It seems like a daft question but all too often we are swayed by sites like Etsy and Ebay to drop prices and shipping costs in a bid to make sales. But that’s for their benefit, not yours. You might double your sales as a result, but you could also be making less, and perhaps not even enough to cover your account expenditure. And there is the added kicker that Etsy will rank you lower in search results if it thinks your shipping is too high regardless of how much shipping actually costs.
Etsy’s recent change to its payment system has highlighted just how much it costs someone to list and then to sell an item. It’s got sellers all worked up because, in addition to this new look system, they are now taking all charges direct from sales at the point of sale, rather than letting you pay your account retrospectively on the first of each month and with 15 days in which to do it. This is something which helped small businesses see-saw between in credit bank balances and many have been perplexed at the lack of funds staying in their accounts.
Below, I have picked up an example from my most recent sale. It’s one of my small multiple listing sundry items but illustrates the ‘less simple’ simplified system. There are lots of sellers making many sales on small low price items. And if nowhere else, this is where you need to really watch your costs. I would never list items this small normally, if I didn’t happen to have the stock. And frankly, you would have to sell a huge number of items like this to make enough to live on:
In summary, it costs me 86p to list a £2.50 auto-renew item with 1.50 shipping added. Here in the UK, if you are not registered for VAT you will be charged that on top of every aspect of that item. As an example of a more expensive item: a garment priced at £50 with £16 added for shipping to mainland Europe costs me £7.64 in fees.
The question is, how is that affecting your finances? Are you making enough on those small items? Whilst the new system breaks down the finances, it is causing endless confusion for Etsy sellers who have been used to a different system for a very long time. The forums are littered with endless problems.
It’s all very well Etsy trying to push its sellers into dropping shipping costs below what it ACTUALLY costs to send something (approximately a £2 difference for domestic postage for me), but that just doesn’t work in my book, and it shouldn’t work in yours either.
If you’re unsure what your losses are on your costs, you need to take charge of your account now. And with bug issues over Etsy overcharging interest on transaction fees for UK sellers, it’s essential that you know what is going on with your finances.