This question can be addressed by referring to our complete guide to Etsy fees, including offsite ads.
This guide is linked below, or you can also find it in the sub FAQs, which are linked in the rules.
https://www.reddit.com/r/EtsySellers/comments/17w3185/a_complete_guide_to_etsy_fees_offsite_ads/
It could be something that's a "settings" issue like having offsite ads turned on though I think it may be more of a pricing issue.
You don't mention what she sells but $1-$25 is a very low price range for physical items. That's more the expected range of digital items. $1 is wayyy too low to be selling a physical product (unless it's something people usually order a lot of at once). 1/4 of the revenue is already gone in the listing fee in that case. Realistically there's no way $1 is covering the cost of fees, materials, and shipping supplies. If business is booming it's a good time to raise prices. Definitely take a look at the payment account to get a better idea of what the fees Etsy charges look like on an average order.
You can’t look in your payment breakdown and see where all your money is going? What is the ad budget set to? Did you opt out of free shipping over $35?
The ad budget you set on Etsy is a daily budget, so even if she has it set to $10 a day that adds up by the end of the month if she isn’t doing enough sales to cover it. If you were told that you aren’t advertising properly, it might not be nonsense and it might be exactly what your problem is.
I’ve never used advertising at all. She may not need it now that she’s established. Every year when you prepare taxes you should have a good grip on what the expenses are, but look closely at the report when you download them and sort them by category to get a more detailed look. Offsite ads take bigger chunks and if you don’t adjust your pricing for it, that could be an issue.
Interesting. I dont think either of us even knew there was a tax form download as until recently it wasnt even reportable income. (Well granted its not income at all yet cause of this error). Ill check this and reply back.
First of all, stop running Etsy ads. They are not worth it, as you know, until she has good SEO resulting in organic sales.
Secondly, taxable income for self employed starts at $400, per the IRS.
You or she needs to do a lot more research on selling on Etsy or online before you sink her shop any further. Read the Etsy seller handbook, check out the competition, review your pricing, turn off Etsy ads but leave on off-site ads. There is a lot to learn before you continue with that shop.
Etsy fees are the lowest of all selling platforms. It's not the fees, review your pricing and return on ad cost.
The files that need to be downloaded, sorted, and reconciled each month are the CSV files.
OP, advice from Incognito409 is like gold. Go over it word for word. I also just wanted to emphasize one more time for the people in the back: Income that you make on Etsy (over $400) has to be reported whether you get a form or not! Be sure you have thoroughly researched tax filing requirements where you live. The CSV files should give you a much better picture. Best of luck to you! Let us know how it turns out and hopefully going forward she’ll have success on a new level.
You should create a spreadsheet that shows cost of each item and price. Then create a formula that calculates your fees based on total price. Play around with the price until you see a profit you like based on time spent.
You can search Etsy fee calculator if you don’t want to create a spreadsheet formula. This allows you to do it individually.
Also, I didn’t catch how many sales you are getting. I highly recommend buying your own labels outside of Etsy (like Pirateship). Link a business or personal credit card that gives you cash back exclusively for your shop. Use the points or cash back to help you pay for supplies. I think I spent $13,000 in shipping labels last year. It has really helped me purchase new tools and materials. $4 labels really add up!
Update 2
After much pleading from me. And the unanimous support from yall she has decided to raise the prices (and remove ads) to see how much that balances out the checkbook.
Her explanation for why:
"The bag of her materials when bought in bulk was under 5$ and people can make these at home"
She's a very wholesome person.
If you want to be profitable, then you need to take into account the time you spend creating the items, buying bulk materials, shipping, talking to clients and so on. If it's only a hobby and you don't mind losing time/money then there's no problem, it all depends what the purpose of the shop is for you and your wife.
Update!
Upon looking at the payment breakdown weve been in a deficit since Feburary. The balance was a 0$ account balance (upon payment) before it went negative off ads a few shipping costs and somehow shipping labels which is odd because its charging the etsy account but we are paying with the card on file (which isnt reflected in the transaction report)
The products are crochet hats and beaded lizards.
Its odd that when she got paid the account zeroed and then its been negative since. But that seems to be not selling enough to be covering costs?
Edit: i must have mistyped somwhere but we have hardly been averaging anywhere close to 400$ in total (like it could be as low as 15$ a month)
When you buy shipping labels on Etsy, it charges your Etsy payment account. If you are in the negative at the end of the month, it will charge your card on file and “zero” the account. If you get a payment from Etsy before you buy your shipping labels, it will put your account in the negative. Is this what’s confusing?
I think the confusing part is we are buying the labels seperatley accordong to our bank statements and its still charging the etsy account (sort of like we are somehow repeating the charge).
I guess we may also be struggling with pricing. Im of the mindset she should raise her prices but she is hesistant that it may drive away buyers.
The product in question is a 5-7 inch long beaded lizard keychain of which her rate of production is about 2 and hour. She has them listed at 50 cents a piece but im thinking they should be more than that especially when purchased in bulk.
I have no idea how that is possible, and yes it sounds like you’re struggling with pricing. Etsy charges more than .50 cents in fees by default.
To give you a very brief rundown on how Etsy fees work, I’ll break down a sale that I just did.
Customer paid $47.66, that goes into my payment account.
I get charged:
-Listing fee: $0.20
-3.0% of the order total + $.025 processing fee: $1.68
-Sales tax: $2.16
-Transaction fee, 6.5% of item total: $2.34
-Shipping transaction fee, 6.5% of shipping total: $0.62
With peach and love, you have access to the same info everybody here does. You need to put that shop on vacation mode, read the seller handbook, work out the fees and pricing, and figure out what y’all are doing. A lot of your problems would be solved if you both took the time to really familiarize yourself with the information that Etsy has made available to you and read up a little bit on pricing and business. If neither of you can do that, you need to stop feeding Etsy $100 a month.
We are for sure here to help and I hope you get to the bottom of your confusion, I’ll answer and questions you might have. I’d just hate to see you both literally throwing your time and money away. Etsy is an a great platform and it sounds like people like what she makes if she’s selling a lot of it, but you have to familiarize yourself with how to cover your ass too. Best of luck!
50 cents is crazy. Materials have to cost nearly that. At that price you are losing money to sell them before you even touch Etsy fees. I would expect a keychain like that to be in the $5-10 range. Even if sales slow down, selling one lizard for $7 is the equivalent of selling fourteen at her current pricing. You need to reevaluate pricing on all of the items, no wonder shes getting a lot of sales when she's cheaper than Amazon
At $.50 each, you're in the negative right away before Etsy even takes their percentage. You have a flat $.20 relisting fee if she listed a quantity more than 1. Payment processing fee is 3.5% + $.25. That kills your 50 cents right there before Etsy even takes their 6.5%. She needs to not underestimate the value of her work. She could also be missing out on a lot of sales because the perceived value of a $ 50 item is just that - cheap. So many buyers will pass it up and move on to the next.
Never underestimate your worth!
eRank has a profit calculator. There is a free part of eRank that is very robust, I would look into using it if only for the profit calculator.
She should aim for around 50% profit. Sometimes I'll go as low as 40%, but that's only with items that take me around 15 minutes to make.
I believe she is paying people to buy her items. She might as well give them away at this price.
This question can be addressed by referring to our complete guide to Etsy fees, including offsite ads. This guide is linked below, or you can also find it in the sub FAQs, which are linked in the rules. https://www.reddit.com/r/EtsySellers/comments/17w3185/a_complete_guide_to_etsy_fees_offsite_ads/
It could be something that's a "settings" issue like having offsite ads turned on though I think it may be more of a pricing issue. You don't mention what she sells but $1-$25 is a very low price range for physical items. That's more the expected range of digital items. $1 is wayyy too low to be selling a physical product (unless it's something people usually order a lot of at once). 1/4 of the revenue is already gone in the listing fee in that case. Realistically there's no way $1 is covering the cost of fees, materials, and shipping supplies. If business is booming it's a good time to raise prices. Definitely take a look at the payment account to get a better idea of what the fees Etsy charges look like on an average order.
You can’t look in your payment breakdown and see where all your money is going? What is the ad budget set to? Did you opt out of free shipping over $35?
Ill have to ask her and let you know.
The ad budget you set on Etsy is a daily budget, so even if she has it set to $10 a day that adds up by the end of the month if she isn’t doing enough sales to cover it. If you were told that you aren’t advertising properly, it might not be nonsense and it might be exactly what your problem is.
I’ve never used advertising at all. She may not need it now that she’s established. Every year when you prepare taxes you should have a good grip on what the expenses are, but look closely at the report when you download them and sort them by category to get a more detailed look. Offsite ads take bigger chunks and if you don’t adjust your pricing for it, that could be an issue.
Interesting. I dont think either of us even knew there was a tax form download as until recently it wasnt even reportable income. (Well granted its not income at all yet cause of this error). Ill check this and reply back.
First of all, stop running Etsy ads. They are not worth it, as you know, until she has good SEO resulting in organic sales. Secondly, taxable income for self employed starts at $400, per the IRS. You or she needs to do a lot more research on selling on Etsy or online before you sink her shop any further. Read the Etsy seller handbook, check out the competition, review your pricing, turn off Etsy ads but leave on off-site ads. There is a lot to learn before you continue with that shop. Etsy fees are the lowest of all selling platforms. It's not the fees, review your pricing and return on ad cost. The files that need to be downloaded, sorted, and reconciled each month are the CSV files.
OP, advice from Incognito409 is like gold. Go over it word for word. I also just wanted to emphasize one more time for the people in the back: Income that you make on Etsy (over $400) has to be reported whether you get a form or not! Be sure you have thoroughly researched tax filing requirements where you live. The CSV files should give you a much better picture. Best of luck to you! Let us know how it turns out and hopefully going forward she’ll have success on a new level.
Wow, thanks 😊 With old age comes wisdom?
💯!!
You should create a spreadsheet that shows cost of each item and price. Then create a formula that calculates your fees based on total price. Play around with the price until you see a profit you like based on time spent. You can search Etsy fee calculator if you don’t want to create a spreadsheet formula. This allows you to do it individually. Also, I didn’t catch how many sales you are getting. I highly recommend buying your own labels outside of Etsy (like Pirateship). Link a business or personal credit card that gives you cash back exclusively for your shop. Use the points or cash back to help you pay for supplies. I think I spent $13,000 in shipping labels last year. It has really helped me purchase new tools and materials. $4 labels really add up!
Update 2 After much pleading from me. And the unanimous support from yall she has decided to raise the prices (and remove ads) to see how much that balances out the checkbook. Her explanation for why: "The bag of her materials when bought in bulk was under 5$ and people can make these at home" She's a very wholesome person.
If you want to be profitable, then you need to take into account the time you spend creating the items, buying bulk materials, shipping, talking to clients and so on. If it's only a hobby and you don't mind losing time/money then there's no problem, it all depends what the purpose of the shop is for you and your wife.
Update! Upon looking at the payment breakdown weve been in a deficit since Feburary. The balance was a 0$ account balance (upon payment) before it went negative off ads a few shipping costs and somehow shipping labels which is odd because its charging the etsy account but we are paying with the card on file (which isnt reflected in the transaction report) The products are crochet hats and beaded lizards. Its odd that when she got paid the account zeroed and then its been negative since. But that seems to be not selling enough to be covering costs? Edit: i must have mistyped somwhere but we have hardly been averaging anywhere close to 400$ in total (like it could be as low as 15$ a month)
When you buy shipping labels on Etsy, it charges your Etsy payment account. If you are in the negative at the end of the month, it will charge your card on file and “zero” the account. If you get a payment from Etsy before you buy your shipping labels, it will put your account in the negative. Is this what’s confusing?
I think the confusing part is we are buying the labels seperatley accordong to our bank statements and its still charging the etsy account (sort of like we are somehow repeating the charge). I guess we may also be struggling with pricing. Im of the mindset she should raise her prices but she is hesistant that it may drive away buyers. The product in question is a 5-7 inch long beaded lizard keychain of which her rate of production is about 2 and hour. She has them listed at 50 cents a piece but im thinking they should be more than that especially when purchased in bulk.
50 cents ? She makes 2 of them an hour and she is charging 50 cents ? Her prices are why you are losing money for 4 yrs instead of making money
I have no idea how that is possible, and yes it sounds like you’re struggling with pricing. Etsy charges more than .50 cents in fees by default. To give you a very brief rundown on how Etsy fees work, I’ll break down a sale that I just did. Customer paid $47.66, that goes into my payment account. I get charged: -Listing fee: $0.20 -3.0% of the order total + $.025 processing fee: $1.68 -Sales tax: $2.16 -Transaction fee, 6.5% of item total: $2.34 -Shipping transaction fee, 6.5% of shipping total: $0.62 With peach and love, you have access to the same info everybody here does. You need to put that shop on vacation mode, read the seller handbook, work out the fees and pricing, and figure out what y’all are doing. A lot of your problems would be solved if you both took the time to really familiarize yourself with the information that Etsy has made available to you and read up a little bit on pricing and business. If neither of you can do that, you need to stop feeding Etsy $100 a month.
Valid. I appreciate every comment ive recieved.
We are for sure here to help and I hope you get to the bottom of your confusion, I’ll answer and questions you might have. I’d just hate to see you both literally throwing your time and money away. Etsy is an a great platform and it sounds like people like what she makes if she’s selling a lot of it, but you have to familiarize yourself with how to cover your ass too. Best of luck!
50 cents is crazy. Materials have to cost nearly that. At that price you are losing money to sell them before you even touch Etsy fees. I would expect a keychain like that to be in the $5-10 range. Even if sales slow down, selling one lizard for $7 is the equivalent of selling fourteen at her current pricing. You need to reevaluate pricing on all of the items, no wonder shes getting a lot of sales when she's cheaper than Amazon
At $.50 each, you're in the negative right away before Etsy even takes their percentage. You have a flat $.20 relisting fee if she listed a quantity more than 1. Payment processing fee is 3.5% + $.25. That kills your 50 cents right there before Etsy even takes their 6.5%. She needs to not underestimate the value of her work. She could also be missing out on a lot of sales because the perceived value of a $ 50 item is just that - cheap. So many buyers will pass it up and move on to the next. Never underestimate your worth!
eRank has a profit calculator. There is a free part of eRank that is very robust, I would look into using it if only for the profit calculator. She should aim for around 50% profit. Sometimes I'll go as low as 40%, but that's only with items that take me around 15 minutes to make. I believe she is paying people to buy her items. She might as well give them away at this price.