Etsy Is Charging a 5 Percent Fee on Sales and Shipping Fees. Here’s How to Offset It

I’ve been an Etsy seller for over two years selling everything from funny mugs to whimsical yoga mats. My Etsy shop has been a great source of extra income and has been an incredible distribution channel. As of July 16th, Etsy will charge a 5 percent fee on all product sales and shipping fees. Though I love the platform, when I saw their fees will rise from 3.5 percent to 5 percent, I groaned in unison with many Etsy shopkeeps.

Taking a deeper dive into why Etsy chose to raise fees, I learned that they plan to use a portion of the extra funds to build a more robust marketing program. The new program will allocate more funds toward customer service making the Etsy experience better for both the buyer and the seller. For Etsy to remain competitive in a saturated digital world, extra funds spent on customer service will help their platform remain competitive among e-commerce giants including Ebay and Amazon.  

Though the increase may be necessary, it’s also left many sellers scratching their head wondering what to do next. Here are three things you can do to offset the new 1.5% fee and remain a competitive seller on Etsy.

1. Increase your prices to remain profitable.

When I first started my Etsy shop, I was shocked when tax time came around–I had been losing money on a few products after taking into account seller fees and taxes. I slowly started to increase my prices to reflect the time and effort I put into producing each item. Surprisingly, I found my sales numbers unfazed. Initially, I thought the price increase would deter customers but after marking up my items more than 30%, I’m happy to report that sales have only increased.
Like Etsy, you also have the opportunity to also increase your prices if you so choose. Use the fee raise as an opportunity to figure out your break even point and how many units you need to sell to meet your goals. Scared of what your customers might think of an increase? One easy way to get feedback on product pricing is to simply post the product to your personal Facebook or Instagram and say “How much would you buy this for?” The answers might surprise you.

2. Reevaluate your shipping cost sand see where else you can cut costs.

A 5 percent fee on all shipping transactions can quickly add up. Take a look at how you’ve set your shipping rates and increase your prices to take into account the 5 percent fee. “Many sellers don’t make a profit on shipping .” says Susan Shapiro of Etsy shop Susabellas. “Re-evaluate your current shipping service. Website likes Stamps.com can show you the lowest shipping rate possible and Etsy also offer commercial based pricing with USPS. You can save anywhere from 5-39 percent on certain services.  By switching shipping providers you may be able to save much more than the new 5 percent fee.”

Not only can you use Etsy’s fee raise as an opportunity to evaluate your pricing, but also your business practices. From your packaging to product materials, there may be a more inexpensive supplier that could help you lower your production costs.

3. Work on your marketing and SEO to sell more.

Even with Etsy’s new fee structure you still have the opportunity to become even more profitable than before. A 1.5 percent fee can quickly be offset by selling just a few more units per month depending on your margins. Invest time experimenting with ads and double down on your social marketing efforts.

Spend a couple of hours this weekend optimizing your listings. From optimizing your tags to taking better photos, a few small tweaks could pay dividends for you in the coming months. Generating more profit can quickly help you compensate for the new fees. 
Though a fee raise is never fun, you have the power to also change your business to reflect the changes. Grab a calculator and get to work restructuring your own prices and business practices.