Etsy Articles

Article / Updated 04-26-2023

When pricing your items on Etsy, the trick is to strike a balance. You want to price your pieces high enough to cover your costs and turn a healthy profit. But you need to price them low enough that you can sell a reasonable volume of goods. Finding that sweet spot is the focus of this article. Not all creative types share a general distaste for math, but lots of us do. Unfortunately, if you hope to run a profitable Etsy shop, you need to get comfortable with doing a little arithmetic, especially when it comes to pricing your pieces. But don’t freak out! We’re not talking calculus here, or even trigonometry. All you have to learn are two very simple formulas: Wholesale price = (materials + labor + overhead) x 2 Retail price = (wholesale price x 2) + shipping Calculating the cost of materials When calculating your cost for materials, include the price of every little component in your piece. For example, suppose you sell handmade puppy plush toys for babies. Your material cost for each toy may include the cost of fabric, a label, rickrack, stuffing, and thread. What matters here is the cost of what you used to produce one piece. For example, suppose you spent $125 on materials to produce 50 plush pups. To calculate the price of materials per piece, you divide $125 by 50, for a total of $2.50 per piece. Figuring labor costs What if, while perusing the want ads in your local newspaper, you happened upon this listing: Wanted: Skilled professional to expertly fabricate product by hand. Must also run every aspect of business, including sourcing supplies, maintaining and marketing shop, interacting with customers, and ensuring that items sold are artfully packaged and shipped to buyers. Pay: $0. Odds are, that’s a job you’d pass up. And yet, many Etsy sellers pay themselves exactly nada to run their shops. Don’t fall into this trap! Like anyone, you deserve to be compensated for your work. Your pricing formula must include the cost of your labor. To calculate your labor costs, first set an hourly rate for your time. Be sure to pay yourself a fair wage — one that accounts for the skill required to craft your piece. Also think about how much you want or need to earn for your time. If you’re just starting out, you may opt for a lower hourly rate. You can give always yourself periodic raises as your skills improve. Another approach to figuring your hourly rate is to work backward. That is, figure out how much you need to be able to “bill” for each day and divide that by the number of hours you intend to work. So say you need to earn $160 a day and you plan to work eight hours a day. You simply divide $160 by 8 for an hourly rate of $20. We aren’t saying you should charge $20 an hour! This is just an easy round number that works well for this example. Armed with your hourly rate, you’re ready to work out your labor costs. These costs must take into account the time it takes to design a piece, shop for supplies for the piece, construct the piece, photograph the piece, create the item listing for the piece (including composing the item title and description), correspond with the buyer, and package and ship the item. As with materials costs (described in the previous section), you can amortize some of your labor costs — that is, you can spread them out. For example, if it took you four hours to develop the design for a piece, but you plan to make 50 of them, you can amortize those four hours over the 50 finished pieces. Similarly, you likely shop for supplies for several pieces at one time, meaning that you can spread the time you spend shopping across all the projects that you plan to craft using those supplies. If you’re collaborating with others, you want to make sure that you include the cost of their labor as well! Let’s use those plush toy pups as an example. Suppose you spend four hours designing your toy and another hour shopping for enough supplies to construct 50 units. Assuming that your hourly rate is $20, your labor cost is $100 — or, spread out over 50 toys, $2 per toy. Suppose further that each toy takes 30 minutes to make, photograph, and package ($10 in labor). (Yes, we know, 30 minutes is on the low end. Humor us. It makes the math easier.) Your labor cost per toy is then $12. Underestimating the value of your work doesn’t just hurt you; it hurts everyone who’s trying to earn a living selling handmade goods. Deflated prices are bad all the way around! Adding up overhead Your overhead may encompass tools and equipment used in the manufacture of your products, office supplies, packaging supplies, utilities (for example, your Internet connection, electricity used to power your sewing machine, and so on), and Etsy fees. (Note: These costs don’t include shipping. You generally calculate these costs separately and pass them along to the buyer. More on shipping costs in a moment.) As with labor costs, you need to amortize your overhead costs — totaling them up and then spreading them out over all the items you make. As a simple example, if you calculate your monthly overhead at $50, and you produce 50 pieces a month as with those plush pups, your overhead is $1 per piece. Of course, this calculation gets tricky when your overhead involves purchases of items like tools and equipment used in the manufacture of your products. In those cases, you want to amortize the items over their life span. For example, maybe you’ve bought a $250 sewing machine that you plan to use for five years. In that time, you anticipate that you’ll sew 500 pieces. Your overhead for the machine is then 50 cents per piece. If you simply can’t face calculating all these overhead costs, add up your materials cost and your labor cost for each piece you make, multiply the sum by 10 or 15 percent, and call that your overhead. It won’t exactly reflect your actual overhead, but it’ll probably be in the ballpark. Understanding the “times 2” Earlier in this article, we provide the wholesale pricing formula, which calls for adding together your costs for materials, labor, and overhead and then multiplying the sum by 2. What’s up with that? That “times 2” covers a host of things. It’s your profit. It’s what you invest back in your business. If your sewing machine breaks, the “times 2” is what you use to buy a new one. If you decide to expand your product line, that “times 2” is where you find the capital you need to grow. Or you may just use your “times 2” to build a nice nest egg for your business or a fund to fall back on if times get tough. You may feel uncomfortable with all this two-timing, thinking that your labor costs are your “profit.” Don’t. Yes, you may be paying yourself to make your products, but if your business grows, that may not always be the case. Multiplying your costs by 2 enables you to ensure that your business is profitable, regardless of how it’s structured. Pricing for wholesale and retail As the proprietor of your own small manufacturing business, you need to establish two prices for your goods: the wholesale price and the retail price. The wholesale price is for customers who buy large quantities of your item to resell it. That customer then sells your piece to someone else at the retail price, which is usually (though not always) double the wholesale price. As mentioned, to determine the retail price, you typically multiply the wholesale price by 2 and add shipping costs. Some sellers choose a higher operand — for example, multiplying the wholesale price by 2.5 or even 3 to determine the retail price (assuming that the market will bear it). We know what you’re thinking: “I’m going to sell my stuff only through my Etsy shop, so I’ll just charge everyone my wholesale price.” Right? Wrong! Even if you plan to sell your items exclusively through Etsy, you need to establish both a wholesale price and a retail price, and you need to sell your pieces on Etsy at the retail rate. Why? Two reasons. First, even if you have no plans to expand beyond your Etsy shop, you don’t want to cheat yourself of the chance to offer wholesale prices to bulk buyers if the opportunity arises. And second, you’ll almost certainly want to run the occasional sale in your Etsy shop. Pricing your goods for retail gives you some leeway to discount them as needed and still turn a profit. (More on running sales in a minute.) Adjusting for free shipping and handling Anymore, thanks to big-box businesses (think: Amazon), most online shoppers pretty much expect free shipping — including shoppers on Etsy. In fact, according to Etsy, shoppers on the site are 20 percent more likely to complete a purchase if shipping and handling are free. To facilitate this, Etsy enables shop owners (read: you) to offer a free shipping guarantee. This guarantee automatically applies free shipping and handling to buyers in the U.S. when they spend $35 or more in your shop. Note: As an added bonus, Etsy’s search algorithms prioritize items that ship for free, making it easier for buyers to find them. If you want to offer free shipping and handling on all orders, not just orders over $35, you can create and apply a special “free shipping” shipping profile. Ugh. Does all this mean you have to eat your shipping and handling costs anytime people avail themselves of your free shipping guarantee? Negatory. It just means you need to factor these costs into the price for each item you list. So, if shipping and handling an item will set you back $5, you need to up that item’s listing price by that same amount. Your shipping and handling costs aren’t limited to postage. They also include mailing supplies, like an envelope or box, tissue, tape, and whatnot, not to mention labor. Enabling the free shipping guarantee If you decide you want your Etsy shop to offer a free shipping guarantee, you need to perform a few steps to set it up: Click the Settings link on the left side of the Shop Manager Click Shipping Settings Click the Free Shipping Guarantee tab. Click Get Started to open the Set a Free Shipping Guarantee dialog box and click Set Free Shipping Now. Etsy confirms that you’ve set up your free shipping guarantee; click Got It.

Step by Step / Updated 03-27-2016

Editing an Etsy listing is pretty simple. Maybe you made a mistake when creating your Etsy listing and need to change it. Or maybe a potential buyer asked a question about the item you have for sale, and you want to update the item's listing to reflect your answer. Or you may want to add or change a listing photo. Fortunately, regardless of why you need to change a listing, editing Etsy listings is a breeze (and free). You can edit any part of your item listing — the item title, item description, price, images, tags, materials, shipping information, you name it. To edit a listing, log in to your Etsy account and follow these steps:

Article / Updated 03-26-2016

With a little planning and forethought, you can post your Etsy listing so that it reaches the maximum number of potential customers. Once it is posted, you can go into your account at any time to see when your listing expires. When you post your Etsy listing, it will appear within a few seconds on the main Etsy page under Recently Listed Items. To ensure that the maximum number of potential buyers see it during that brief, shining moment, you may want to consider submitting your listings at certain times — say, at 9:30 p.m. EST, after mommies on the East Coast have put their wee ones to bed, or at 12:15 PST, when everyone in California is on their lunch break. (Of course, Etsy is an international enterprise, meaning that whenever you post, odds are it's peak time somewhere.) If your schedule doesn't allow you to create listings at peak times, don't sweat it. You can enter your listing details but wait to submit your listing until the time is right. To do so, simply complete the listing, but instead of clicking the Publish button to post the listing, click the Save as Draft button. Then, when you're ready to post the listing, simply go to Your Account, click the Draft Listings link under Items on the left side of the page, click the check box next to the listing you want to post, and click the Publish button to upload the listing. Any listing that you post on Etsy remains active for 120 days (unless, of course, you sell the item or deactivate the listing). To find out when a listing expires, log in to your Etsy account and follow these steps: Click the Your Account link along the top of any Etsy page. The Your Account page opens. Click the Currently for Sale link, under Items, on the left side of the page. The Currently for Sale page opens. Locate the listing whose expiration date you want to determine. The expiration date appears in the Expires column. If your Etsy shop boasts multiple listings, you can sort them by expiration date on the Currently for Sale page. To do so, click the Expires column header.

Article / Updated 03-26-2016

When you begin selling items in your Etsy shop, you may wonder how to determine how much your customers should pay for them. If you hope to run a profitable Etsy shop, you need to get comfortable with doing a little math, especially when it comes to pricing your pieces. But don't freak out! All you have to learn are two very simple formulas: (Materials + Labor + Overhead) x 2 = Wholesale price Wholesale price x 2 = Retail price Offering products at different price points (using the preceding formulas) is a great way to increase your customer base. For example, say that you specialize in ceramics. In that case, you may make ceramic mugs to sell at a lower price point; simple, medium-size bowls to sell at a slightly higher price point; and ornate platters to sell at a premium price point. This structure enables you to reach a larger range of potential buyers, which may help you increase your overall sales. Calculating the cost of materials When calculating your cost for materials, include the price of every little component in your piece. For example, suppose that you sell handmade puppy plush toys for babies. Your material cost for each pup may include the following: Fabric Label Rickrack Stuffing Thread When you calculate the costs of your materials, you need to consider only the price of what you used to produce one piece. For example, if you bought 3 yards of fabric when purchasing your supplies, for a total of $12, but you used only a third of that fabric to produce a single pup, you want to divide what you paid for the fabric by 3, to calculate your material cost for the fabric — here, $4. Figuring labor costs Calculating your labor costs requires you to first set an hourly rate for your time. Be sure to pay yourself a fair wage — one that accounts for the skill required to craft your piece. Also, think about how much you want or need to make for your time. (This consideration is especially important if you're looking to quit your day job.) Many professional crafters go with a rate in the neighborhood of $12 to $20 per hour. If you're just starting out, you may opt for a lower hourly rate. You can give yourself periodic raises as your skills improve. Armed with your hourly rate, you're ready to work out your labor costs. These costs must take into account the time it takes to do the following: Design a piece Shop for supplies for the piece Construct the piece Photograph the piece Create the item listing for the piece, including composing the item title and description Package and ship the item If you clear more than $400 per year with your Etsy shop, you need to pay taxes on it — probably at a rate of about 30 percent. Adding up overhead In addition to calculating your costs for materials and labor, you want to account for your overhead. Your overhead may encompass the following: Tools and equipment used in the manufacture of your products Office supplies Packaging supplies Utilities (for example, your Internet connection, electricity used to power your sewing machine, and so on) Etsy fees PayPal fees These costs don't include shipping. Be sure to calculate those costs separately and pass them along to the buyer. In the formula provided, after adding your costs for materials, labor, and overhead, you multiply the sum by 2. That "times two" is your profit. It's what you invest back in your business. If your sewing machine breaks, the "times two" is what you use to buy a new one. If you decide to expand your product line, that "times two" is where you find the capital you need to grow. Or you may just use your "times two" revenue to build a nice nest egg for your business or a fund to fall back on if times get tough.

Article / Updated 03-26-2016

Ever wonder how many people have visited your Etsy shop? Or what keywords they used to find an item in your store? Thanks to Etsy Web Analytics, you can find out. With Etsy Web Analytics, a free service powered by Google Analytics, you can track such metrics as page views, site visits, popular content, and page referrals — helpful for, say, determining whether that ad you placed on that blog is actually directing readers to your Etsy shop like it's supposed to. Before you can use Etsy Web Analytics, you must have a Google account and a Google Analytics account. (Both are free.) When you have a Google account, you can create your Google Analytics account: Type www.google.com/analytics in your web browser's address bar. The Google Analytics page opens. Click the Access Analytics button on the right side of the page. If you're not signed in to your Google account, enter your e-mail address and password in the appropriate fields and click the Sign In button. Click the Sign Up button in the page that appears. A New Account Signup page opens. In the website's URL field, type www.etsy.com. In the Account Name field, type your Etsy shop's URL — as in, shopname.etsy.com, where shopname is your shop's name. Enter your country and time zone in the appropriate fields; then click the Continue button. Type your last name and first name in the appropriate fields, select your country or territory, and click the Continue button. Read the Google Analytics user agreement; then click the Yes, I Agree to the Above Terms and Conditions check box to select it. Click the Create New Account button. The Tracking Instructions page opens. In the code that appears in the text box, locate the string of letters and numbers that appears in this format: UA-XXXXXXXX-X; this string of letters and numbers is called a Web Property ID. Write down this Web Property ID. Click the Save and Finish button. After you create a Google Analytics account, you need to set up Etsy to work with Google Analytics. Log in to your Etsy account and follow these steps: Click the Your Account link that appears along the top of any Etsy page. The Your Account page opens. Click the Options link under Shop Settings on the left side of the page. Click the Web Analytics tab. In the Web Property ID field, type the Web Property ID that you wrote down in the preceding section. After you connect Etsy to Google Analytics, you can view your Etsy activity on the Google Analytics site. To do so, simply log in to your Google Analytics account. (Type www.google.com/analytics in your web browser's address bar, click the Access Analytics button, enter your e-mail address and password, and click the Sign In button.) The Overview page for your Etsy shop appears. On this page, you can pinpoint, among other key nuggets, how many people have visited your shop and how long they spent there. You can also access information such as where they came from (that is, which web page they were on before they accessed your shop) and more. Don't be surprised if you don't see any useful info right away. Google needs a bit of time to start tracking your site.

Article / Updated 03-26-2016

Placing a banner on your Etsy site helps you establish your brand. You can create a banner yourself or have a professional do it. Once you have your Etsy banner made, uploading it to your site is a pretty basic process. While logged in to your Etsy account, click the Your Account link along the top of any Etsy page. The Your Account page opens. Click the Info & Appearance link, under Shop Settings, on the left side of the page. The Info & Appearance page opens, with the Info & Appearance tab displayed. Scroll down to the Shop Banner Image section and click the Browse button. Locate and select your banner file; then click the Open button. Click the Save button. Etsy uploads your banner to your shop. To view your banner, click the Shop icon that appears in the header bar.

Article / Updated 03-26-2016

Odds are, you need to collect sales tax for the items you sell in your Etsy shop at least some of the time, (Alaska, Delaware, Montana, New Hampshire, and New Jersey are the big exceptions that don't require sales tax.) You also may not need to collect sales tax if you use your Etsy shop to sell prescription drugs (not recommended); agricultural products, such as animal feed or seed; groceries; or products for resale. So when do you need to collect sales tax? Here's the short answer: You must collect sales tax — sometimes called a franchise tax, a transaction privilege tax, or a use tax, among other aliases — on most goods and some services delivered to a customer who lives in a U.S. state where your business maintains a physical presence, such as a store, office, or employee. So, for example, if you run your Etsy shop from your fifth-floor walkup in Brooklyn, and someone from the state of New York buys something from your shop, you need to hit that person with sales tax. But if your buyer lives in Cali, you're both off the hook (unless your shop is a collective and your partner lives in Long Beach). In general terms, the sales tax process works like this: You get a sales tax ID number from your state. Check your state government's website for details. Each time you conduct a taxable transaction, you calculate the tax owed and collect it from the buyer. You keep excellent records about the tax that you've collected through your Etsy business. Each month, quarter, or year (depending on your level of sales), you file a tax return and submit the sales tax that you've collected to your state. You stay out of jail. So how much sales tax do you need to collect? Ay, there's the rub. Sales tax rates vary widely from state to state. Plus, some cities, counties, and jurisdictions impose sales tax above and beyond the state rate. To make sure that your Etsy shop complies, you absolutely want to research your local laws, and maybe even consult a fancy-pants accountant or attorney for guidance. Here's the good news: You can set up your Etsy shop to calculate and collect sales tax automatically. That way, when a shopper from your neck of the woods ponies up for one of your items, she's charged the appropriate tax automatically. It's like magic! The sales tax ID number that you obtain from your state entitles you to buy supplies and other items for your Etsy business wholesale — which is typically at least half off the retail price. Holy bonus, Batman!

Article / Updated 03-26-2016

Etsy recognizes the importance of marketing your shop and offers several built-in promotional tools. In addition to offering coupons, you can sell gift certificates to your Etsy shop. A gift certificate must be a tangible item — say, a paper certificate or a postcard that's mailed to the recipient, or even a digital PDF file, which can be e-mailed. (If you go the digital route, be sure to select a file type that the recipient can't alter.) In addition to touting your shop's name and Etsy address, the gift certificate must include a unique, secret code (this can be anything you want) with instructions for the person redeeming the gift certificate to both choose the Other payment method when checking out and enter that code in the Message to Seller section. You may need to enable the Other payment method; to do so, click the Your Account link that appears along the top of every Etsy page, click the Shipping & Payment link under Shop Settings, click the Payment Methods tab, click the Other check box under Payment Methods You Accept to select it, and then click the Save button. To sell a gift certificate, you create an item listing for the gift certificate, just as you would for any other item in your shop. This item listing must contain the phrase "gift certificate" both in the title and description and as a tag, and must include all the same information as the gift certificate itself (minus the unique, secret code). The listing also needs to clearly state that the gift certificate is valid only in your Etsy shop. Be aware that Etsy will assess a fee both when you sell a gift certificate and when your buyer uses the gift certificate to purchase another item in your shop. When it comes to issuing gift certificates, you'll want to be crazy organized: Keep track of the unique code applied to each gift certificate, the amount each gift certificate is for, and when each gift certificate is redeemed. Note that if a customer applies a gift certificate to an item that costs more than the gift certificate's value, you need to send that person a revised PayPal invoice for the difference.