What the Etsy Fee Changes Mean for Your Business

Well, if you’ve been spending any time in the small business news world the last week, I’m sure you’ve heard about the changes that are coming to Etsy. Etsy announced fee increases and membership levels that are coming to the platform on June 14th and you can read the official announcement here.

As with (most) changes on Etsy, there was some considerable backlash in the forums, with posts titled:

“Will this lead to Etsy’s downfall?”
“Dear Etsy, get your act together!”
“Closing my Etsy shop due to fee increases!”

But, what do these changes really mean for your business? In this post, I’m going to break it down so that you can adjust your business to adapt and roll with these changes. So let’s dive on in.

What is changing?

There are basically three main changes being announced.

  1. The Etsy transaction fee is going up to 5% from 3.5% (where it has been since Etsy opened in 2008).
  2. The transaction fee will now be applied to shipping as well, when previously shipping was exempt from the transaction fee.
  3. Etsy will soon offer Seller Packages, basically “levels of membership” in order to access new features. Sellers who do not choose to enroll in these packages will still have access to all features currently available on Etsy.

What does this mean for my bottom line?

Let’s work through a quick example of how your fees will change when selling an item. For this example, I’ll be selling a canvas for $100, which ships for $10.

Old Fee Structure

Retail Price: $100
Shipping: $10
Total Cost: $110
Transaction fee (3.5%): $3.50
Etsy Payment Processing fee (3.55%): $3.55
Listing fee: $0.20
Total Fees: $7.25

New Fee Structure

Retail Price: $100
Shipping: $10
Total Cost: $110
Transaction fee (5% on total cost): $5.50
Etsy Payment Processing fee (3.55%): $3.55
Listing fee: $0.20
Total Fees: $9.25

Total Fee Difference: $2.00 increase

So, on a $100 sale (not including the shipping cost, which would not factor into your profit), you will now be paying $2.00 more, or 2% more in total fees.

While this is an increase in fees, it is not as astronomical as you may have been led to believe by the hype in the media and forums. A simple increase in your price by 2% will have your profit at at exactly the same level when the fees increase next month.

How will this change how I price my items?

Many people hypothesized that Etsy made these changes (which many other online platforms also have made) in order to prevent “cheating the system.” With the old system, where shipping was not charged a transaction fee, there was always the possibility of someone listing that $100 canvas for $50 and then charging $60 for shipping in order to avoid fees. Now, there will be no benefit to hiding cost of the item in the shipping cost.

Also, there is now an even greater incentive to offer free shipping on Etsy. In the previous example, you would pay the same fees if you listed the canvas for $110 with free shipping. It has been shown time and time again that offering free shipping can drastically help your conversion rates!

What about the new Seller Packages?

Like I mentioned above, the Standard Package will offer the exact same tools that sellers have access to today. There will not be a monthly charge with this package.

The Plus Package (launching in July) will be $10 a month (going up to $20 per month in January 2019). This package will include customization tools, “back in stock” notifications for customers, redirection from your own web address, 15 listing credits, $5 advertising credits, and discounts with Etsy’s partners.

I think this package is going to be totally worth it – especially with the $8 in total credits – that means that you’ll only be spending $2.00 per month on this package in total.

The Premium Package is a bit of a mystery. Etsy will be launching this in 2019 and pricing has not yet been announced. There have been hints that it will have tools for business owners with employees – which could be great if you have someone who helps you with shipment and fulfillment!

Final Verdict.

All in all, I think these changes represent a positive shift at Etsy. We’ll now be able to offer free shipping without affecting our fee payments. And I’m excited to see what new tools Etsy comes out with for sellers. Admin have stated that the money Etsy receives from these fee increases will be spent on advertising – on radio, TV and in print. I’d love to see more exposure for Etsy in the public eye.

What do you think? What were your first impressions about these changes? Do you think you’ll sign up for a Plus or Premium package?