Cost of Selling Items on Etsy 2020: How Payment Works // Full Explanation with Example!

hey guys how's it going it's all reet here in this video we're gonna look at the complicated world that is the cost of selling on Etsy so we're gonna look at fee structure we're going to look at the different ways to get paid on Etsy we're gonna look at what those fee fees are and then going to look at an example together so I filmed a similar video last year detailing all of the stuff and you guys found it super helpful so I decided to do a 20/20 version because Etsy is always changing they have changed a few things and I'm also going to incorporate some of your feedback that I got from that video so let's first start off with how do you get paid on Etsy because the fees are going to make more sense if you understand the how of how we get paid so the first method of getting paid on Etsy is using what's called Etsy payments and this is the primary way for you to get paid it is basically the name given to Etsy's internal payment processing system which they allow you to use so what's good about Etsy payments is that it allows your buyer it gives your buyer many different options for basically the buyer giving you money in your store and those methods are they can pay with credit card debit gift cards PayPal Apple pay so they give them a whole lot of options using this Etsy payment system the thing with Etsy payments is that there is a fee associated with using their payment system and also you are required to use Etsy payments if you fall under this eligibility list of countries eligible for Etsy payment so if you are on this list I'm in Canada so I am required to use Etsy payments in my store the US is also on here as well and I'm going to by the way all of what you're seeing here I'm going to put links to these articles and resources in the description below so you can always refer back to if you are on this list you have to use Etsy payments as your main method for accepting payments into your store now what if you're not on this list so if you're not on this list you will be using a different method of accepting payments and that could be from receiving a check in the mail so the buyer sends you a check or money order you can receive money that way you can also connect your PayPal account and receive money that way from your buyer and then there is an also an other category which basically means you can coordinate a certain specific way of getting paid from your buyer directly the question that I had previously was can you accept money from can you connect your PayPal to receive money in that way if you don't want to use Etsy payments and the question or the answer is no you can't if you are required if you are on that eligibility list for accepting payments on through Etsy payments if you are on this list then you absolutely have to use the Etsy payment system which includes PayPal in it but you just can't have all of that control in terms of connecting your PayPal account directly to your store because you are required to use their Etsy payment system and you can't set your store to be only receiving payments from PayPal okay so now that we understand about how to get paid through Etsy let's go and look at the different fees associated with listing an item and selling an item on your store now I think the best way to illustrate this is just by opening up through paint and drawing it out and listing it out for you using an example because I'm a visual person and I understand things better when I see it through an example it simplifies a really complicated matter there's so many articles and videos and stuff explaining Etsy fees but it's still somehow is complicated to understand and it took me a while to figure this out I really wanted to share what I discovered you so let's first start out by listing all of the different fees associated so the first fee that you will encounter is a listing fee and that listing fee is 20 cents so when you first list an item in your store so let's say you've you've set up your store you don't have any listings yet but you want to list your first product and you create the product you create the listing for the product you will be charged 20 cents for creating that listing in your store now the listing it's not necessarily a one-time fee because your listing will expire after 4 months so 4 months your listing will expire it will come off of your store and in order to relist that you will have to pay the 20 cents fee again there is an option where you can set it to you can set the listing to auto renew so when you do that the 20 cent charge will just automatically be charged after 4 months but if you want to manage that on your own you can set it to manual so that if that listing does expire after 4 months or when it will expire after 4 months it will be taken down and then you can decide whether or not you want to pay the 20 cents again to relist that on your store so that's the listing fee the second fee that you will encounter is a transaction fee so your transaction fee is the field that Etsy will take once you make a sale so once your product sells you will be charged a 5% fee and that fee is not just on the retail the retail cost of the item but it's also on the shipping so keep that in mind it's it's on the retail price get to expand this and the shipping so whether you take 5% off of you can take 5% off of the total cost basically of retail price plus shipping basically whatever the customer paid a 5% fee will be taken off of that amount again we'll go through an example together but right now I'm just listing all of all of the different fees so that's transaction fee the next fee you need to be aware about is called Auto renew sold fee the auto renew sold fee is 20 cents and it's it's similar to the listing fee in that if you make a sale when you sell an item if you have quantities left over from that item then Etsy will charge you 20 cents to read list that item to keep that item listed in your store because in their minds technically if you if you sell something that listing should come off of your store but if you're saying that you still have more quantities left of that item then to keep that listing up you will pay another 20 cents and that's going to show up in your back end as an auto renew sold fee so that is another fee that you need to be aware about and by the way all of these fees are in u.s. dollars so they charge it in US but then it's converted to whatever currency your bank account is in so just keep that in mind the next fee is called multi quantity fee I have a feeling some people are watching this and they're like okay too many fees just accept the video not starting an Etsy store so this is another fee you need to be aware about multi quantity fee is when you sell more than of the same item to a buyer so let's say you have a t-shirt right and the buyer you listed one t-shirt design up in your store and your buyer wants two of those t-shirts so they want to they select quantity two and they they purchased two of those t-shirts then you will be charged 20 cents for each extra quantity of that item sold so because you're selling two of those items Etsy will charge you 20 cents for that second item second product that the that the buyer bought if they wanted three of your items so if you're on their they're on your t-shirt listing and they select quantity three then you will be sold for or you will be charged rather forty cents for your multi quantity fee because it's 20 cents per each additional item sold of that from that listing so keep that in mind so each additional item sold from the same listing alright okay next fee still going sometimes I look at these fees and I'm like Multi quantity fee like where do they where do they come up with these fees right it's just like from the sky the next fee that kind of slightly touched upon before is the Etsy payments fee so in the example that we're gonna go together I'm assuming that you are on that list of countries eligible for Etsy payments and you are using their Etsy payments processing system so like I said there is a fee associated with using that processing system whenever a buyer purchases something from your store and that fee just to make things more complicated varies depending on what country you're in so I'm gonna put here varies and you'll be able to see what those fees are in this list right here so again I'm gonna put a link to all of these articles that you're seeing here that I'm using I'm gonna put links to them in the description below so you can check out and see what is the Etsy payments fee for your country so if you're in the US you can scroll down here and see that your Etsy payments processing fee is three percent plus twenty five cents now this percentage is taken off the total sale price so whatever your buyer pad whatever your buyer paid that's what this percentage is taken off of so yes it will include shipping as well so I'm in Canada like I said for me it's a little bit more complicated for me it's three percent off of the total cost of what the buyer or the total amount that the buyer paid plus twenty five cents only if it's a domestic order or orders from the US so if my buyer is in the US or Canada then that's what the payments fee is but if they're anywhere else in the world on international orders then it's four percent plus twenty five cents so just for the sake of simplifying things let's just assume in our example that the buyer is it's a domestic order so I'm going to right over here you know what I'll use I'll use the US just to make things because this is actually 25 cents Canadian so let's just again simplify I'll use a US keep it all US dollars since most of you who are watching are from the states so 25 cents USD okay so these are the main fees that you might see in your store there are other fees associated depending on what you're doing with your store where you're from all that kind of stuff for example if you are if your shop is in a currency you're selling in a currency that is different from the currency of your bank account then you will be charged a currency conversion fee for Etsy to take that money that the buyer paid in your store in that currency and exchange it into the currency when they deposited into your bank account so actually did I did a video on this saying that why we keep even though I'm in Canada and most of my buyers are in the States I actually switched my the currency of my store back to Canadian dollars originally it was in US dollars but I changed it back to Canadian dollars because my bank account is in in Canadian dollars so that way I'm avoiding the currency exchange fee if you're wondering about VAT taxes and shipping and all that kind of stuff I'm gonna go through this example just keeping it simple without talking about taxes because it varies for every you know there's so many different little things about where you are in the UK and that kind of thing with VAT and also with shipping everybody calculates shipping differently I did another video by the way on how to calculate the right shipping price for your items so that you are still profitable so you can check that video out as well but for now I want to keep it super simple I'm gonna go over an example and show you how these different fees come into play so for us we sell t-shirts in our store I designed them and and we have another person who who makes the actual physical t-shirt and prints it and then we we sell that on our Etsy store I'm gonna draw a t-shirt let's go through an example together so this is my t-shirt my product that I am listing in my store so let's say I retail this t-shirt so I'm selling it for let's say $24 all right so I list this t-shirt on my Etsy store and the first fee that I pay is this listing fee right here which is 20 cents all right so I'm gonna I'm color coding this so we understand what's what so the first fee that I pay is 20 cents when that item sells that I will then pay a transaction fee of 5% on what the customer paid so which includes shipping if if I have charged for shipping some people offer free shipping so let's say I retail dit for 24 but then I also charge $5 shipping again we're we're emitting taxes and all that kind of stuff just for the sake of simplicity so let's say that let's use green here so with shipping the customer paid ended up paying $29 all right so my transaction fee let's calculate that will be 5% of $29 so I'm gonna go 29 times 5 percent equals and then I'm getting $1 and 45 cents alright so that is my transaction fee okay so how does the auto-renew sold fee come into play so when we list a t-shirt in our store we actually set the quantity the amount of product that we have to like 900 because it's actually unlimited because when someone purchases a t-shirt it's print-on-demand meaning the customer places the order and the t-shirt is only made once the customer places the order so the supply is unlimited right so because I have more quantities left of that item I am paying 20 cents extra when that listing or when that product sells so that will be my auto renew sold feet so again when I'm selling when I've just sold that item I will be charged an auto renew sold fee to keep that item listed in the store cuz it's kind of like I'm paying another extra 20 cents now to relist that item in the store that's the auto renew sold fee if I had if I let's just say I had my t-shirt listing and I only put one like I only have one of that product and it sells then I won't be charged the auto renew sold fee because it will just be taken down basically Etsy won't relist it because I've already sold the one quantity the one product the one piece that I have so just keep that in mind if you are saying that you have more than one of a certain product then you will be charged another 20 cents for it to remain listed in your store so that's the auto renew sold fee then there's the multi quantity fee for the most part we on average sell one t-shirt per order that definitely can be improved but that's the way it is let's just say our buyer just bought one t-shirt if they bought two of this same t-shirt then again they would be charged in another twenty or we would be charged another twenty cents if they bought three of the t-shirts then the additional fee would be 40 cents and so on but let's for now say that the buyer only bought one now the Etsy payments fee we can't forget that because we are using Etsy payments processing system so that will be the 3% will be taken off of what the buyer paid which is 29 so let's again go 29 times 3 percent which is 87 cents let me get a new color here let's get purple so we have 87 oops we have 87 cents that is a horrible looking 8 plus 25 cents all right because it's 3% of what the buyer paid 3% off of 29 plus 25 cents so let's add up let's put this color coded here so we know what that is let's add up all of these fees and see what the total cost of is in fee so 20 cents plus 145 plus 20 plus 87 plus 25 is $2.97 so let's see what we're left with I'm gonna go 24 which was the retail price of the shirt minus 297 I'm taking it off of 24 by the way and not 29 just because I'm assuming that $5 shipping fee is all going towards the cost of me shipping that item so I'm removed I'm going 24 minus 297 and I am left with $21 and 3 cents all right that is what I'm left with after lips that was a gross box that's what I'm left with after all of these fees are taken out now keep in mind this doesn't this isn't necessarily my profit because it's gonna cost you a certain amount to have made that product so you gotta also subtract the cost of you making that product like your materials may be labor cost that kind of thing to actually really find out what you are left with what is the real profit after all of these fees are taken into account so guys I hope this exercise has been helpful for you and if you are interested in learning more about how to calculate the cost of shipping in your store or learning more about the currency exchange fees then I'm going to put links to those related videos and down in the description and they'll pop up here too and if there is any other questions that you have for me please leave them in the comments section so I will be watching the comments section I want to get to your questions and let me know if you liked this video put a thumbs up on it leave a comment subscribe to the channel because we do have a lot of other Etsy related resources and videos for you to help you if you do decide to still stick with selling on Etsy but in any case thank you guys so much for watching and I will see you in the next video bye [Music]

Channel: Essetino Media - Create Profitable Content

Views: 137,399

Keywords: cost of selling items on etsy 2020, cost of selling shirts on etsy, etsy payments, cost of selling items on etsy, how etsy payments work, what is etsy payments, how you get paid on etsy, selling on etsy, how to sell on etsy for beginners, starting an etsy business, how much does it cost to sell on etsy, how much does it cost to start an etsy store, etsy fees explained, #essetinoartists

Id: ZoMQiNOXR0I

Length: 23min 34sec (1414 seconds)

Published: Mon Jan 20 2020