Working out what you really keep from each Etsy sale
Indicative trading calculations, not VAT or accounting advice. Check VAT treatment and figures with a qualified accountant before making pricing decisions.
The costs on one sale
- Materials / unit cost
- What it costs you to make or buy one item. Include wasted materials on average.
- Postage and packaging
- Postage you pay, plus boxes, tissue, mailers, tape and inserts.
- Marketplace fees
- Listing and transaction fees — often a percentage of the sale plus a small flat amount.
- Payment processing
- Usually a percentage plus a fixed fee per order.
- Adverts
- Spend on on-site or off-site ads, averaged per order that ads produced.
- Returns and problems
- An average £ per order for refunds, replacements and lost parcels.
Worked example: a £28 item
Assumptions (all hypothetical): the buyer pays £28 in total, including postage; materials cost £8; postage £3.20; packaging 90p; a combined marketplace fee of 10% + 20p; payment processing of 4% + 20p; adverts averaging £2.50 per order; returns averaging 60p per order. The seller isn't VAT registered.
| Line | £ per order |
|---|---|
| Customer pays | £28.00 |
| Materials | − £8.00 |
| Postage | − £3.20 |
| Packaging | − £0.90 |
| Marketplace fee (10% + 20p) | − £3.00 |
| Payment processing (4% + 20p) | − £1.32 |
| Returns allowance | − £0.60 |
| Contribution before ads | £10.98 |
| Adverts per order | − £2.50 |
| Contribution after marketing | £8.48 |
Of £28, about £8.48 (30.3%) is left to pay for your time, tools, photography and any other monthly costs. "Materials £8, sells for £28" looked like £20 profit — the real figure is less than two-thirds of that.
How the percentage fees are worked out
Percentage fees apply to what the buyer pays: 10% of £28 = £2.80, plus 20p = £3.00. Payment: 4% of £28 = £1.12, plus 20p = £1.32. If your marketplace charges on the postage portion too, include postage in the price you enter rather than leaving it out.
What changes the answer most
| Scenario | Contribution | Margin |
|---|---|---|
| Organic sale, no ads | £10.98 | 39.2% |
| Base case (£2.50 ads) | £8.48 | 30.3% |
| 20% off sale, with ads | £3.66 | 16.4% |
A 20% discount cuts the price by £5.60 but costs nearly stay the same, so contribution drops from £8.48 to £3.66. Discounts hit small-ticket handmade items particularly hard.
The most you could spend on ads per order before a sale loses money (break-even ad cost) is £10.98 here. For more on that, read break-even advertising.
Monthly view
At 40 orders a month that's £339.20 of contribution. Take off £25 of hypothetical monthly costs (software, a share of equipment) and £314.20 remains — before you've paid yourself for making anything. Divide that by your hours to sanity-check whether your pricing values your time.
Load your own price, materials and fee percentages into the profit calculator. Save versions with and without ads to compare them.
Try your own numbersWant Etsy's own fee structure pre-filled? The Etsy profit calculator (selling downloads? see Etsy digital download profit) separates transaction, payment processing, regulatory and Offsite Ads fees, with editable example rates.
VAT and other things this example leaves out
- If you're VAT registered, part of what the buyer pays is output VAT, not revenue. Switch on VAT mode in the calculator. Some marketplaces also charge VAT on their own fees — check your statements.
- Currency conversion fees on international sales.
- Unsold stock, failed makes and seasonal swings.
- Income tax on your profit — speak to an accountant or check HMRC guidance for your situation.
Limitations
This is an illustration of the arithmetic using made-up fees. It isn't Etsy's fee calculator and isn't tax or accounting advice. Always use the fees on your own account statements.