With monthly sales averaging about $150 million and monthly pageviews above two billion at last count, it’s an understatement to call Etsy an important part of the craft community. Each year, over a million Etsy sellers supplement their income (or straight-up work for themselves) using the platform — and some even become newsworthy for their impressive profits. If you’ve considered taking your products to digital walls of an Etsy store, though, there are some things you need to know.
Artist, award-winning product designer, and financial educator Lauren Venell helps Etsy sellers balance their books.
“It’s a little bit of a different animal” than selling in your own online store or in person, says Lauren, “because Etsy encompasses that whole process.” With your Etsy store, you’ll get a landing page, a buyer profile, and a lot of the logistics — like the actual transactions and shipping — taken care of.
“They encompass the listing, they encompass the sales, they take care of the payment, they take care of the credit card processing, they take care of the shipping labels,” Lauren explains.
This end-to-end control is definitely a bonus for busy sellers and those who don’t want to wrangle their own online store, but can also fuel a kind of detachment from the actual dealings of your store. To help illustrate the comparison, Lauren created this image:
Because Etsy is a business, the site takes a cut of each of your sales, and will charge you for other services, like handling shipping labels. But, says Lauren, you’d be hard-pressed to find a way to sell your goods wherein you’re not also paying someone else.
“If I go to a craft fair, for example, I’m paying my booth fee — my listing fee, basically — right up front,” she says. Ditto if you use a service like Square, which bills you for the use, or a store where you might sell your goods, who would take a commission. The expenses of using Etsy, however, are little more hidden. You simply get a deposit into your bank account for your profit.
Etsy’s easy nature, though, can also lead some sellers to be lax about keeping their books, which could mean shorting themselves with pricing models that don’t work, overpaying for supplies, or otherwise creating unnecessary difficulties in their business. This makes bookeeping extremely important, says Lauren.
The only way to make that a reality is to really keep an eye on and make sure you’re balancing your books independently of simply looking at your bank statement.
To make your bookkeeping easier and more transparent, Lauren recommends keeping a close eye on the amounts Etsy takes out, including the 20 cent listing fee, the 3.5% commission, and shipping and handling. You also need to be familiar with your state’s tax laws, to know what kind of taxes you might be paying. All of this factors into your pricing structure, and ensures that you’re doing what small business strategist Tara Gentile calls pricing for profit, rather than just for pay.
“It’s not just about paying for your labor,” she explains. “It’s about creating an excess and abundance with the prices that you set.” If you’re not looking carefully at how much it costs to ship your goods or how much Etsy is taking in commission, you might not be paying yourself as much as you could be.
Etsy makes it incredibly easy for buyers and sellers to find each other and conduct business, but if you’re not carefully keeping an eye on where your money is going, it can be easy to underprice your wares and limit your financial success.