Is it Profitable to Sell on Etsy?

Although selling on Etsy is worth it for many small business owners, it must be profitable for your business. Making several sales doesn’t really matter if you’re spending more money than you’re earning back.

This article will break down the costs associated with selling on Etsy, Etsy fees, and how to become more profitable selling on the platform.

 

How much does it cost to sell on Etsy?

When trying to determine if your small business can be profitable selling on Etsy, you must look at more than just Etsy fees. You have to add up any cost associated with selling on Etsy, including your hourly wage for the time you spend setting up and maintaining your shop, answering messages, packaging orders, etc.

You’ll find a brief breakdown of the common fees and costs associated with running an Etsy shop below.

Etsy fees

• Etsy listing fees (0.20 USD/item listed)
• Etsy Transaction fees (5% of total sale)
• Etsy Payment fees (varies by country; US is 3% of transaction total + 0.25 USD)

 

Optional Etsy fees

The following are Etsy fees that may or may not apply to your business, depending on what you sell, how you sell it, and where you sell.

• Advertising and Promotional fees
• Subscription fees (if you opt-in to Etsy Plus)
• In-Person Selling fees
• Delivery Fees
• Regulatory Operating Fees
• Pattern Fees
• Currency Conversion

 

Etsy Expenses

Below are a few examples of expenses that can occur when operating an Etsy shop.

• Business operation expenses (e.g. business license, insurance, taxes, etc.)
• Production costs
• Tools & equipment (to purchase and to maintain)
• Shipping fees (these may be fully or partially paid by the customer)
• Shipping boxes/packaging costs
• Gas costs (driving to and from the post office or supply stores)
• Photography tools (e.g. editing software costs)
• Marketing materials (e.g. business cards, coupons you include with orders)
• Marketing outside of Etsy (e.g. running Facebook ads)
• Office supplies (e.g. paper and printer ink for printing invoices or labels)
• Office/studio costs (e.g. electrical, internet, etc.)

 

Your wages

You must track all your hours and be paid a fair wage to determine if your Etsy shop will be profitable.

When selling on Etsy, you may spend time on the following:

• Creating products
• Photographing products
• Editing photos and uploading them to Etsy
• Creating listings
• Answering messages/emails
• Updating your shop (e.g. shop announcement, cover photo, sections, etc.)
• Packaging orders
• Shipping orders
• Marketing your shop
• Travel time (e.g. to and from supply stores, post office, etc.)
• Admin work (e.g. filing taxes)

 

Hours and expenses will vary greatly from Etsy shop to Etsy shop, so this list isn’t exhaustive. Consider the products you make, how you run (or will run) your business, and the tasks you’ll need to complete.

If you haven’t started your business yet, there will be a lot of guesstimating.

 

How to estimate your wages

When it comes to the hours you spend on your business and how much money you’ll need to pay your hourly wages, work backward.

Instead of trying to guess how much time each task will take you, consider how many hours you’ll have available each week to work on your Etsy business. Then multiply that number by 4 to get approximately how many hours you’ll work on your Etsy business in a month.

For example, if I’m working a full-time job and have a busy personal life, I may only have 10 hours each week to spend on my Etsy business.

I would work approximately 40 hours a month on my Etsy business.

Then determine how much you would like to be paid per hour and multiply that amount by the number of hours you’ll work in a month.

For example, if I want to make $20/hour, I will multiply 20 (hourly wage) by 40 (hours/month).

My wages per month will be approximately $800/month.

That gives me a rough number to work with when it comes to my monthly wages and how much to subtract from revenue to help determine my profits.

 

How to determine if your Etsy shop will be profitable

There are different ways to calculate and break down profits (e.g. net profit vs. gross profit), but the simplest way to determine profits are:

Revenue – expenses = profits.

For example, if I sell $1000 worth of products in a month and spend $900 on expenses and wages, I profited $100.

At the end of a month or year, you can take your revenue (total sales) and subtract how much you spent on your business (including your hourly wage).

Again, if you don’t have an Etsy shop yet, you won’t know these numbers.

So let’s predict if your Etsy shop is likely to be profitable.

 

Step 1: Estimated production hours

How much product you can make and sell will help determine your potential revenue.

Start with how many hours you can work on your Etsy business each month.

Consider that you cannot spend every hour on creating.

The tasks required to sell the products you make will likely take half your time, if not more.

Plan to spend about half your time making products and half your time on marketing, selling, and admin tasks (you’ll have more accurate numbers to work with once your business is up and running).

Divide the total hours you’re estimating you’ll work each month in half.

For example, if I plan to work 40 hours/month on my Etsy business, I’ll estimate that 20 hours will be spent on production.

 

Step 2: Stock numbers

Now determine how many products you can make during those hours.

For example, if it takes me one hour to make one product, and I have 20 production hours per month, I’ll be able to make 20 products each month.

 

Step 3: Projected revenue

Now take the retail price of your product (or average retail price of your products) and multiply it by the number of products you can make each month. (You can get more detailed with this calculation if you have varying price points and plan to make varying amounts of each product. Determine the quantity you’ll make of each product and multiply each product’s quantity by its price, then add all totals together.)

For example, if the product I sell is $75, I would multiply 20 (products) by 75 (price).

If I sell all the products I make in a month, my revenue will be $1500.

We now want to determine if your business will be profitable selling on Etsy.

 

Step 4: Expenses

Estimate your expenses.

You can determine your wages by multiplying your hourly wage but the number of hours you plan to work each month.

For example, $20/hour multiplied by 40 hours = $800

Determine your material costs per product and multiply that number by the number of products you can make in a month.

For example, if materials cost $15/product and I plan to make 20 products in a month, that’s $300/month in product materials.

You can also estimate your Etsy fees based on how many products you’ll make and list, and the fees you’ll have to pay if they all sell.

For example, 20 products at $75:

• Etsy Listing Fees: $0.20 x 20 listings = $4
• Etsy Transaction Fees: $75 x 5% = $3.75 x 20 items = $75
• Etsy Payment Fees: $75 x 3% + $0.25 = $2.50 x 20 items = $50

Minimum Etsy fees (based on listing and selling 20 items) = $129

Try to gather some rough numbers for any other overhead expenses you anticipate (e.g. packaging supplies, office supplies, marketing, etc.).

For example, let’s say my shipping supplies (labels, boxes, tissue, business card, etc.) cost around $1/product, that’s another $20 if I sell and ship all 20 items I make in a month.

Add all your costs together.

For example:

• Wages – $800
• Materials – $300
• Etsy fees – $129
• Shipping materials – $20

Total known expenses: $1249

 

Step 5: Gross Profit

Subtract your known expenses from your potential revenue.

We’ll call this total your “gross profit” since we don’t know all your expenses yet.

>> Gross profits are your profits after subtracting the costs of making and selling your products. It doesn’t include operating costs.

>> Net profits are your profits after you deduct all expenses.

*You may be including expenses outside of making and selling in your gross profit calculation, but that’s okay for this exercise. We just want a rough idea of how much your profits are after deducting your known expenses.

Subtract your known expenses from your total revenue (based on you selling all the products you make).

For example:

Total revenue ($75 x 20 products) = $1500

Estimated expenses = $1249

1500 – 1249 = 251

My “gross profit” is $251

 

Step 6: Budget

Before having several months of business operations under your belt, there will be many costs that are hard to determine.

For example, how much will printer ink cost each month? That will be hard to calculate until you go through an entire year of business, have receipts for printer ink, and can divide the printer ink total by 12 (months).

But if you start with the costs you know and subtract them from the potential revenue you can earn, you can then see how much money is left to cover your unknown expenses.

This will help you get a clearer picture of if it will be profitable for you to sell on Etsy.

For example, if I estimate my “gross profits” will be $251/month, I then must determine if I think my unknown expenses will be less than $251/month. If they are, my Etsy business will be profitable.

It will also help create a rough budget for your business’s unknown expenses.

For example, if I want my net profits to be $200/month, I have a budget of $51 to spend on any other expenses outside of the ones I’ve already estimated.

This budget will help me be more conscious about my spending and consider an expense’s return on investment (ROI) before spending money on it.

 

How much does it cost monthly to sell on Etsy?

There are no monthly fees to selling on Etsy. Monthly Etsy costs are based on how many items you list and how much you sell.

But let’s look at an example to give you an idea of what it might cost monthly to sell on Etsy.

Let’s say I list 20 items per month and my average sale is $35.

If I sell every item I list, my monthly Etsy costs will be:

• Listing fees: $4
• Etsy transaction fees (5%): $35 x 5% = $1.75 x 20 items = $35
• Etsy Payment fees (varies by country, US is 3% + $0.25) $35 x 3% + 0.25 = 1.30 x 20 items = $26

Monthly Etsy costs: $65

 

What percentage does Etsy take (2022)?

In 2022, based on a US business, Etsy takes the following percentage:

• $0.20 USD per listing
• 5% of the total sale (transaction fee)
• 3% of the total sale (Etsy Payments fee)
• $0.25 USD per sale (Etsy Payments fee)

 

As a US business:

• A $20 sale on Etsy, Etsy would take $2.05
• A $50 sale on Etsy, Etsy would take $4.45
• A $100 sale on Etsy, Etsy would take $8.45