If you’re starting up a business, you have to consider all of your overhead costs.
Online platforms are a good way to minimize those costs so that you don’t have to pay rent on a physical store, purchase point-of-sale equipment, and hire staff to run the storefront while you make or acquire your products behind the scenes.
But even online platforms are most likely going to have costs of some kind associated. Figuring out what your actual costs are can prove difficult because most of your fees will be small percentages here and there, rather than a flat or monthly rate.
Is Etsy Free to Use?
Joining Etsy and starting up your shop is free. However, selling on Etsy does have associated costs. You will pay a $.20 USD listing fee per item listing, plus a 5% transaction fee and a 3% + $.25 payment processing fee.
You may also accrue small payment processing fees on top of this, depending on your bank and country.
How Much Does it REALLY Cost to Have a Shop on Etsy?
Unfortunately, there’s no cut-and-dry number or percentage that we can isolate from Etsy’s user fees.
But we can help you figure out an approximate percentage of your profits that your individual shop will cost.
First, let’s break down the minimum required fees on Etsy.
Etsy charges $.20 per item listing.
Now, Etsy’s website makes it sound as if this is a flat rate per item listing, even if that listing includes more than one item (such as options for different colors and sizes). However, this is a bit misleading.
Etsy charges the listing fee when it’s posted, but for every item under that listing that is sold, additional listing fees are charged.
For example, if you sell one of the items under the listing, but you still have more items under that listing that haven’t yet sold, Etsy will then charge $.20 to automatically renew the listing.
If you sell, say, three of the item, Etsy will charge the listing fee for the two items other than the first one, and then also charge the $.20 automatic renewal fee for the listing.
For each item that you sell on Etsy, you will be charged a 5% transaction fee, which is essentially Etsy’s commission.
The 5% is applied after your additional charges, such as shipping, customizing, and gift wrapping, but (for the USA and Canada, at least) before sales tax is added in.
Payment Processing Fees
Etsy requires that your transactions are made through Etsy Payments, and there is a small processing fee for each transaction.
This fee can vary from country to country, but for the United States and Canada, the fee is 3% of the total, plus a flat rate of $.25 USD.
What Percentage Does Etsy Take?
Etsy’s flat rates make it difficult to come up with a standard percentage of each sale that you can deduct from your profits.
However, here’s a rough formula:
- ($.20 x items sold in a single transaction) +$.25 + 8%(subtotal)
So, 8%, plus a few quarters, essentially.
But, especially depending on your prices and your cost per item, this can add up.
Plus, if your prices or totals are relatively low, these extra flat fees can push your percentage way above 8%, whereas if your totals for each transaction are $100 or more, these flat rates may only push your percentage up to 9% or 10%.
But these required fees only give us the minimum amount that you could end up paying Etsy.
What Other Etsy Costs Can My Store Accrue?
Etsy has a few offerings for its sellers, which can potentially boost your shop’s visibility, but they will cut into your profits, so it’s up to you to decide what you shop can afford and if the eventual payoff will be worth the extra costs to you:
Based on your location, Etsy may allow you to purchase shipping labels through them, which may be an extra cost for you, depending on how you bill your customers for shipping.
Etsy Plus Subscription
You can upgrade from Etsy Standard to Etsy plus for a monthly fee of $15 USD.
Etsy Plus qualifies your shop for certain credits to put towards your listing fees and advertising.
Etsy Plus also gives you access to discounts on domain names, custom shipping boxes, and business cards.
It can also allow your customers to enable alerts when you restock a product so that they can have first dibs on new items.
Etsy does have advertising fees for ad space on Etsy’s own platforms, but you set your budget for how much you’re willing to spend on these ads.
It works somewhat like an auction; the shops with the higher budgets or “bids” are first to get their listings placed in advertising on Etsy’s domains.
Etsy also purchases advertising on other sites, and all sellers are automatically enrolled in offsite advertising.
Some sellers are given the opportunity to opt-out of these ads in order to avoid paying the additional fees.
However, if your shop has ever made $10,000 USD in the space of one year, Etsy will not allow you to opt-out of offsite ads.
Etsy has a Pattern tool that allows its sellers to create a customized website.
The first 30 days is a free trial period, but after that, you will be billed $15 USD monthly for the subscription, plus any additional sales taxes that may apply to this fee depending on where you are in the US.
If you purchase a domain name through one of Etsy’s additional partners for this site, you will also be charged the cost of the domain name.
If you sell your products through Square in addition to selling online through Etsy, Etsy will charge you a $.20 USD transaction fee if your Square isn’t synced with your Etsy listings.
This is in addition to your listing renewal fees, which will be applied the same as through an online sale.
If your items are listed in a different currency from your payment account currency, you may incur a currency conversion fee amounting to 2.5% of the order total.
This one is pretty easy to avoid, just make sure your listing is in the correct currency.
How Far Can I Get on Etsy With a Free Store?
There’s no version of Etsy that will not incur some fees for you as the seller. Starting up your shop is free, but you can’t get any products listed without paying Etsy’s required listing fees.
You can still become quite successful without upgrading from Etsy Standard to Etsy Plus, but you may need to pay for additional advertising through Etsy to get sufficient exposure.
So the short answer is, you can’t get very far on Etsy without investing at least the minimum required payments.
Is It Cheaper to Sell on eBay than Etsy?
A side-by-side comparison to eBay and Etsy’s fee scales doesn’t give a lot of immediate clarity about which is the cheaper format to sell your products from.
There are a few quick overview comparisons; for example, while they both charge a $.20 listing fee, Etsy’s fee is renewed every four months, and eBay’s is renewed every thirty days.
Etsy’s transaction fees remain the same percentage across the board, but eBay’s percentages vary based on the type of item. And while eBay does offer selling packages to start up your store, you can sell without signing up for a package.
A selling package will give you a bit of a discount on listing fees, but the package subscriptions themselves can add up. Plus, eBay’s transaction fees trend towards being higher than Etsy’s. Whether you pay more on one platform or the other does depend a bit on what types of products you’re selling.
Plus, eBay gives access to a wider market, and a lot of their customers are looking for something generic and cheap.
Etsy gives access to a more targeted market, which tends to be a bit more community-oriented and willing to pay higher prices for something unique.
Which platform takes a higher percentage may not matter so much if only one of them is a good place for your products to move.
For the most part, Etsy’s fees are smaller than eBay’s, but that still leaves you as the seller to decide which platform will bring you a bigger payoff, based not only on the associated fees but also on your potential for profit.
What Exactly do You Need to Register a Store on Etsy?
To register your Etsy store, you need:
An Etsy Account
You can set this up for free, and with it, you select your shop preferences, language, currency, etc.
A Shop Name
Remember that a catchy and memorable name is an essential part of your branding!
If you find that the name you want is already taken, try variations before you scrap that idea.
Add your initials, or “Shop,” “Boutique,” “Co,” etc.
Hopefully, if you’re at the point of setting up your account, you already have items you’re hoping to market.
Make sure to take professional photos and be descriptive and personal in your listings.
A lot of sellers choose to use PayPal or another online payment processor.
You can also set up payment by mail so that your customers can send you a check or money order.
Your billing information allows you to verify your identity, as well as to have your Etsy fees automatically withdrawn, so you don’t have to keep on top of them.
Check our article here about how well Etsy is doing over the last years..
Check our article here about how well Etsy is doing over the last years..
Do You Need to Offer Free Shipping on Etsy?
As of July 2019, Etsy changed its search algorithms to prioritize shops and items that include free shipping within the USA.
Etsy recommends that sellers include their shipping costs into the prices of their items so that customers aren’t surprised by the extra cost tacked on at checkout.
However, a lot of buyers admit that they don’t mind the extra cost for shipping, because they come to Etsy to find things that are handmade and unique, and they’re willing to pay extra for what they’re getting.
While you’re not required to offer free shipping, if you don’t, your shop may be harder for customers to find because of Etsy’s search algorithms.
However, there is a toggle that customers can set that will prevent the search from prioritizing free shipping, so you may still get a lot of exposure in searches by customers who are aware of this and who don’t mind the extra cost.
Because shipping costs can vary widely per product and per shipping location, it’s easier for some shops to set a fixed shipping cost and add it to their item price than it is for others.
Whether to offer free shipping or not is your decision to make for your shop. The best way to decide is to find out if you can reasonably raise your prices without making them too high and still avoid incurring a percentage of the shipping costs yourself.
You also may want to find a way to market your shop to compensate for you having a lower place in searches.
Does Free Shipping Increase Sales on Etsy?
Offering free shipping in your Etsy shop won’t necessarily increase your sales.
It will boost your shop’s visibility in searches, but remember that searches aren’t the only way that customers will come across your shop.
Ultimately, you may have to run some numbers and see how offering shipping will affect your profits.
Do your shipping costs vary widely enough that you can’t tack a reasonable flat rate onto your prices without sometimes having to pay out of your own pocket for shipment?
Are your products in high enough demand that your customers are willing to pay for them to be shipped?
Some sellers have found that offering free shipping actually hurt their sales because they had to increase their prices.
If you’re selling an item for $8 or $10, but you have to charge an extra $6 to your prices to cover shipping, your items may seem overpriced to your customers, even though they’ll end up paying the same amount if they’re paying a shipping cost.
If your prices are high enough and your shipping costs low enough that a small price increase wouldn’t hurt your sales, it may be worth it to offer free shipping for the sake of having better search priority.
But there’s no one-size-fits-all. You may have to play around with your settings and prices before you figure out what’s working for you.
Being a business owner is a learning process, so lean into it and see what works best for your shop.
What Are Some Free of Charge Alternatives to Etsy?
If you’re finding that Etsy is just too costly of a place for you to start, there are a few good alternatives. Some free selling platforms include:
Square Online Store
Square is an excellent selling platform, and it’s becoming more and more widely used, not just for online sales but also for physical small businesses’ point-of-sale systems.
Square is completely free to sell your products, apart from a 2.9% + $.30 payment processing fees.
You can now use social media to sell your handmade products.
Facebook even allows you to look at your statistics and post advertisements for your products.
Once you’ve got a Facebook shop set up, you’re a few steps away from linking to your Instagram to sell from both platforms.
It’s also recommended that you boost your social media sale by building your own shop website that you can attach to Instagram and Facebook to get more brand exposure.
There Are Some Lower-Cost Selling Platforms You Can Try.
While they’re not exactly free, there are a few platforms that may better fit your budget.
- Aftcra – Free to join, but they take a 7% commission on sales.
- Storenvy – Free to join, but takes a 10% commission.
- Zibbet – Free for the first ten listings, but above that will cost you $5/month.
- Artyah – Free, but it takes a 3.5% transaction fee.
- Folksy – Free, but does charge listing fees and 6% commission.
- BigCartel – For 25 listing fees, you pay $9.99/month, and but no listing fees or commission.
So, is Etsy Worth the Cost?
Whether it’s worth paying Etsy’s fees for your store is up to you to decide, based on your products, prices, and target market.
While the free and cheap alternatives to Etsy may be more affordable, there could be a trade-off of less traffic for your store.
Does your target demographic make a lot of Etsy purchases? Are your products handmade, and/or are they unique enough to stand out on Etsy?
The cost of your selling platform is essentially the rent you’re paying for your shop. You just need to see what total overhead cost is realistic for you, in both allowing you to spread your brand far enough but also allowing you to have a wide enough profit margin for your shop to be successful.
What are your goals as a seller, and what sort of budget are you working with?
You can always start out on one of the free or cheaper platforms, and move over to a bigger platform once your business has grown enough to sustain the extra costs.