I've been on Etsy for quite a number of years now, and I'm here to break down the true costs of using the platform. By which I mean the financial cost. Now, I'm not an expert, I'm just a long-time user of Etsy, so it would be great if you could bear this in mind as you read - and I hope it can help you make a decision on whether or not to use the platform.
I initially set up my shop, Howell Illustration, in 2016. But, for a while, I did nothing with it. It languished until around 2018, when I finally started my business full time and really got to it. I joined Etsy because it seemed like an excellent way to get people's eyes on my business. I felt that there was a gap for my work there. And, because I had no idea how to drive people to my website. I still don't really - I just hope they show up! In any case, the last thing I was enticed by was the very small 20 cents listing fee. And this, takes me to my first point with Etsy:
20 cents per listing is not a one time charge
Every time your listing runs out of stock, you get charged a further 20 cents to relist.
Every time you list a new item you are charged 20 cents.
Every time your listing is renewed you are charged a further 20 cents.
And here's the real kicker to that: Etsy force renew every single one of your listings every four months, so if you have over 100 listings on there (which the algorithm likes you to have, as the more of your keywords used the better, thus putting you higher in the results, which you need, because there are literally thousands of listings of your product on Etsy, guaranteed), you're paying 20 dollars, or £16.53, as the exchange rate stands. Now, it doesn't sound like much, but let's not forget, that's on 100 listings. I have around 300 listings. So I'm paying £50 (or 60 dollars) every 4 months to Etsy, just as a base rate - not including the renews of listings that have sold out etc.
You are charged VAT
Whether you can claim it back or not. I am a very small business, as such, the rules in GB mean I don't have to be VAT registered. Meaning, I don't charge VAT on my products, and I can't claim VAT back on my expenses. However, Etsy still have to charge the VAT on every sale, and every listing, because they are a large business. Yes, every single sale, and every single listing. Again, it doesn't look like a lot, but add that up and it does start becoming rather scary.
Processing Fees
Currently at 4% + 20p. Along with paying your money for listing, and the VAT on top of that, you also get charged a fee each time you sell a product - and then you get charged VAT on that too.
Transaction Fees
On every transaction. Currently at 6.5% + VAT, which they charge on both postage, and per item - yes, even if you have sold two items to one person, they charge this against the selling price of each item, any postage cost and also another charge if the person has chosen to gift wrap their item.
Regulatory Operating Fee
Currently at 0.25% of the order total + VAT
Let me show you what this looks like. The below pictures are all for a single transaction of one of my letter sets with extra paper and express postage. Remember, this also excludes the original listing fee I paid of 20cents and the renewal of that every four months:
Okay, so, here's the conclusion and the final breakdown: Etsy, not including marketing fees or any postage you pay through them, take just less than 20% of your final selling fee. I've worked this out by looking at the total fees for a full year against total sales. So, Etsy takes 20% of my final cost price. Packaging, shipping, time and production fees for my items take a further 50% (yes, I have an excel spreadsheet for each individual item which works all of this out for me). In total then, I'm left with about 30% of the selling price, if you buy my item through Etsy.
Just as a comparison: If you buy through my website, I get, on average, 50% of the final selling price, even with the cost of the domain, shop app, website usage and transaction fees.
It goes without saying that Etsy do not have much say over VAT, but I've written this to highlight how many other ways you are charged. Be prepared for about 20% of your final selling price to vanish in fees (not including any marketing you do through Etsy, which is another set of charges all together). And, there are other ways that you can lose money on Etsy, who like you to offer free shipping if you want to be pushed up the rankings, and make it tracked shipping if you want star seller. So, even if you wrap the cost of shipping into your price, you're probably still going to lose money. I can't put my letter sets up to £17 can I? No one would buy them. So, they remain at £12 and I don't get a star seller badge because I don't offer free tracked shipping - that's how it works on Etsy.
Also, Etsy will take waaaayyyy more of your time than you think. You do have to jump through about a million hoops in order to get your products seen, just because of the sheer quantity of products like yours that are on the market. You have to be constantly updating, looking, listing, photographing, keyword searching - it's exhausting. The other downside of Etsy, is that when people say 'Where did you get that?' the answer is usually not 'Howell Illustration', but 'Etsy'. So your brand gets lost in the murk.
Etsy do good things as well, they offer training from other expert sellers, and they do market the platform a lot. They offer places in their catalogue, a robust social media presence, Google advertising and even an Etsy award, which can all help boost your brand. BUT, to date, I've never had my products featured on any of these (except Google ads, which just chooses what gets shown based on Google keywords), despite applying for them (because there's just so many sellers and so much stuff!) so how much it's going to help you, you have to decide.
I used to be a big supporter of Etsy, really until they started their Star Seller programme (which requires you to buy your postage through them to be a Star Seller - what's buying postage through Etsy got to do with whether or not you're a good seller?) and upped their fees even after bumper profits. Both made me highly cynical regarding Etsy's motives. So, looking back on it, I wish I'd just ploughed all of my time and resources into my own website, beacuse now I'm kind of stuck on a platform I've lost a lot of faith in.
What do you think you'll do? Has anyone else lost faith in Etsy?
Let me know what you think below!
As always, thanks for reading.
Nx