappear from your store.

Make sure you are optimizing what you put out there on your store, and if things are not selling try to market for free on your social media platforms, or consider taking a step back and finding out what’s not working.

Also, make sure that you are being trustful and communicative with customers at all times – check out our article on using credit cards through Etsy.com.

How Long do I Sign Up for when Opening an Etsy Store?

Etsy Standard is free with no additional costs to you when you sign up.

It can go on for however long you want the shop to exist – but remember, your listings will expire after four months without sales.

If you plan to have our Etsy shop for a long time, all you have to do is pay the fees and maintain the shop in order to keep it going. Other than that, Etsy will not remove the shop if you are following their rules and conditions.

Are There any Hidden Costs when Using Etsy?

There are a lot of costs when it comes to running your own business, and sometimes they can be unexpected.

Etsy.com has a lot of unexpected costs, but none of them are hidden. With proper research and communication with the Etsy community, it is easy to see where new sellers can get the information they need to succeed in their first few months on Etsy.com.

However, when it comes to promoting your site, yourself, and your product, you may have a few extra costs:

Can I run my Etsy Store Without Paid Apps?

There are many Etsy shop owners who use paid apps to try and sell their products.

• Outfy – traffic and sales management for products
• Mad Mimi – emails and newsletters manager for updates to customers
• Marmalead – SEO keywords and marketing
• Lead Dyno  – social media sharing and marketing

See “references” for links to these sites below.

These are just four of many free-trial and paid app sites you can use to try and market your products on your Etsy store.

But do you need these sites to be successful on Etsy.com?

Not really, but you need a few things before you can go without sites like these:

• A Previous Following Online
  • A few hundred or thousand followers on social media sites like Facebook, Instagram, or Twitter that love your product will be the first to buy from you when you announce your site.
• A Marketing Strategy
  • Knowing how to photograph, upload, design, and promote advertisements or listings to your followers and fans is key in getting them hyped and interested in what you have to sell. Most people post weekly, or even daily, about their product.
• Quality Products
  • You can’t sell just anything and make a great living at it. Your product must be unique, quality craftwork that interests buyers and sets you apart from 2 million other Etsy shops. Stay true to “you” and your craft, and you will get there!
• Great Customer Service
  • Once the orders pour in, you need to make sure they come back for more. Your customer service must be EXCELLENT, quick, quality, and communicative at all times.
• A Strong Team
  • If you can’t do it alone, do it with professional, dedicated people who believe in your product and will do what it takes to keep your shop running. From design to production, Etsy allows many different “roles” for your shop to have.

References:

Outfy

Mad Mimi

Marmalead

Lead Dyno