Your Etsy revenue isn’t your profit

Start with what the order brings in

A sale notification tells you that someone bought your work. It does not tell you how much the order contributed to your business. For a useful estimate, start with the discounted item price plus the shipping amount you charge the buyer. Keep buyer sales tax separate from seller revenue.

Suppose you list one item for $40 and charge $5 for shipping. With no discount, seller revenue is $45. If you offer 10% off the item, the item contributes $36 and seller revenue becomes $41. The $5 shipping charge has not changed. Entering the original list price would overstate this order’s income.

Etsy’s payment account is the place to reconcile actual fees, tax and deposits. A calculator is a planning worksheet; a deposit can combine activity from different orders and dates. Use the same order and period when comparing the two.

Source: Etsy: fees, taxes and your payment account (opens in a new tab)

Give each cost a home

Separate the cost of the item from the cost of getting it to the customer. That makes the estimate easier to update and helps prevent double-counting. For a handmade item, product cost can include materials and the hands-on labor you choose to pay yourself. For a purchased product, start with its landed unit cost.

Write down what is included in each figure. If your production worksheet already includes a box and postage, adding those expenses again would make your profit appear too low. If the worksheet includes only the finished product, packaging and postage still need their own lines.

• Product cost: materials or inventory, plus included production costs.
• Packaging: mailer, box, tissue, tape and other supplies for this order.
• Shipping cost: what you pay for the label or carrier service.
• Other order costs: an expense that has not already been counted above.

Check the base behind each fee

A percentage is incomplete without the amount it applies to. Etsy’s transaction fee, payment processing and Offsite Ads are separate charges, with rules that depend on the order and seller setup. Shipping collected can be part of a selling-fee base even when you intend it only to reimburse postage. Payment processing rates depend on the country of your bank account.

The Etsy worksheet uses a one-item order with US-bank, USD Etsy Payments assumptions. Review the visible rates before using the result. Other setups, currency conversion, gift wrap, refunds, regional seller taxes and multi-item listing charges need additional treatment. Add known extra order fees where supported, and reconcile your actual account separately.

Offsite Ads deserves a scenario of its own. An attributed order may carry an additional percentage fee, subject to Etsy’s eligibility rules and per-order cap. Compare an order without that fee with the rate that applies to your shop. Do not spread a fee over every order unless that is an intentional planning assumption.

Source: Etsy Fees & Payments Policy (opens in a new tab)

Follow one order through the worksheet

Here is a hypothetical one-item US order: $40 item price, $5 shipping collected, $12 product cost, $1.50 packaging and $5 postage. Seller revenue is $45 and non-fee order costs total $18.50.

Using editable assumptions of a $0.20 listing fee, a 6.5% transaction fee and 3% plus $0.25 processing, with no sales tax, extra fees or Offsite Ads, the unrounded fee total is $4.725. Estimated profit is $21.775, displayed as $21.78. The displayed fee and profit amounts are each rounded to cents, so subtracting rounded display lines can differ by one cent from the underlying calculation.

This is an order contribution estimate. It does not automatically account for rent, subscriptions, income taxes, returns, unsold inventory or every hour spent running your shop. Allocate those separately before treating an order result as the profit of the whole business.

Use the estimate to make one decision

A useful next step is to change one assumption at a time: reduce the item price for a promotion, increase postage, or add the applicable Offsite Ads rate. Look at the change in dollars as well as the margin. A percentage can look healthy while the dollars left do not cover your time.

For discount planning, choose a minimum dollar profit you are comfortable with and test the sale price against that threshold. The Etsy calculator’s target-price and discount estimates use its Etsy fee model, including the ad cap. A generic flat-percentage calculator cannot represent every capped or mixed-base fee.

Keep the example as a starting point, replace every cost with your own estimate, and compare the final result with actual completed orders. Update the worksheet when your shipping, production cost or fee setup changes.