⚠️ Profit Warning: REVENUE IS NOT PROFIT.
Many new Etsy sellers calculate profit by simply subtracting the cost of goods from the sale price. This is a mistake. Between the 6.5% Transaction Fee, the $0.20 Listing Fee, and the 3% + $0.25 Payment Processing Fee, your margins are thinner than you think. Use a proper Etsy profit calculator before you set your prices.
I still remember the day I sold my first hand-painted denim jacket on Etsy. It was listed for $125. I was ecstatic. In my head, I had just made $125. I mentally spent that money on a nice dinner and new paint supplies.
Then the deposit hit my bank account. It wasn't $125. It was $108.
"Okay," I thought, "Fees are normal."
But then I looked at my credit card statement. I had spent $15 on shipping (because I underestimated the weight), $40 on the vintage jacket itself, and $10 on paints.
My "profit" was actually $43. And it took me 5 hours to paint. I was working for $8.60 an hour.
That moment was my wake-up call. I wasn't running a business; I was running a charity for people who wanted cool jackets. If you are selling on Etsy without doing the math first, you are likely leaking money in places you can't even see. Between the "Offsite Ads" you didn't know you were enrolled in and the listing renewal fees that drip-feed out of your account, the "Etsy Tax" is real.
The "Big Three" Fees: Where the Money Goes
When you ask what percentage does Etsy take from sales, the answer isn't a single number. It’s a layer cake of fees. In 2025, the structure is rigid, and if you price your items too low, these percentages will eat your margin alive.
1. The Transaction Fee (6.5%)
This is the big one. Etsy takes 6.5% of the total order amount.
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The Trap: This includes shipping and gift wrap.
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Example: If you sell a mug for $20 and charge $10 for shipping, Etsy takes 6.5% of $30 ($1.95), not just the mug price.
2. The Payment Processing Fee (The "Invisible" Tax)
This fee doesn't go to Etsy; it goes to the credit card processor (like Stripe).
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US Rate: Typically 3% + $0.25 per transaction.
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Why it hurts: It applies to the total with tax. If the buyer lives in a state with high sales tax, you pay a fee on that tax money you never touch.
3. The Listing Fee ($0.20)
Every time you list an item, it costs $0.20.
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The "Renewal" Leak: Listings expire after 4 months. If your item doesn't sell, Etsy charges you another $0.20 to renew it.
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Multi-Quantity Trap: If you have 100 stickers in stock and sell 50, you are charged the $0.20 listing fee 50 times.It’s not a one-time fee; it’s a "per item sold" fee for renewals.
The Variable Fees: The Ones You Forget
Here’s where it gets interesting... the fees you can't always predict. These are the ones that break your Etsy calculatorspreadsheet if you aren't careful.
Offsite Ads (12% or 15%)
Etsy advertises your items on Google, Facebook, and Instagram.
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The Rule: If a buyer clicks an ad and buys from you within 30 days, you pay a fee.
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Under $10k Sales: You pay 15% (Optional - you can opt out).
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Over $10k Sales: You pay 12% (Mandatory - you cannot opt out).
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My Honest Failure: I hit the $10k threshold in 2023 and forgot about the mandatory ads. I priced a low-margin item assuming standard fees. I sold 50 of them through ads and barely broke even because I hadn't accounted for that extra 12%.
Currency Conversion (2.5%)
If you are in Canada but list in USD, Etsy charges you 2.5% to convert the money back to CAD before depositing it.
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Fix: Always list in your bank account's currency to avoid this.
Regulatory Operating Fees
If you sell to customers in the UK, France, or Italy, Etsy passes on a "Digital Services Tax." It’s usually small (0.32% - 0.47%), but it’s another line item on the receipt.
How to Calculate Etsy Profit (The Manual Formula)
Stop guessing. If you want to know how to calculate profits from etsy sales, use this formula. It looks scary, but it’s just 4th-grade math.
Let’s break down a real $50 Sale:
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Item Price: $40
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Shipping Charged: $10
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Total Revenue: $50
The Costs:
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Transaction Fee (6.5%): $3.25
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Processing Fee (3% + $0.25): $1.75
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Listing Fee: $0.20
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Cost of Shipping Label: $9.00 (Actual cost to you)
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Cost of Goods (Material + Labor): $15.00
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Total Costs: $29.20
Net Profit: $20.80. Margin: 41%.
(Parenthetical aside: Seeing that you only keep $20 from a $50 sale can be depressing. But remember, Etsy brings you the customer. If you sold on your own website, you’d pay $0 in transaction fees but probably $500 a month in marketing to find that same customer.)
I use Closo to automate my profit tracking across all my listings – saves me about 3 hours weekly – because doing this math manually for 200 SKUs every time shipping rates change is impossible.
Pricing Strategy: The "3X Rule"
When I use an Etsy calculator 2024 (or 2025), I often realize I'm underpricing. The golden rule for handmade goods is the 3X Rule.
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1x Materials: Covers the cost of the clay, beads, or fabric.
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1x Labor: Covers your hourly wage (pay yourself!).
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1x Overhead/Profit: Covers Etsy fees, packaging, and business growth.
Example: If a necklace costs $5 in beads and takes 30 minutes ($10 labor), your base cost is $15.
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Sale Price: $15 x 3 = $45. At $45, you can absorb the fees, offer free shipping, and still make money. If you price it at $25, you are working for free.
Does Etsy Take a Cut of Shipping? (Yes.)
This is the most common complaint I see in forums. "Why does Etsy take a cut of my shipping money? That goes to the post office!"
The History: Years ago, Etsy didn't charge fees on shipping. So, sellers started listing items for $1.00 with $50.00 shipping to avoid fees. Etsy closed that loophole. Now, the 6.5% transaction fee applies to the shipping collected.
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Strategy: If you charge $10 for shipping, Etsy keeps $0.65 of it. You effectively only get $9.35 to buy the label. Always pad your shipping price by 10% to cover the Etsy fee.
People always ask me...
"Is the Offsite Ads fee worth it?"
Common question I see. It depends on your margins. If you have a high-margin item (like digital downloads or jewelry with a 400% markup), paying 15% for a sale you wouldn't have otherwise gotten is a great deal. It's essentially marketing on autopilot. However, if you are selling low-margin items (like heavy vintage goods or electronics), that 15% can wipe out your profit entirely.
"Can I write off Etsy fees on my taxes?"
People always ask me this. Yes! Every single fee—listing, transaction, processing, shipping labels—is a business expense.
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Tip: Download your "Monthly Statement" CSV from the Finances tab. It totals these up for you. Do not try to calculate this manually at tax time; you will miss things.
"Does Etsy charge for free shipping?"
No, but you pay for it. "Free Shipping" is a marketing term. It means you buy the label.
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The Math: If you offer free shipping, you must increase your item price to cover the label cost.
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Benefit: Etsy gives priority placement in search to items with free shipping guarantees over $35. It is usually worth absorbing the cost into the price to get the SEO boost.
Conclusion
Using an Etsy profit calculator isn't just about knowing your numbers; it's about respecting your time.
Etsy is a powerful marketplace, but it is expensive. The fees are the rent you pay for foot traffic. If you treat it like a hobby, the fees will feel like a punishment. If you treat it like a business—by baking the 6.5%, the $0.20, and the ad fees into your price from day one—you can build a sustainable income.
So, open your spreadsheet. Re-calculate your prices. And don't be afraid to raise them. Your work is worth a profit, not just a break-even.
If you are looking to lower your overhead, check out our guide on saving money on Etsy shipping labels. And if you are tired of the fees and want to diversify, read our comparison of Shopify vs. Etsy for handmade sellers to see if owning your own site is the right next step.
FAQ
Here's something everyone wants to know: Is there a monthly fee for Etsy?
There is no mandatory monthly fee to sell on Etsy. The "Standard" plan is free (you only pay per listing and sale). However, there is an optional Etsy Plussubscription for $10/month, which gives you credits for listings and ads, plus advanced shop customization options. Most new sellers do not need this.
Common question I see: What is the $0.20 listing fee for?
The $0.20 fee covers the cost of hosting your product page on Etsy for 4 months. Think of it as "rent" for the shelf space. Even if the item doesn't sell, you pay the $0.20. If it does sell, the listing "renews" automatically (if you have stock), charging you another $0.20 to put it back on the shelf.
People always ask me: How do I avoid Etsy fees?
You cannot avoid the mandatory transaction and processing fees. However, you can avoid the Listing Renewal Fees by deleting dead inventory that never sells. You can also avoid the 15% Offsite Ads fee (if you sell under $10k/year) by opting out in your Shop Settings. Finally, you can lower your shipping costs (and thus the fee on shipping) by using a thermal printer and commercial rates.
