How much Etsy takes per sale can cause sticker shock for many sellers once they see what they’re left with (if you’re not familiar with all the fees, you’ll find an easy-to-understand fee breakdown here). This article will explain how to lower the fees you must pay.
It’s important to understand; you cannot attempt to avoid Etsy fees; that’s prohibited by Etsy and will likely get your shop suspended or shut down.
An example of avoiding fees would be encouraging Etsy shoppers to buy your item through another platform.
The suggestions I share in this article are to help lower Etsy fees, not avoid them.
They won’t amount to huge savings but may add up at the end of a year.
1 – Lower Shipping Fees
When Etsy charges a fixed percent per sale (for fees such as transaction fees, Etsy Payment fees, etc.), they include shipping costs in that calculation.
For example, one of the fees Etsy charges is a 6.5% transaction fee. They apply that fee to the total sale amount (e.g. the price of your product plus shipping). So if you sell a $10 item and charge $5 for shipping, Etsy charges 6.5% on $15, not just the price of the item ($10).
If you’re able to find a cheaper courier and can lower your shipping fees, you can reduce the amount Etsy takes.
For example, if you’re selling a $20 product and charge $10 for shipping, Etsy’s transaction fees take 6.5% of your total sale (product price plus shipping; $30), and transaction fees alone for that sale will be $1.95.
But if you’re selling a $20 product and only charge $5 for shipping, the transaction fees will be $1.63.
Although the savings may seem small, they can be significant over time.
For example, if you’re able to save $0.32 in Etsy fees per transaction and you make 100 sales per month, you’ll be saving $32/month and $384/year.
A word about Free Shipping
I’ve seen people suggest sellers offer free shipping to reduce Etsy fees, but that simply doesn’t work.
When you offer free shipping, it’s not really free. You’re basically hiding some or all of the shipping fees in your prices.
If you have high profit margins, you may be able to offer free shipping without raising your prices, however, that means you’re reducing your profit margins.
Let’s say you typically charge $5 for shipping but decide to offer free shipping, to reduce your Etsy fees, and you don’t raise your prices.
You’re now losing $5 of profit instead of approximately $0.48 that Etsy would collect based on shipping costs (for 6.5% transaction fee on the shipping cost, and 3% Etsy Payment fee on the shipping cost).
Offering free shipping and reducing your profits may make sense if it helps you make more sales. But if you’re looking to save money, it’s better to charge customers for shipping and let Etsy take their cut.
Alternatively, you may hide shipping fees in product prices and raise your prices. But again, this doesn’t save you money on Etsy fees. At the end of the day, Etsy is taking the same amount whether shipping is in your prices or added to your prices.
2 – Reduce Shipping Countries
Being selective when it comes to which countries you ship to can not only lower your shipping costs, which lowers how much Etsy takes, but you can also reduce your Etsy fees.
For Australia, Canada, and New Zealand, the Etsy Payments fee goes up by 1% when shipping internationally, as opposed to domestically.
The more you must charge to ship an item, the more money Etsy takes.
Of course, one can argue that it’s better to make a sale to a customer in another country and give Etsy more money than to not make a sale.
But for those will low profit margins, the higher cut that Etsy takes may not be worth it.
3 – List Prices in your Banking Currency
Etsy will charge a Currency Converter fee if you’re listing your products on Etsy in a different currency than your payment account/bank account.
To avoid this fee and lower how much money Etsy takes from you, simply list your products in the same currency as your payment account.
4 – Reduce Listings
Many handmade business owners tend to create a lot of stock to display their creativity. But just because you can make a product doesn’t mean you should.
Offering too wide of a selection can lower shoppers’ perceived value of your products, and can actually reduce sales.
It can also increase your Etsy fees without increasing your revenue.
Of course, you don’t want a bare-bones shop. You want a selection of products for shoppers to browse.
However, you also don’t want to mindlessly add listings to your shop and continuously rack up Etsy listing fees without some indication that those listings will sell.
When you first start a shop, there will be an element of testing, and you’ll have listings that don’t sell. But as you make sales and gather stats, you’ll have a better idea of what type of listings sell and which tend to be ignored.
As you learn what your bestsellers are and only list what’s necessary, you’ll reduce how many unnecessary Etsy fees you incur.
5 – Turn Off Auto-renew
There may be some listings you want to keep auto-renew on for, such as bestsellers. But if you’re looking to reduce your Etsy fees, you’ll want to be selective about which listings deserve a spot in your shop.
If an item hasn’t sold in 4 months, is it worth spending $0.20 over and over in hopes that it will?
If a listing isn’t selling as is, it may be better to remove the listing and try selling it through another platform (e.g. through your website if you have one, at your next craft show, marketing it on social media and asking those interested in buying to contact you to set up payment).
6 – Limit One-of-a-kind Products
As fun as it is to come up with a new design each time you make an item, one-of-a-kind isn’t as profitable…for many reasons.
When every item you make is unique, you must create a listing for each.
On the other hand, if you create 10 different products but have multiple quantities in each, you can reduce your listing fees.
For example, let’s say seller A has 100 products to sell and they’re all one-of-a-kind. To list those items on Etsy, they must create 100 listings ($20 USD in listing fees).
Let’s say seller B also has 100 products to sell, but they only offer 10 types of products and have 10 units of each. They only need to create 10 listings ($2 USD).
Only when one of those listings sells will they be charged another $0.20 USD by Etsy.
So at the end of four months, seller A is paying $20 USD in listing fees, even though they only sold 5 items. If seller B also sold 5 items, they’ve only paid $1.20 USD in listing fees.
(For listings with a quantity greater than 1, you’ll be charged $0.20 USD to create the listing. When the listing sells, you’ll automatically be charged $0.20 to keep the listing up and sell the remaining quantity. After each sale, you’re charged $0.20, so if Seller B has 10 units, sells 5, they’re charged the $0.20 6 times, since the listing auto-renews after the 5th sale).
7 – Use Variations
Variations are another way to reduce the number of listings you need to create and only pay additional listing fees when an item sells.
For example, if I offer a product in green, blue, and yellow, instead of creating three listings, I could create one listing with the color options as variations.
You may also use variations to create bundles.
For example, let’s say I sell boxes of tea lights and customers often buy 2 or 3 boxes at a time. Instead of creating a listing and adding multiple quantities, I could create variations on the listing such as “2 boxes – $24” and “3 boxes – $45”, offering a small discount to customers buying more than one box.
This way, when a customer purchases the variation of 3 boxes, I’m only paying for the initial $0.20 listing fee, as well as an additional $0.20 when it auto-renews (total of $0.40).
On the other hand, if a customer simply chooses “3” under quantity, then I’m charged $0.20 for the initial listing, and $0.20 again after each quantity is sold (total of $0.80).
8 – Create Bundle Listings
If the variations method won’t work for the product you sell, but customers do commonly purchase in multiples, you can create listings for the most popular quantities or bundles.
For example, if my customers commonly buy 3 candles at a time, but I offer a variety of scents, I may create a listing for a 3 Candle Pack and in the variation, list the different scent combinations.
Again, this simply helps reduce how much I’m spending on listing fees.
These techniques won’t create significant savings with each sale, but may add up over the course of a year.
Outside of Etsy fees, you also want to be sure you’re charging sales tax if you’re required to. Learn more here: Does Etsy Automatically Charge Sales Tax?