I know many people who follow me are just starting out with their upcycling and handmade crafts businesses so thought I would do a blog about selling on Etsy and talk about the “P” word (pricing!) because it gets a little more complicated when selling on their marketplace. By the end of this blog, you will hopefully see Etsy as a friend rather than a foe!
I created my Etsy store in the Spring of 2020. Before then I was selling my upcycled/hand painted furniture on Facebook Marketplace, which at the time, being new to furniture painting and my technique not being as good as it is now was fine, long term it would never have been sustainable because let’s be honest, people shop on Facebook Marketplace for one thing, and one thing only – bargains! Fewer and fewer people were prepared to pay the increased prices I was starting to charge so I decided it was time to launch my wares on Etsy.
Etsy is relatively straightforward to set up. There are plenty of articles out there that talk about how to succeed on Etsy so I will leave that to them, but I will talk about pricing. Pricing is incredibly personal. It’s subjective and objective. An art and a science! What works for me may not work for you and vice versa. Irrespective of how you approach pricing one thing for sure is you need to make enough money to cover your costs plus some profit else what’s the point?
Various pricing strategies exist with one of the most common being cost-plus pricing. Cost-plus pricing is where a markup is added on top of the cost of the goods for sale.
For example, if it costs you £50 to produce your product and you want to make £50 profit when it sells (100% markup) then you would retail your item for £100 (£50 costs + £50 profit).
This pricing model works fine until you are selling via a platform that adds fees to your sale, like Etsy because they charge lots of different fees each time you sell an item on their platform. The following table summarises what these fees are for sellers in the UK (correct as of 29/01/2023):
So using the example from earlier, we have a product and want to sell it for £100 as we want to cover our £50 costs and achieve £50 profit. If we were to sell our product on Etsy for £100 let’s see how much Etsy would take in fees (for the purpose of this demonstration we will assume we are not participating in Etsy Offsite Ads)…
- Marketplace listing fee = £0.17
- Payment processing fee = £4.20
- Regulatory operating fee = £0.25
- Transaction fee = £6.50
- VAT on fees = £2.22
- TOTAL ETSY FEES = £13.34
So after Etsy take their £13.34 from our £100 transaction we are left with £86.66. Take away from that our costs of £50 then that’s profit, not the £50 we were aiming for!!
OK, well if we know that Etsy will take £13.34 in fees on £100, surely we can just up the selling price to £113.34? Nope, here is why…
- Marketplace listing fee = £0.17
- Payment processing fee = £4.73
- Regulatory operating fee = £0.28
- Transaction fee = £7.37
- VAT on fees = £2.51
- TOTAL ETSY FEES = £15.06
On this occasion, after Etsy take their £15.06 from our £113.34 transaction we are left with £98.28. Take away from that our costs of £50 then that’s profit, again, not the £50 we were aiming for but certainly closer!!
YES! Spending hours doing complex algebra each time I listed a product was getting tiring, so I designed a calculator to do it for me (and you as I am now offering it for sale in my Etsy shop!). I will talk you through how it works…
The full version of the calculator has several features and calculators all in one so I will talk you through the different features one by one...
Recommended Selling Price calculator
This calculator uses a cost-plus pricing method to calculate a minimum selling price. The calculator will use the total costs you have incurred producing your item and the profit you wish to achieve to calculate fees payable and increase your selling price accordingly so that after paying Etsy selling fees you recover your costs and achieve the level of profit you stated.
Remember our item from earlier we spent £50 on creating and wanted to make £50 profit on? Here's the calculator at work...
The calculator allows me to enter up to 200 rows of different products and record up to 10 different products per item (which is very handy - you'll see why later). So as you can see above, we spent £50 on production costs, want to make £50 profit so the calculator is telling us we need to list our item for £115.32. After Etsy take their £15.32 fees, you guessed it... we're left with £100! £50 to cover our costs and £50 for OUR back pocket and not Etsy's!
Competitor Pricing calculator
This calculator uses a competitor pricing method to calculate a minimum selling price. Competitive pricing is the process of selecting price points for your products based on competitor pricing in your market or niche, rather than basing prices solely on business costs or target profit margins. Simply enter the selling price that is being charged for your product by up to 5 of your competitors for the same/similar product and the calculator generates a mean average recommended selling price. Listing your item at the suggested price makes your prices 'competitive'.
The calculator will show you the Etsy fees payable should you list your item at the recommended selling price and how much profit you will have made after paying fees and covering costs.
As you can see above, our production costs were £50 (again!) but looking on Etsy we have found 5 competitors selling the same (or very similar) with prices ranging between £135 down to £80. The calculator suggests a recommended selling price of £108.31 (you can round up and down as you wish naturally!). Selling our product for £108.31 means we are left with £43.89 profit after covering our costs and Etsy fees (£14.42).
Fee & Profit calculator
This 'quick' calculator will show you the Etsy seller fees payable based on your choice of selling price and selling platform. If you include details of your production costs the calculator will also tell you how much profit you would make if your product sold for the specified price after costs and Etsy seller fees have been settled. There are plenty of websites out there that will calculate this too but I included it as a bonus because it's a great tool for auditing your current prices and seeing if you need to up them (or drop them!).
In this example, you can see that an item with a selling price of £150.99 will incur £19.92 in Etsy fees when it sells. As we entered a cost value of £50, the calculator tells us that leaves £81.07 profit accounting for costs and fees.
This added feature in the calculator tracks all the individual costs you have entered for up to 200 different items and adds them all up for you and shows the values in a graph. Handy for identifying where you are spending the most on your production costs so you can attempt to make savings and improve your profitability!
So in this 'mock-up' we can see that the greatest cost that we're paying out for is delivery (£135) so that may be something to 'shop around' and see if we can find a cheaper provider. All the headers are changeable so they can be configured to your type of business whether you sell painted furniture like me or wax candles, gift cards, clothing, etc...
So that's it! I hope you found this blog helpful and thought-provoking! Etsy needn't be your nemesis. You just have to understand how it works and you can price your products accordingly and avoid the bitter disappointment of getting less than you were planning for.
Will the calculator improve your sales - not really, that's down to you, your products and marketing. But what it will do, is give you the confidence to price your products more accurately and the foresight of how much you will make for every sale!
I'm more than happy to answer any questions you may have about the calculator so feel free to send me a message (email@example.com)
Want to get your hands on a copy of m Etsy Pricing Calculator?
If yes, you can grab yours by clicking here.
All the very best!