Etsy fees are 23% of my revenue - is this normal?

I finally sat down and calculated ALL my Etsy fees for November. I'm in shock.

I sold $4,200 worth of ceramics. Here's what Etsy took:

• Listing fees: $8.40 (42 listings renewed)
• Transaction fees (6.5%): $273
• Payment processing (3% + $0.25): $138.50
• Offsite Ads (15%): $315
• Shipping labels (at cost): $185

Total fees: $920 out of $4,200. That's almost 22%, and I haven't even counted the $10/month for Etsy Plus or my promoted listings spend.

My material cost is about 35% of sale price. So my actual profit margin after fees and materials is like 43%. Is this normal?? How do other sellers make this work?

Unfortunately, yes, this is pretty normal now. Etsy has raised fees significantly over the past few years.

That Offsite Ads fee is the killer - if you make over $10K/year, you're forced into the program and can't opt out. 15% on any sale that came through their ads.

Some strategies:

• Raise prices to account for fees (most serious sellers have)
• Build an email list and direct customers to your own site for repeat purchases
• Use Etsy as a customer acquisition tool, not your only channel

There's a fee calculator on Terms.Law that breaks down exactly what you'll net on any sale. Helpful for pricing.

Wait - you're paying 15% Offsite Ads on $315 of revenue? That means $2,100 of your $4,200 in sales came through Offsite Ads. That's 50% of your sales!

Here's the thing: without those ads, would you have made those $2,100 in sales at all? Probably not all of them. So while the fee hurts, it's for incremental revenue.

What I do: I track which products get Offsite Ads sales vs. organic. If something only sells through Offsite Ads, I raise the price specifically to cover that 15%. For organic sellers, I keep prices competitive.

The real problem is Etsy has no real competition. Amazon Handmade takes 15% referral fee. Shopify costs ~$29/month plus payment processing. Faire takes 25% from wholesale orders.

At least with Etsy you get traffic. Try driving traffic to a standalone Shopify store - you'll spend more than 20% on Facebook/Google ads anyway.

The math I use: Etsy = customer acquisition cost. My own site = profit center for repeat customers. First purchase on Etsy, every purchase after goes through my website.

That's a really good point about Offsite Ads. I never thought of it that way - those sales probably wouldn't have happened organically.

I used that fee calculator and played with different price points. If I raise prices 15% across the board, my net profit goes from 43% to 51%. That's significant.

Question: has anyone seen sales drop after raising prices? I'm worried about losing my position in search.

Quick note on the Offsite Ads situation: if you make less than $10,000 in the trailing 12 months, you CAN opt out. Once you cross $10K, you're locked in at 12% (not 15% - that's the rate for sellers under $10K who opt in).

Some sellers strategically stay just under $10K on Etsy and move overflow sales to their own site. Something to consider for your business structure.

Also - make sure you're tracking all fees for tax purposes. Payment processing fees, Etsy fees, shipping costs - all deductible business expenses.

Re: price increases - I raised my prices 20% last year. Conversion rate dropped maybe 10%, but revenue per sale went up 20%. Net result: more profit, less work.

Handmade/artisan buyers are less price sensitive than you think. They're already choosing to buy from a small maker instead of Amazon. A $45 mug vs a $52 mug isn't a dealbreaker for your target customer.

What DOES hurt you: bad photos, slow shipping, poor reviews. Focus on those.

One more fee to watch out for: if you offer free shipping and bake it into your price, you're paying 6.5% transaction fee on the shipping amount too. Etsy charges the transaction fee on the TOTAL including shipping.

So a $50 item with "free shipping" (really $40 + $10 shipping baked in) costs you $3.25 transaction fee. The same item at $40 + $10 separate shipping costs $2.60 + $0.65 = $3.25. Same either way actually.

Nevermind, I confused myself. But the calculator does break this down correctly.

UPDATE: Raised prices 12% on my best sellers this week. So far, no noticeable drop in conversion rate (been watching daily). Too early to tell for sure but feeling better about the decision.

Also started including a card in every shipment with a 10% off code for my own website. Building that direct customer list like you all suggested.

Thanks for all the perspective. I think I was so focused on "I'm losing 23% to fees" that I forgot about all the marketing/SEO/platform work Etsy does that I'd have to pay for anyway somewhere else.

Great update! One more thing: quarterly estimated taxes. At $4K+/month you're likely over the threshold where you need to pay quarterly estimates to avoid penalties.

Platform sellers often forget to set aside tax money because it never hits their bank account as "income" - Etsy just deposits the net amount. But you owe tax on the gross sale, then deduct the fees. Make sure you're setting aside ~25-30% of profits for taxes.

Late to this thread but wanted to add - the Etsy fee calculator is clutch for pricing strategy. I use it to model different scenarios before changing prices.

For example, I tested whether offering free shipping (and raising price to compensate) was worth it vs charging separate shipping. The calculator showed me I'd need to raise my base price by $4.50 to cover both the shipping cost AND the extra transaction fees on that higher price. Decided it wasn't worth it for my average order value.

Another ceramics seller here - I disagree slightly with the "Etsy fees are just customer acquisition cost" framing. Yes Etsy brings traffic, but they also take 23%+ while providing increasingly worse search results and support. At some point the value exchange tips too far in their favor.

I've been building my own Squarespace site for 6 months now. It took time to get traffic but now about 40% of my sales come direct. Those sales have WAY better margins even accounting for the hosting costs and occasional FB ads.

Update for anyone following this thread - Etsy just announced another fee increase coming in April 2025. Transaction fee going from 6.5% to 7%. I'm seriously considering the strategic $10K cap approach mentioned earlier to avoid the mandatory Offsite Ads.

The fee calculator on this site has been a lifesaver for modeling different scenarios btw. Really appreciate whoever built that thing.

@handmade_ceramics_kate how's the price increase going a couple months later? Curious if you've seen any long-term impact on sales volume or search ranking.

I'm thinking of doing the same but nervous about losing my star seller status if conversion rate drops. Would love to hear how it played out for you!