Etsy success stories feature sellers earning $5,000+ per month. What gets less attention: 65% of Etsy sellers make less than $100 per year, and only about 5% treat it as their primary income. Etsy takes roughly 12-15% of each sale in various fees, materials cost money, and handmade products require significant labor. This guide breaks down what Etsy sellers actually keep after all costs.
How Etsy Fees Actually Work
Etsy's fee structure is layered, and many new sellers underestimate the total cut. Here's the breakdown for a $30 item:
| Fee Type | Amount | On $30 Sale |
|---|---|---|
| Listing fee | $0.20 per listing | $0.20 |
| Transaction fee | 6.5% of sale price + shipping | $1.95 |
| Payment processing | 3% + $0.25 | $1.15 |
| Offsite ads (if applicable) | 12-15% on attributed sales | $0-4.50 |
| Total fees (without offsite ads) | $3.30 (11%) |
Important notes on fees:
- Offsite ads are mandatory for shops over $10,000/year revenue—you can't opt out, and Etsy takes 12-15% of any sale attributed to their ads.
- Shipping charged to buyer still incurs the 6.5% transaction fee.
- Multi-quantity orders incur $0.20 listing fee per unit sold, not per order.
- Currency conversion adds another 2.5% for international sales.
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Essential Gear for Etsy Sellers
- Photo Light Box - Professional product photography for listings
- Thermal Label Printer - Fast shipping label printing
- Poly Mailer Bags (100 pack) - Protect items during shipping
- Digital Kitchen Scale - Accurate weight for shipping costs
What to Realistically Expect
- Time required: Product creation varies wildly—1 hour for digital downloads to 10+ hours for complex handmade items. Add 2-5 hours weekly for photography, listings, customer service, and shipping.
- Earnings range: Median Etsy seller earns under $500/year. Top 10% earn $1,000-5,000/month, but typically after 2-3 years of building. Profit margins range from 20-40% on handmade goods to 70-90% on digital products.
- Main tradeoffs: Low barrier to entry but intense competition. Etsy controls visibility and can change algorithms. Handmade products have natural scaling limits.
Time Investment by Product Type
Hourly rates vary dramatically based on what you sell:
| Product Type | Typical Price | Hours to Make | Effective Hourly |
|---|---|---|---|
| Digital downloads | $3-15 | 2-10 (one time) | Scales infinitely |
| Stickers/small prints | $5-15 | 0.25-0.5 | $10-30 |
| Jewelry | $20-80 | 1-3 | $8-25 |
| Knit/crochet items | $30-100 | 5-20 | $3-10 |
| Custom furniture | $200-1000 | 10-40 | $15-35 |
These estimates include material costs but not overhead like photography, customer service, or shipping time. True hourly rates are often 20-40% lower.
Real Profit Margin Examples
Here's what sellers actually keep on different product types:
Handmade candle: $28 sale price
Materials: $6 | Etsy fees: $3.50 | Packaging: $2 | Shipping supplies: $1.50 | Profit: $15 (54%)—but 45 minutes labor = $20/hour before taxes.
Digital planner: $8 sale price
Materials: $0 | Etsy fees: $1.15 | Profit: $6.85 (86%)—created once, sold repeatedly. After 100 sales, effective hourly rate can exceed $100+.
Hand-knit sweater: $120 sale price
Materials: $25 | Etsy fees: $15 | Packaging/shipping: $12 | Profit: $68—but 15 hours labor = $4.50/hour before taxes.
Calculate Your Etsy Profits
Input your prices and costs to see actual profit per item after all Etsy fees.
Open Etsy CalculatorCommon Pitfalls
Underpricing handmade goods
Many sellers price based on materials only, ignoring labor. If you spend 3 hours on a $40 item with $10 in materials and $5 in fees, you're earning $8.33/hour. Factor in your time or you're subsidizing buyers.
Ignoring the offsite ads fee
Once you cross $10,000 in annual sales, Etsy automatically enrolls you in offsite ads and takes 12% of attributed sales. This can significantly cut into margins on items you thought were priced correctly.
Competing in saturated categories
Stickers, printable planners, and jewelry have millions of listings. Standing out requires exceptional photography, SEO, and often paid Etsy ads—which further cut margins.
Not accounting for returns and problem orders
Lost packages, damaged items, and customer disputes happen. Budget 2-5% of revenue for these issues—especially for fragile or customized products.
Frequently Asked Questions
Can you make a living selling on Etsy?
About 5% of Etsy sellers treat it as primary income. Most who succeed either sell digital products at scale, have a niche with high margins and steady demand, or combine Etsy with their own website. Handmade-only shops struggle to scale beyond part-time income.
What sells best on Etsy?
Digital downloads (planners, wall art, templates) have the best margins. For physical goods, personalized/custom items, wedding-related products, and home decor tend to perform well—but competition is intense in all popular categories.
How much does it cost to start an Etsy shop?
$0 to start (no monthly fees for basic shops). But realistic startup costs include: product materials ($50-500+), photography equipment or services ($50-200), initial inventory ($100-1000+), and packaging supplies ($50-200). Digital sellers can start for under $50.
How long does it take to make sales on Etsy?
First sale typically takes 1-3 months for shops with good SEO and photography. Consistent sales (10+ per month) often take 6-12 months of active listing and optimization. Many shops never reach consistent sales due to competition and discoverability challenges.
Should I use Etsy Ads?
Etsy Ads can help visibility but often have poor ROI for low-margin products. Test with $1-5/day initially and track actual profit per sale after ad costs. Many sellers find ads work for high-margin items ($50+) but lose money on lower-priced products. The offsite ads program (mandatory for larger sellers) is separate and takes 12-15% of attributed sales.
Is selling digital products better than physical?
Digital products have dramatically better margins (70-90% vs 20-40% for physical) and infinite scaling potential. However, competition is intense in popular digital categories like planners and wall art. Physical products can command higher prices and build stronger customer loyalty. Many successful sellers do both.
How important are reviews?
Critical. Shops with 50+ five-star reviews see significantly higher conversion rates than new shops. Etsy's algorithm favors shops with strong review history. Getting those first 20-50 reviews often requires competitive pricing, excellent customer service, and sometimes selling at minimal profit to build momentum.
Related Guides
Etsy Shop Guide 2026
Setting up, optimizing, and growing your shop.
Print on Demand Guide
Selling custom products without inventory.
Handmade Business Guide
Pricing, scaling, and selling handmade goods.
Digital Products Guide
Creating and selling downloadable products.
Etsy vs Shopify vs Amazon Handmade
Platform comparison: fees, traffic, and tradeoffs.
Is Starting a Business Worth It?
Time investment and opportunity cost reality.