How to calculate your profit on an Etsy sale
The price a buyer pays is not what you keep. Between the sale and your bank account sit Etsy's fees, payment processing, postage and the materials that went into the item. Here is the calculation step by step, with one real-looking sale worked through.
The formula
Profit = what the buyer paid for the item and shipping − material cost − Etsy transaction fee − listing fee − payment processing fee − postage you paid − any other fees (ads, VAT on fees, currency conversion) − your time, if you want to count it Sales tax or VAT the buyer paid is collected and passed on, so leave it out of what you keep.
A worked example
A bracelet sells for 18.00 with 3.50 shipping charged to the buyer. The shop is in the US. Revenue: 18.00 + 3.50 = 21.50 Materials: 2.5 m cord at 0.40 + clasp 0.85 + gift bag 0.30 = 2.15 Transaction fee: 6.5% of 21.50 = 1.40 Listing fee: 0.20 Payment processing: 3% of 21.50 + 0.25 = 0.90 Postage: 1.20 Profit: 21.50 − 2.15 − 1.40 − 0.20 − 0.90 − 1.20 = 15.65 If the bracelet takes 12 minutes and you pay yourself 12 an hour, subtract another 2.40, which leaves 13.25.
Where the calculation usually goes wrong
- Forgetting that the transaction fee also applies to shipping, not just the item price. - Forgetting the listing fee is charged again every time an item sells. - Counting postage once per item when several items went out in one parcel. Split per-order costs across the items in the order. - Using an old material price after a supplier put prices up. - Leaving out payment processing, which differs by country. Check the rate for your shop in your Etsy payment account.
Doing it for every sale automatically
The calculation is simple for one sale and tedious for a month of them. MakerLedger does it for every line of Etsy's order export: you set your fee rates and postage once, give each product a material recipe, and import the CSV. Each sale shows its revenue, materials, fees, postage, labour and profit, and the totals roll up per product and per month.
Frequently asked questions
Is the Etsy transaction fee charged on shipping?
Yes. Etsy's 6.5% transaction fee applies to the item price plus the shipping and gift wrap the buyer pays.
What is a good profit margin for handmade items?
It depends on your materials and how long items take to make. Work out profit per sale first. The margin that matters is the one your own numbers show.
Should I include my time?
If you want to know whether a product is worth making, yes. Give yourself an hourly rate and count the minutes each item takes.
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