Etsy is a great platform for sellers. It gives you access to a global audience of buyers all looking for items just like yours. If you are a creative maker, and aren’t on Etsy it can be daunting. Is it worth it? And do Etsy sellers actually make a profit?
There are many stories of sellers making large amounts on Etsy, but for each of those there seems to be a hundred stories of disgruntled ex-sellers who couldn’t make it work.
So which is true? Is Etsy a money making no brainer, or is it just a scam that is impossible to make money on?
Like any business venture, the answer is less about the platform, but about the seller. Lets take a look.
Is Etsy profitable for sellers?
Yes, it is definitely possible to make a profit from your items on Etsy. Etsy is an affordable platform for sellers and if priced correctly you can make a significant profit margin for your listings.
Its important to note here that being able to make a good profit from your listings is not the same as making a good income from your store.
Profit is calculated per sale as:
sale price – costs and expenses = profit
And is often expressed as a “profit margin”, which in simple terms is the amount of the sale price is actual profit. Profit margin is worked out as a percentage:
(sale price / 100) * profit = profit margin
As mentioned before, profit is only calculated as the amount made per sale, so if you make $50 per sale, but you only make 1 sale per month, that gives you a monthly revenue of $50 – hardly life changing.
It is very easy to make a profit on Etsy, the hard part is making enough sales to make a good income.
How much profit can be made
So just how much profit can be made on an item? That will depend on what you sell. Lets have a look at a few common types of listing.
Rough profit margin: 20-50%
Its hard to pin down an average profit margin for craft items as they can vary wildly. Things to keep an eye on when working out the profit margin on craft items are:
- cost of supplies – leather craft will have higher supply costs than embroidery. Be sure to work out how much it costs for supplies per item
- perceived value of the item – some items make more because the perceived value in the eyes of the customer is higher. Items that stand out, that look expensive, or are branded to be exclusive wil have a higher perceived value
Its also important to note here that profit margin only accounts for supplies and seller fees, it doesn’t include the time from you to actually make the item. Be sure to account an hourly rate to your items so that the profit reflects the time taken to make it.
Print on Demand
Rough profit margin: 20-30%
Print on Demand (such as posters, mugs or t-shirts) can be a bit easier to calculate. Your Print on Demand provider will give you a price for producing a single item and shipping – you just have to add your profit on top.
A profit margin of 20-30% is a rough standard, and will allow you to keep a decent amount of profit whilst still being priced competitively.
Profit margins for this is lower than crafts, however the time investment is much lower, as you aren’t fulfilling the orders yourself
Rough profit margin: 80-95%
Digital downloads offers the highest profit margin of any item on Etsy.
As there is nothing to make, there are no supply costs, all you are paying for is the Etsy seller fees. This makes it incredibly lucrative.
However, digital items are often priced very cheaply, as many buyers wouldn’t pay top dollar if they don’t get a physical item. It is then necessary to sell in large volume ion order to make a decent income.
Why do some struggle to make a profit?
For every seller making a good income on Etsy there are hundreds who have tried and failed. So what are the common reasons for not being able to make a profit on Etsy? The 3 top reasons are:
- incorrect pricing
- not enough demand
- ad spend
Lets take a look at each.
This one is the biggest reason why sellers don’t make a profit on Etsy. They just don’t correctly work out their profit margin.
Many beginner sellers overlook things like:
- packaging costs
- Seller fees
It can be easy to dismiss these costs as they appear insignificant – such as packaging costs – but when you start selling at decent volume they soon add up.
Sellers also rarely account for their time to make the items. If it takes you 2 hours to make an item and your making $5 profit, is $2.50 a good enough hourly rate? not for me, and I doubt for you.
These types of sellers make sales, but get fed up making peanuts for all their effort.
Not enough demand
The second biggest reason is there not being enough demand for their listings.
They make all the right choices, and they sell their items at a competitive rate, with a decent profit margin. However they just don’t make enough sales for it to make a decent income.
Sellers in this group get fed up with stagnant growth after the initial burst of sales. It can be tricky when your expectations aren’t realistic. Many sellers only make enough for a handy side income, making a full time income is very rare.
The final reason I see people failing to make a profit on Etsy is ad spend.
It is possible to get your items to the top of search results by paying for ads. This is a great way to boost sales, but needs to be monitored carefully, as you can soon find that the additional profit from sales is eaten up by advertising fees.
A sustainable Etsy store is built on solid SEO, so that you don’t need to advertise.
It is possible to make a profit on Etsy. So long as you avoid the common pitfalls, and you have realistic expectations you can make your Etsy store a success.