The New Etsy Fees – What, Why and What Should You Do

Jun 19, 2018 | Handmade Business Tips, Online Shop

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A few days ago, Etsy announced their fee structure was changing and the internet went BOOM.

In this episode, we’re going to talk about what the new fees breakdown is, why it’s happening and what you should do about it.

Let’s get into it.

You can watch the video, or read the post below.

What

 

1/ New Transaction Fees: 5%

 

As of July 16th, 2018, the Etsy transaction fees will go up from 3.5% to 5%. The 5% will be applied to the item price and also to shipping costs. I’ve seen lots of comments on this one and I know a lot of you are feeling enraged about it. Why on earth would Etsy take 5% of your shipping fees?

This is actually common practice on e-commerce marketplaces: Amazon does it, eBay does it, and if you really think about it, it’d be the same if you had your own website.

When someone orders on your own website they usually pay using Stripe or Paypal which charge a % fee. That fee comes out of the TOTAL charged to the customer (so item AND shipping), not from just the item price. It’s just that we never really think about it this way, right? The reason Etsy (and other marketplaces) do this is to avoid having people charging $1 for the item and $99 for the shipping and therefore dodging the fees.

 

Side note here because it’s something I’ve read in comments online a lot: This is NOT to push you into offering free shipping because $100 = $5 and $85 + $15 = $100, so the fee would still be $5. It makes it easier to try free shipping because you’re charged the same, but you don’t pay less by offering it.

 

2- Introduction of Monthly Plans

The other big news is the introduction of 3 different plans:

  • Standard;
  • Plus;
  • Premium.

The standard plan is free and exactly the same as what you have now. You can still access the same features, use promoted listings, and you don’t have to pay more.

The Plus plan is $10USD (I have prices in AUD so please let me know in the comments below if I’m wrong) and will increase to $20USD per month in January 2019. It will come with a few features:

  • Customizable shop options (banner templates and featured listings);
  • URL redirect to your Etsy shop (which is nice they think of it, but you can get that feature easily for less than $20/month);
  • notifying shoppers your items are back in stock;
  • Advertising credit of $6.7AUD per month (so I believe around $5 USD);
  • 15 listings credit per month.

 

The premium plan is still a bit of a mystery, as pricing is yet to be announced and it won’t launch before 2019. So far we know it will come with:

  • “advanced management tools for business owners with employees” (so not necessarily useful if you’re just a one person running your Etsy shop);
  • premium priority support;
  • “new advanced tools” which is a bit more of a mystery (think about analytics but that’s pure speculation).

Let me know what you think about those plans in the comments below 🙂 

I’ve seen a lot of people concerned that people on the plus and premium plans will have better search rankings. Etsy has clearly stated that it’s not a case and I really don’t believe they would go lying about it and doing something totally different. You can keep everything like it is now or upgrade if you want more options – but you don’t have to.

Why

Etsy wants to attract more customers/buyers AND develop better tools for sellers. That’s got to cost money, and that money gotta come from somewhere, right?

Quite simply, they want to grow and make improvements and it costs money so they’re upping their fees. The real question is what will they do with that extra money and will it truly benefit you as a seller with better tools, better features, more customers? I sure hope so.

From what they said they’re planning to:

  • Increase marketing budget by at least 40% to get more traffic and buyers to Etsy;
  • create a new look for teams and forums;
  • provide phone support 24/7 and live chat;
  • create new help center;
  • provide new ways to share insights into Etsy buyers trends and tips and advice to optimize for reach. I’m hoping for better shop analytics here!

WHAT SHOULD YOU DO

I know what you should not do: freak out.

The fees increase is annoying, and it’s a lot of changes happening in a short timeframe:

  • The new search algorithm that everyone is still trying to figure out,
  • Closing Etsy wholesale,
  • New pricing model…

I understand that it might be unsettling because it’s directly affecting your livelihood. Granted, the timing was bad.

But if you want my opinion, here it is… the price increase is not that much – for a $50 item the fees will increase only by .75cents.

You can recoup that with a slight increase in your prices. It’s still SO much cheaper than other platforms. Go and have a look at Amazon fees and eBay fees and you’ll realize that 5% for Etsy is still actually quite low.

My take on this is that when you’re in business you have to be flexible – things like that will happen again and again and again and you just have to get used to it. The people who are going to be the least affected by it are the ones that spent the least time wondering WHY and already started thinking like a business owner:

  • What does it mean for me?
  • What are my choices/options?
  • How do I adapt to this new situation?

The fact is, even if you weren’t selling on Etsy, this stuff happens all the time with Facebook, Pinterest, Instagram algorithm, even Google Algorithm.

It’s not something that you’re necessarily safe from if you sell on your own website.

I honestly think we need to reframe this conversation:

This is not about answering “can I afford the extra fees?”.

This is about wondering “Am I happy to be on a platform that makes those types of decision for me? Am I happy to roll with the changes as they show up and to commit to this long-term?”

If you want to stay on Etsy, this means adjusting to those changes when they arise. If you want to get some more freedom, it’s time to focus more on your website or start one if you’ve been thinking about it.

But if you weren’t about to close your Etsy shop yesterday, I don’t think this announcement should be what pushes you to do so. On the other hand, if you’ve been thinking about it for a long time, then yes maybe this is the push you needed.

There is also a nice in between: you can afford those new fees by adjusting your prices and wait for 3, 6, 9 months to see where Etsy is going, how positively or negatively those changes are affecting your shop, and decide then.

Whatever you do, make sure to never put all your eggs in one basket. If you’re selling on Etsy, make sure you’re growing that email list. If you’re selling on your own website, make sure you’re diversifying your sources of traffic so that if one doesn’t work so well after a while or an algorithm changes or something like that happens, you have other sources of traffic to fall back on.

It’s really important that you own your business.

What are your thoughts on all the new changes Etsy is rolling out? Are you going to stay on the platform? Are you going to upgrade your plan? Let me know in the comments below!

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