Thinking about turning your passion into a successful Etsy store? Well, you should know that every business needs a little investment at the beginning. In this article we look at all the costs you need to take into account when you start selling on Etsy. From the first listing you publish on the platform, to your first sales. Here are all the obvious and less obvious costs you need to take into account!
Turn your passion into a successful Etsy store: from your first listing to your first sale
If you want to open an Etsy store but have no experience with the platform and online selling, make sure to get our Ultimate FREE Guide to a Successful Start on Etsy, a step-by-step workbook to help you set up your store effortlessly:
The complete PDF workbook will be sent to you via e-mail after you confirm your subscription. You can print it and use it as a work sheet. It will also help you calculate the right prices for your products with our table method, including all the costs and desired profit margins!
The costs of selling on Etsy
Your journey as a seller on Etsy starts when you publish your first product on the platform. Opening a store on Etsy is free, but you are required to publish your first listing when you open the shop. You will pay a $0.20 fee per listing created.
When establishing the price of your first product, you should also take into account that when your item sells, Etsy will also get 6.5% of the transaction fee, and a payment processing fee of 3% (product price + shipping).
For example, you sell a pair of handmade earrings for $40 (final price, with shipping costs included), the fees you’ll be paying when they sell are:
Listing fee: $0.20
6.5% of the transaction fee: $2.6
3% Etsy processing fee: $1.2
Total costs: $4
If you have a larger stock of the same product, and you use only one listing to sell it, you should also know that each time one of your items sells, you pay a $0.20 renewing fee.
For example, you have 10 pairs of handmade earrings in the same model. You use one Etsy listing to sell them, and set the product quantity to 10. Each time you sell a pair of earrings, a $0.20 fee will be deducted.
Your production & labor costs
There’s a lot more that goes into a successful business than passion. You need all the tools necessary to develop your product, you need time, resources, and sometimes help to create the finished product you want to sell.
Let’s look at an example together: you are a painter and decide to sell some of your paintings on Etsy.
What are your costs?
First of all, materials (in this case, painting supplies): paper/canvas, brushes, colors, etc. Secondly, you need to think about the time you are investing to create each painting. If you work 100 hours on a painting, from start to finish, what would be the money value of that time for you? If you work only 30 minutes per painting, then what value would you give that time? (You can also take into account the hundreds of hours you’ve worked and trained already to get to this point of efficiency).
Thirdly, where are you painting? Do you need a special place to run your business? Or is it just you in the comfort of your home? These additional costs should also be factored in, when you envision your Etsy business plan.
Storage, packaging, and shipping costs
Other costs that can pile up when running an Etsy business are related to storage, packaging, and shipping. This is an area where we had many problems as well when our Etsy business started to thrive.
Let’s look at an example where storage is imporant. You’ve decided to sell vintage clothes on Etsy.
You’re in thrift stores all of time, finding beautiful vintage pieces for your Etsy business. And the clothes start to pile up, you’re running out of storage space. When someone orders a jumper, it takes a lot of time for you to find it. And then you decide you need to wash it again, or iron it, because of improper storage.
Well, just imagine when more and more orders are coming in, and you can’t find the clothes. Or if you find them, they are damaged, dirty, or creased. You’ll have a lot of unnecessary work on your plate. And your order processing time will increase.
That is why, storage should be thought out as best as possible from the beginning.
Once you gather a reasonable number of products, start looking into storage options.
Packaging is something customers love. We’ve all watched at least one unboxing video.
If you want your products to have a personal touch, a bit of brand awareness, and maybe get you some return customers, invest in packaging. Even a small note or sticker can make a difference.
Shipping costs are often overlooked by Etsy sellers who are at the very beginning of their journey. People start listing products on the platform, and forget to actually to research the options and costs of shipping them to their customers.
So when the first order is in, many people have no idea what service to use to send the package with, nor how much it costs.
Often, international shipping can cost more than the price you set for your product on Etsy. So you end up paying from your own pocket. That’s definitely not a profitable way to turn your passion into a successful Etsy store.
When you create your Etsy store, make sure to work on a shipping strategy. Decide what countries you want to ship your products to, the carriers that ship there, and how much it costs. Look for some of the best options, and set the prices of your products accordingly if you offer free shipping.
Don’t forget about your local taxes
“If you sell items on Etsy, you must pay income tax on your income—usually, the total amount you earned by selling your products, less your business expenses.” If you’re US-based, read all about it in this useful article by Turbotax.
Ready to Turn your passion into a successful Etsy store? Start working on a list
If you’re ready to start your journey as a seller on Etsy, we recommend working on a list with all of the costs we mentioned above. And start doing your research on: income taxes, shipping locally & internationally, materials & labor costs, storage and packaging options, etc.
You can deal with all of these things more in detail as your business starts to grow. But it’s good to have an overall image about all of these things from the start. So that you know how to set reasonable prices for your products on Etsy.
New to Etsy? Read the 7 Things I Wish I Knew Before Opening my Etsy Store!
Next up: Advertising, photography & social media
In this article we don’t cover additional costs. Paid adverting, product photography, social media marketing, these can all generate costs as your business grows. But we will look at these things more in depth in a future article, which targets more established Etsy sellers.