Why Does Etsy Take So Much Money? (is there a cheaper way?)
Etsy is a platform for selling handmade, vintage, and craft items. Etsy charges a small fee for each item you list on the platform, as well as fees when you make a sale.
Find a complete breakdown of how much Etsy charges per sale here, as well as examples of the fees you can expect for a $20, $30, and $50 sale.
Many sellers are shocked when they receive their first payment and see how much Etsy has taken from their sale.
However, Etsy is one of the best and cheapest ways to sell handmade online.
To help you understand why Etsy takes so much money and why it’s not really that much in comparison to other online sales channels, I’ve broken fees down below.
Why does Etsy take so much money?
Etsy charges sellers money so they can cover their fees for website hosting, website maintenance and growth, marketing, customer service, and costs associated with conducting transactions, collecting payments, and transferring funds.
If you were to set up a website that functioned in a similar way to Etsy, but on a smaller scale, you would have the following fees:
- Website development
- Website domain
- Website hosting
- Marketing
- Transaction fees
- Etc.
The cost for each of these tasks will vary greatly depending on the companies/services you use, your skill level, etc.
For a general idea of the costs associated with setting up a website versus selling through Etsy, check out the example below.
Etsy vs Your Own Website
As mentioned, the website costs are a rough estimate. You can increase or decrease these costs depending on the companies/services you use.
Let’s compare how much it would cost to set up an Etsy shop and make sales through is versus setting up your own website.
Startup Fees
Startup fees refer to the cost to get an online shop up and running and list items in it so you’re ready to make sales. Let’s say you’re adding 10 products in your shop to start.
Etsy
It’s free to set up an Etsy shop and will cost $0.20 USD for each item you add to your shop. In this example, we’re adding 10 listings.
Total: $2.00
Website
Once you set up an e-commerce website, adding listings is free, aside from your time. However, there are many more fees to simply get your online shop up and running when starting from scratch.
- $5/year domain name registration (approximately)
- $5.99/month hosting (GoDaddy)
- $14.99/month e-commerce website builder (GoDaddy)
Total: $25.98 (approximately)
Payment Fees
When accepting payments online, you need a safe and secure way for customers to transfer money to you. Most people are familiar with PayPal, but there are many options. The pricing fees for each service varies, but PayPal gives you a general idea of how much an online transaction will cost.
Payment processing fees typically involve a percentage of the sale (so the bigger the sale the more you pay), as well as a flat fee.
Let’s use one $50 sale as an example, and look at what Etsy charges (for a US sale ) and what PayPal would charge you if you used the service for accepting payments on your website.
Etsy: $50 sale
- 6.5% transaction fee ($3.25)
- 3% + $0.25 payment fee ($1.75)
Total = $5.00
Website: $50 sale
- 2.89% + $0.49 PayPal fees per transaction
Total = $1.94
Marketing
It’s hard to estimate the cost of marketing as there are so many free ways to promote a business. Etsy is an established business that’s well-known and has millions of shoppers.
If you were to type “handmade rose quartz earrings” into Google, Etsy would appear among the top results.
It would take a new website months, even years, to appear on the first page of Google for a particular term (e.g. “handmade rose quartz earrings”).
Your time is money, so that must be factored into marketing costs.
You’ll still be required to market your Etsy shop; Etsy won’t do it all for you. However, you’re tapping into Etsy’s existing audience when you sell through the platform, and that comes at a cost.
Conclusion
Many other costs are involved when running a business, but this article covers the biggest and most common ones.
If you were to set up an online shop, list 10 items, and sell one $50 item, your fees for one month would be:
- Etsy: $7.00
- Website: $22.92 (plus yearly domain fee)
This does not include marketing costs.
To run a shop on Etsy for a month and sell a $50 item, it would cost you approximately $7.00, vs. approximately $22.92 (plus domain fees) on your own website.
When you break it down, it’s clear that Etsy isn’t taking too much money.
What you’re really paying for with Etsy is access to the millions of shoppers that visit the platform each month.
You can undoubtedly find handmade marketplaces that charge less. However, they won’t have anywhere close to the number of site visitors.
You can find a more detailed comparison and two other popular options for selling online here.
You may also be interested in:
Finally understand why your hard work isn't resulting in more sales
Join over 18,000 others and sign up for the
Made Urban newsletter
Hey, I’m Erin 🙂 I write about small business and craft show techniques I’ve learned from being a small business owner for almost 2 decades, selling at dozens of craft shows, and earning a diploma in Visual Communication Design. I hope you find my advice helpful!
Etsy also take what you charge for postage which makes no sense and also charge a further 15% if you make a sale as a result of their marketing.
They also charge 20% VAT (for UK sellers) on the sale price including any postage. Which is quite al lot more than eBay.