Are Etsy Fees Too Low?

No, in 2020, they are not too low, but at first glance, one might get that impression. The Initial Listing Fee is only 20p, but other fees add up quickly. Let's break down the cost structure and see how it impacts the overall profit margins.

The Complex Fee Structure of Etsy

To begin with, there are several fees to consider: Initial Listing Fee, Handling Processing Fee, VAT on Sales and Handling Processing Fee, Marketing Fees, and Postage Costs. These fees can vary based on the product and its sale success.

Initial Listing Fee and Handling Processing Fee

The Initial Listing Fee is 20p, and the Handling Processing Fee is ￡5 for each sale transaction. On top of these, VAT (Value Added Tax) must be accounted for at 20%. Additionally, there are further fees on the VAT of the sale, which adds to the complexity of the cost structure.

Marketing Fees - The Motherload of Fees

The significant fee is the Marketing fee, which can consume about 10 of all the fees. Marketing on Etsy can be crucial, especially in a crowded marketplace, but the pricing can be quite steep. Furthermore, Etsy encourages free postage to be offered, which can increase the overall cost of the item.

Worst-Case Scenario: A Single Product

Let's consider a best-case and worst-case scenario using a simple example: a personalised birthday card priced at ￡10. In the best-case scenario, the card sells on the first day after an advertising campaign costing ￡5 per day. However, the total cost of fees can significantly reduce the profit.

Best Scenario:

Product: ￡10 Listing: 20p Advertising: ￡5 per day ￡5 VAT: 20% on the selling price ￡2 Total: ￡6.45 (after credits of ￡5.45)

Potentially, the postage cost of ￡1.50 can be added, leading to a total profit of ￡3.95.

Worst Scenario:

Product: ￡10 Listing: 20p Advertising: ￡5 per day for 20 days ￡100 VAT: 20% on the selling price ￡20 Total: ￡122 (excluding fees)

Considering the additional fees, the total cost amounts to ￡123. Adding the postage cost of ￡1.50, the total loss would be ￡124.50 for the single product.

Lesson from a Personal Experience

During a hypothetical day of advertising on 29/04/2020, I made a sale of ￡227.33, with Etsy fees amounting to ￡46.00. After paying these fees, the total payment was ￡181.33, leaving a mere profit of ￡50, indicating the significant impact of these fees.

Given the high fees and the complexity of the cost structure, many sellers find it more profitable to focus on driving traffic to their own websites or platforms like Amazon HandMade, which offer more competitive fees and support.

Conclusion

The cost structure of Etsy, while complex, can eat into the profit margins of sellers. Factors such as the initial listing fee, handling processing fee, VAT, marketing fees, and postage costs make it challenging to compete effectively on the platform. For those v?n considering using Etsy, it may be prudent to carefully evaluate the costs and consider alternative platforms or methods of selling.

Thanks for taking the time to read this. If you have any questions or need more detailed information, feel free to reach out.