You sell a product for $20 on Etsy. The customer pays, Etsy deducts its fees, and the amount that eventually belongs to your business is less than the number you saw on the order.
It’s very easy to look at that difference and think, “Etsy is taking too much of my money.”
Maybe Etsy really is too expensive for your particular business. That’s possible. But before you blame the platform, there’s another question you need to answer: Was that $20 product priced to make a profit after the cost of selling it?
Because Etsy fees absolutely affect your profit. But sometimes the fee isn’t the biggest problem. Sometimes the product was underpriced before Etsy ever took a penny.
Today we’re going to follow the money through an actual Etsy sale so you can see the difference between revenue, Etsy fees, product costs and actual profit. Then you can decide whether Etsy is costing your business too much based on your numbers instead of somebody else’s opinion.
If you’re still deciding whether Etsy, your own website or a combination makes sense for your business, start with our guide Etsy, Your Own Website, or Both? How to Decide What Comes Next. That article looks at the selling-platform decision. Today, we’re putting the calculator on the table.
First, What Does Etsy Actually Charge?
Before we can decide are Etsy fees too high, we need to know what we’re talking about.
For a U.S. seller, Etsy currently charges a $0.20 listing fee for each listing, a 6.5% transaction fee on the total order amount, and Etsy Payments currently charges U.S. sellers 3% plus $0.25 per transaction. Additional fees can apply depending on things such as advertising, currency conversion and other services.
Those fees can change, so always check Etsy’s current official fee information rather than building your prices around numbers you saw in an old video or social media post.
For our example, we’re going to keep things simple. We’ll use the basic listing, transaction and U.S. Etsy Payments fees and leave optional expenses such as advertising out for now.
For a U.S. seller, Etsy currently charges a $0.20 listing fee for each listing and a 6.5% transaction fee on the total order amount. Etsy Payments also has payment-processing fees that vary by country. U.S. sellers currently pay 3% plus $0.25 per order. You can always verify the current amounts on Etsy’s official Fees & Payments Policy before setting or changing your prices.
Let’s Follow a $20 Etsy Sale
Imagine you make a handmade product and list it for $20.
For simplicity, let’s also assume the $20 is the amount we’re using to demonstrate the basic Etsy charges and we’re leaving shipping and sales tax out of this example.
Here’s what happens before we even discuss what it cost you to make the product.
| $20 Etsy Sale | Amount |
| Sale price | $20.00 |
| Listing fee | -$0.20 |
| 6.5% transaction fee | -$1.30 |
| 3% payment processing | -$0.60 |
| Payment processing fixed fee | -$0.25 |
| Remaining after these Etsy fees | $17.65 |
So Etsy-related charges in this simplified example total $2.35.
You started with a $20 sale and have $17.65 remaining.
This is usually where the Etsy-fee conversation stops.
But our business calculation is nowhere near finished.
Etsy Didn’t Make the Product for You
Now we need to look at what it actually cost to create and sell the item.
Let’s say your materials cost $5.00.
Your packaging costs $1.00.
You also have approximately $1.00 in other product-related overhead. That could represent a reasonable portion of things such as labels, printer ink, equipment use or other expenses associated with producing and preparing your products.
Now our calculation looks different.
| Where the $20 Went | Amount |
| Original sale | $20.00 |
| Basic Etsy fees in our example | -$2.35 |
| Materials | -$5.00 |
| Packaging | -$1.00 |
| Allocated overhead | -$1.00 |
| Amount remaining | $10.65 |
Now we’re down to $10.65.
Is that your profit?
Not necessarily.
We still haven’t paid the person who made the product.
That’s you.
Your Labor Is Not Free
This is one of the biggest mistakes I see handmade business owners make.
They calculate materials, packaging and selling fees, then call whatever is left “profit.” Meanwhile, they spent 30 minutes, an hour or sometimes several hours making the product.
Your time has value.
Let’s say this particular product requires 30 minutes of your actual working time. For our example, we’ll assign that labor a value of $8.
Now look at what happens.
| Final Cost Check | Amount |
| Amount remaining after fees, materials, packaging and overhead | $10.65 |
| Labor | -$8.00 |
| Actual remaining profit in our simplified example | $2.65 |
That $20 sale now looks very different.
You made a sale.
You generated $20 in revenue.
But after the costs in our simplified example, the business kept only $2.65 as profit.
Now we can ask a much better question.
Is Etsy the problem?
What Happens If We Remove Etsy From the Example?
This is where things get interesting.
Imagine you could magically remove the $2.35 in Etsy fees from our example without replacing them with any other selling costs.
Your $2.65 profit would become $5.00.
That’s certainly better.
But look at what we just discovered.
Even in an imaginary world where your selling platform costs absolutely nothing, this particular $20 product would only produce $5 in profit using our example costs.
That tells us something important.
Etsy fees are affecting the profit, but Etsy may not be the only problem.
The product’s price, production cost, packaging, labor and overhead all matter too.
And in the real world, moving the product to your own website doesn’t normally make selling costs disappear. Your website may involve payment processing, subscription costs, applications, marketing, a domain and other expenses.
That’s why comparing “Etsy fees” with “no fees” isn’t a useful business comparison.
You need to compare total selling cost with total selling cost.
This is also why choosing a selling platform should be part of a larger sales strategy. Our Sell Online and In Person guide explains why a small business doesn’t need to sell everywhere. The goal is to choose sales channels that actually fit your products, customers and business.
1. Calculate Your Product Cost Before You Calculate Your Profit
If someone asks you how much it costs to make one of your products, you should eventually be able to give a reasonably accurate answer.
Not:
“Maybe around $4?”
You need to know.
For handmade products, that may mean tracking materials down to the amount actually used. If a roll of material makes 20 products, the entire roll isn’t the cost of one product. Divide it appropriately. If a package contains 100 pieces and you use two per order, calculate the cost of those two.
The same principle applies to packaging and other direct costs.
The U.S. Small Business Administration recommends maintaining proper financial records and understanding business finances, including expenses and cash flow. You don’t need to become an accountant to sell handmade products, but you do need numbers you can trust.
You don’t need to become an accountant to sell handmade products, but you do need numbers you can trust. The U.S. Small Business Administration’s guide to managing business finances is a good free starting point for understanding bookkeeping, balance sheets and basic business finances.
2. Stop Treating Revenue Like Profit
This one can hurt, especially after a good vendor event or a busy online weekend.
You make $500 in sales and think:
“I made $500!”
You generated $500 in revenue.
That’s not automatically $500 in profit.
You still have to account for what it cost to generate those sales. Depending on your business, that can include materials, packaging, platform fees, payment processing, advertising, vendor fees, travel, shipping supplies, labor and overhead.
This distinction matters because a business can have impressive sales and still struggle financially.
Revenue tells you how much money came in.
Profit tells you what remained after the appropriate business expenses were accounted for.
You need to know both.
3. Look at Your Profit Margin, Not Just the Dollar Amount
Suppose two products each sell for $20.
Product A leaves the business with $8 in profit.
Product B leaves the business with $2.
They’re both $20 sales, but they are not equally valuable to the business.
That’s why looking only at how many units sold can be misleading. A bestseller with a weak margin may be keeping you extremely busy without producing enough profit.
On the other hand, a product that sells fewer units but has a healthy margin may deserve more attention.
This is also why I don’t want you copying another Etsy seller’s price simply because they sell something similar. You don’t know their material cost, supplier pricing, production method, labor, overhead or profit goal.
Their $20 may work beautifully.
Your $20 may not.
4. Ask What Etsy Is Doing for the Fee
Once you know your numbers, then you can evaluate whether Etsy’s cost is worthwhile.
Is Etsy bringing customers who wouldn’t otherwise know your business exists?
Are people finding your products through Etsy search?
Are Etsy customers becoming repeat customers?
Is the platform making online selling easier for you?
Are the tools saving you time?
Are you actually making profitable sales there?
As we discussed in our Etsy vs. Your Own Website guide, Etsy is an established marketplace. You’re not simply paying for somewhere to put a product photograph.
That doesn’t automatically make the fees worthwhile.
It means the fee needs to be evaluated against the value your business receives.
If Etsy costs your business money but consistently helps generate profitable orders you wouldn’t otherwise receive, that’s very different from paying Etsy fees while receiving almost no sales or useful exposure.
5. Watch Out for Fees That Aren’t in Our Simple Example
Our $20 calculation was intentionally simple so a beginner could follow it.
Your real Etsy statement may be more complicated.
For example, Etsy’s Offsite Ads program can create an additional advertising fee when an order is attributed to one of those ads. Etsy currently says shops that made less than $10,000 USD on Etsy during the previous 365 days are charged a 15% Offsite Ads fee on attributed orders and may opt out of the program. Once a shop crosses Etsy’s $10,000 threshold, participation becomes mandatory and the attributed-order fee is 12%, subject to Etsy’s current rules and caps.
That can make a significant difference to the profitability of an individual order.
This doesn’t mean Offsite Ads are automatically bad. If advertising brings a profitable customer you wouldn’t otherwise have reached, the sale may still make sense.
But you need enough room in your pricing to survive the cost of acquiring that customer.
This is another reason you can’t simply say, “My product costs $5 to make, so selling it for $10 gives me $5 profit.”
It doesn’t.
Etsy’s Offsite Ads can create another advertising fee when an order is attributed to one of those ads. Shops below Etsy’s current $10,000 sales threshold can generally opt out, while shops that cross the threshold become required participants under Etsy’s current rules. Before deciding whether those costs work for your products, read Etsy’s official Offsite Ads information so you’re calculating from the current rules rather than an old social-media post.
6. Don’t Immediately Raise Your Price Just Because You Found a Problem
Now we get to another common piece of advice:
“Just raise your prices.”
Maybe.
But pricing deserves more thought than adding a few dollars because your margin is uncomfortable.
If our $20 example isn’t profitable enough, you have several areas to investigate. Could materials be sourced more efficiently without lowering quality? Is your packaging costing more than it needs to? Is the production process taking too long? Is your supplier too expensive? Is the product itself worth continuing? Can the market reasonably support a higher price?
Sometimes the answer really is a price increase.
Sometimes the better answer is lowering production costs.
Sometimes it’s improving efficiency.
And sometimes the numbers tell you a product isn’t worth making anymore.
That’s not failure. That’s useful business information.
7. Decide Whether Etsy Is Too Expensive for Your Business
Now we’re finally ready to answer the original question.
Are Etsy fees too high?
For some businesses, they may be.
For others, Etsy’s marketplace may produce enough profitable sales that the fees are an acceptable customer-acquisition and selling cost.
And for another business, Etsy may be profitable for certain products but not others.
That’s why I don’t think a stranger on social media can answer this question for you.
They can tell you Etsy’s fees.
They can show you their numbers.
They can explain why they left.
They can explain why they stayed.
But they cannot calculate your profit without your numbers.
Try This With One of Your Own Products
Pick one product you sell and write down:
- Selling price
- Platform/listing fees
- Payment-processing fees
- Materials
- Packaging
- Labor
- Advertising attributable to the sale
- Allocated overhead
- Any other direct selling cost
- Amount remaining
Don’t start with your entire shop.
Start with one product.
If the number surprises you, that’s good information. You found something you can investigate before making a bigger decision about your entire business.
Then do another product.
You may discover that Etsy isn’t hurting every product equally. You may even discover that the item you thought was your best product is simply your bestseller, not your most profitable product.
Those are two very different things.
Liz’s Note: Don’t Ask Whether Etsy Made Money on Your Sale
I understand why sellers get irritated when they see money deducted from an order. Nobody enjoys paying fees.
But here’s the question I would rather have you ask:
Did I make enough money on the sale?
Because Etsy is a business too. Square is a business. Shopify is a business. Credit-card processors are businesses. Vendor-event organizers are running businesses. They’re all going to make money somewhere.
Your job isn’t to find a magical place where everybody else works for free.
Your job is to make sure your business gets paid too.
If Etsy makes money when you make a profitable sale, I care much less about the fact that Etsy made money.
If Etsy makes money, your supplier makes money, the payment processor makes money, and everybody gets paid except you, now we have a problem.
And that is the number I want you watching.
Frequently Asked Questions
Are Etsy fees too high for beginners?
Not necessarily. Whether Etsy fees are too high depends on your pricing, product costs, margins and the value Etsy provides your business. A beginner should calculate the total cost and expected profit rather than deciding based only on the fee percentage.
How much does Etsy take from a $20 sale?
Using the basic U.S. fees in our simplified example, a $20 sale would include a $0.20 listing fee, a $1.30 transaction fee and $0.85 in Etsy Payments processing, leaving $17.65 before product costs and other expenses. Actual orders can differ because shipping, advertising, taxes, currency conversion and other circumstances may affect fees.
Is Etsy’s 6.5% transaction fee the only fee?
No. Etsy also charges listing fees, Etsy Payments processing fees where applicable, and potentially other fees depending on the services and circumstances involved. Always review Etsy’s current official fee information for your location.
Would I make more money selling from my own website?
Possibly, but don’t assume all selling expenses disappear. Independent ecommerce stores can have subscription fees, payment-processing expenses, applications, marketing costs and other expenses. Compare the complete cost of generating and processing a sale on each platform.
Should I increase my Etsy prices to cover the fees?
Your selling price should account for the real cost of doing business, including applicable selling fees, but don’t raise prices blindly. Calculate your product costs, labor, overhead, selling expenses and desired profit, then consider what the market will reasonably support.
What’s the difference between revenue and profit?
Revenue is the money generated from sales before expenses are deducted. Profit is what’s left after the appropriate expenses associated with running the business are accounted for. A business can generate significant revenue without generating strong profit.
The Fee Isn’t the Only Number That Matters
It’s easy to blame the expense you can see.
Etsy puts its fees right there in front of you. Materials are easy to notice because you physically purchase them. Packaging shows up when you reorder boxes or mailers.
Other costs hide more easily.
Your time. Equipment. Mistakes. Advertising. Software. Supplies you use a little at a time. Products that don’t sell. Trips to purchase materials. All of those things can affect what the business ultimately keeps.
So before deciding Etsy fees are too high, run your own numbers.
Maybe you’ll discover Etsy really is too expensive for the way your business operates.
Maybe you’ll discover your price needs attention.
Maybe you’ll find a supplier problem.
Maybe you’ll realize your bestseller isn’t nearly as profitable as you thought.
Or maybe you’ll discover that after everything is calculated, Etsy is still producing profitable customers for your business.
Any of those answers is more useful than making a decision because somebody online said:
“Etsy takes too much.”
Let’s Talk About It
If you sell online, have you ever calculated the actual profit on one individual product after materials, packaging, selling fees, labor and other costs?
Did the final number match what you thought you were making?
And if you sell on Etsy, what concerns you most: the listing fee, transaction fees, advertising fees, your product pricing, or simply trying to understand where all the money goes?
Share your experience in the comments. I have a feeling quite a few small-business owners are going to recognize themselves in this one.