Your Etsy deposit is not your profit. Fees come off the order total, then materials, then the label you actually paid for, then the ads that earned the sale, and finally your own time. Here is the full subtraction, worked through to the cent.
Etsy takes its fees out of your payment account before the deposit reaches your bank, so the number that arrives already looks like a net figure. It is not. It is revenue minus Etsy's cut, and none of your own costs have been touched.
The other half of the problem is where sellers start the maths. Subtract materials from the item price and a $38.00 product with $11.40 of materials looks like it keeps $26.60, about 70 percent. Nothing in that calculation is wrong except what it leaves out, and what it leaves out is most of the cost.
Etsy's transaction fee applies to the whole order total, which includes the shipping and gift wrap you charged the buyer, not just the item price. Starting from the item price alone understates the fee and overstates your profit from the very first line.
Three fees usually apply: a small per-listing fee, a transaction fee charged as a percentage of the order total, and a payment processing fee that is a percentage plus a flat amount. The rates differ by country and Etsy changes them, so take the current numbers from your own payment account.
Materials, components, and any per-item manufacturing or wholesale cost. If you buy in bulk, divide to a per-unit figure and include the waste, because the offcuts you throw away were still paid for.
What the label actually cost, plus the box, mailer, tissue, insert, and tape. This is where sellers who charge shipping still lose money, because the amount charged at checkout and the amount paid at the counter are rarely the same.
Divide your Etsy Ads spend across the orders it produced, and add the Offsite Ads fee on any order that came through one. Then price your own time at an hourly rate. A shop is only profitable if it still is after you are paid.
An item priced at $38.00 with $6.50 of shipping charged to the buyer is an order total of $44.50. The rates used below are an illustration, so confirm your own in your payment account before you rely on them.
Etsy's fees on that order: a transaction fee at 6.5 percent of $44.50 is $2.89, payment processing at 3 percent plus $0.25 is $1.59, and the listing fee is $0.20. That is $4.68 in fees.
Now your costs: $11.40 of materials, $8.20 for the label and packaging against the $6.50 you charged, and $2.00 of Etsy Ads attributed to this order. Total costs are $4.68 plus $11.40 plus $8.20 plus $2.00, which is $26.28.
So $44.50 minus $26.28 leaves $18.22, a margin of about 40.9 percent of the order total. Healthy, and a long way from the $26.60 the price-minus-materials version promised.
Then pay yourself. If the item takes 45 minutes to make, list, and pack, and you value your time at $25.00 an hour, that is $18.75 of labour against $18.22 of profit. The order is $0.53 short of paying for itself. That is not a reason to stop selling it, it is a reason to raise the price, cut the making time, or charge shipping closer to cost, and it is invisible until you run the full subtraction.
Free shipping is not free, and a flat rate loses on heavy or distant orders. Costing the real label against what you charged is usually the single biggest correction a shop makes.
Mailer, tissue, insert card, sticker, tape. Pennies each, and a real number per order once you multiply it by a year of sales.
Ad spend is a cost of the orders it produced. Averaging it across every order flatters your advertised products and punishes your organic ones.
Making time, listing, photography, packing, and messages. Unpaid labour is the most common reason a shop looks profitable and feels exhausting.
A monthly total hides the mix. One listing can be carrying four that barely clear their costs, and the only way to see it is to run the same five subtractions product by product. Shops that do this usually find the same pattern: the cheapest items are the least profitable, because the label, the packaging, and the flat part of the processing fee do not shrink with the price.
Once you know the per-item number, the decisions get simple. Reprice, change the packaging, adjust what shipping you charge, or stop promoting the item that keeps nothing.
Etsy reports what it charged you. It has no idea what your materials, your labels, or your hours cost, which is the half of the calculation that decides whether a product is worth making.
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Typically three on a standard order: a small per-listing fee, a transaction fee charged as a percentage of the total order including the shipping you charged the buyer, and a payment processing fee made up of a percentage plus a flat amount. Extras can apply on top, such as an Offsite Ads fee when the sale came through one of Etsy's off-site ads, a currency conversion fee, and in some countries a regulatory operating fee. Rates vary by country and change over time, so take the current figures from Etsy's fee schedule or your own payment account.
Start from the order total, including shipping charged. Subtract the Etsy fees on that order, then your material cost, then what the shipping label and packaging actually cost you, then the share of ad spend that earned the sale. What remains is profit before your own labour. Subtract an hourly rate for your time and you have the number that tells you whether the product is worth making.
Yes. The transaction fee is charged on the order total, which includes the shipping and gift wrapping you charged the buyer, not only the item price. This is why a calculation that starts from the item price comes out optimistic, and why raising your shipping charge raises your fees too.
Yes, if you want the answer to be useful. Leaving labour out does not make it free, it just moves the cost onto you. Pick an hourly rate you would accept from someone else, multiply it by the realistic time per item including packing, and include it. Plenty of items that look profitable do not survive that line, and knowing which ones is the point.
Etsy deducts its fees from your payment account before the deposit reaches your bank, so the deposit is already net of listing, transaction, and processing fees, and of any ads or refunds in the period. That deposit still is not profit, because none of your own costs, materials, labels, packaging, or time, have come out of it yet.
Yes. Etsy sales, Shopify orders, in-person markets, and wholesale all land in one place with their costs attached, so you see one real profit number instead of reconciling three dashboards that each count things differently. Profit is reported by month and by cost category, and you can give a channel or a product its own category or tag to see it on its own.
Bring your Etsy orders and your costs into one place, and TrueProfit shows the profit each product actually earns, per order and per month.
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