Sunday, September 10, 2017

Understanding Fees on Etsy - With MATH and Everything!

Etsy sellers, this is for you.  And for me, because explaining things to someone else sets them neatly in my mind, and preserves the info for my future use.  

I just did some calculations to confirm how much I am spending on Etsy.  Don't get me wrong, I like Etsy.  Every selling venue needs to have income of their own in order to exist, serve their sellers, pay their employees, and their taxes.  I do not begrudge them their fair share for providing a venue for me. I would ask you please not to complain about Etsy here on my blog.  Feel free to say what you like on your own. 

But the fees are more complicated than I thought they were.  I am going to share with you. 

Here are the Fees

 1)  Listing Fee - .20 per listing.  Each time I list a tutorial or kit, (or it sells and is re-listed) it costs .20.  That one is easy to understand.

2) Transaction Fee -  3.5% of the sale. (Note: I believe they do not take a percentage of the shipping cost. Just the item cost.  Etsy is providing a service, and could have an expectation of being paid for it, but it seems they don’t.)

3)  Payment Processing Fee - 3% plus .25 per transaction.  No matter where they live, including foreign countries.  

I clearly understood the first two fees.  But that Payment Processing Fee I didn’t have a real grasp on.  Again, it seems basically reasonable to me.  

Here’s how it all affects my bottom line.  

Someone purchases something small, lets say a $10 tutorial.  I give Etsy $1.10.  Listing .20, Transaction .35, Payment Processing .55.  

Of the small sale, 11% of the whole transaction goes to Etsy.

Now, let’s say a larger purchase is made.  Someone buys some tutorials and kits, and the total sale is $100, with shipping costs of $2.65.  I give Etsy $7.03.  Listing .20, Transaction 3.50, and Payment Processing 3.33.  And since I charged the actual shipping cost, that breaks even.

Of the larger sale, 6.85% of the transaction goes to Etsy. 

See what happened there?  That is a SUBSTANTIAL difference. 

I have a $1.00 listing and a $3.00 listing for materials used in my tutorials.  I need to re-think those listings, don't I? 

Also, some people buy the tutorial, read it, and an hour later, but a kit.  New transaction.  New Transaction fee, which I expected and understood, but ALSO, new Payment Processing fee, but that second .25 makes things different, in terms of percentage, eh?

Now, about PAYPAL. It took me many efforts with the calculator tool below to realize that PAYPAL CHARGES MORE, for small transactions.  And people bitch up a storm about Etsy Direct Payments! Sheesh.  Use the calculator tool (there is a link at the end of this post) and see for yourself.  PayPal charges 2.9% plus .30 per transaction. For smaller sales, that amounts to MORE.  AND if you are processing payment from out of your own country, they take 3.9% plus.30 for those processing up to $3000 a month.  Etsy has the same 3% fee, no matter where the purchase is made.  Let me be really clear here. Etsy did a kind and generous thing for us, and we bitched about it. Now there are some people from other countries whose banks charge them an ADDITIONAL FEE for accepting payment from Etsy, and those people have a right be be upset.  But maybe with their banks, and not Etsy so much. But for a while Etsy threatened to close the shops of those unwilling to conform, and that was complaint-worthy, IMHO.

Here's a graphic to help you understand.  Note, these calculations were done at the PayPal rate for those with total sales of under $3k and month.  There is a sliding scale, to further complicate things.

Total Purchase Amount
Etsy Payment Processing
PayPal
PayPal Cross Border
10.00 Sale
0.55
0.59
0.69
100.00 Sale
3.25
3.20
4.20
1000.00 Sale
30.25
29.30
39.30

For larger sales, for me, even at the cost of a nickel or a dollar, I would still rather have ALL my bookkeeping information in one neat and tidy place. And since I do sell to the EU, I am happy to save a .14 on each small sale. Transferring numbers around from one place to another makes my head spin.

I just learned a great deal about pricing on Etsy.  Did you?  Draw your own conclusions.  It may affect you differently than it does me. But I need to re-think some pricing a little.  

Check out the cool Etsy Fee Calculator Tool I found here:  https://salecalc.com/etsy 

8 comments:

  1. and for us in Europe they charge VAT on everything. On the item, on the transaction and on the relisting fees.

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    1. Oh Cath, I really do understand how miserable that must be. Governments IMHO should really make it possible for us to make a living. Sharing a portion of our income to benefit general public good is appropriate, but sometimes, I believe they take a greater share of our hard earned income than what is reasonable, I think VAT is a good example of that. I am so sorry for it.

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  2. thank you very much for this and for the link to the calculator tool.

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    1. You are welcome Cath! I think we all need to be fully informed. Knowledge is power! :) <3

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  3. Thank you for sharing your experience with this. I was unaware of any fees beyond the .20 per listing... This helps many of us who are developing our own approach and business model for Etsy! <3

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    1. Glad you found it helpful! Thanks for reading and commenting!

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  4. Thanks for this, Marsha! I always knew Etsy was more expensive than selling patterns on my website, now I know why!

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    1. How interesting! Did you set up your website yourself? My website for my other business cost $3000, and I got a deal on that. Is there a monthly payment in addition to the yearly hosting costs? I am intrigued. I always thought that would be a more expensive option. And there would still be a Payment Processing Fee, right? Do you use PayPal? And if you sell to the EU, how do you manage the VAT? Just curious. :) Thanks for reading and commenting.

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