Your fee percentages are probably right; the number you multiply them by usually is not, and the gap shows up as a shop that stays busy without getting any further ahead.
Most of us price the same way. Take the item price, knock off a rough percentage for fees, call what is left the margin. The percentage is usually close enough. The number you apply it to usually is not — and that is the part nobody checks.
This does not show up as a bad month. It shows up as a shop that gets busier every year without getting any further ahead.
The fee base is wider than the price you set
Etsy's US payment processing fee is 3% plus $0.25. Nearly every cheap calculator I have opened applies that to the item price alone. Etsy's own help page says something different. The fee, in Etsy's words, comes off "the item's total sale price, including its shipping fees, and any applicable sales tax." Shipping and sales tax sit inside the base.
Read that again, because it is strange. Sales tax on a marketplace order is money Etsy collects and remits. You never touch it. It still counts toward the number your processing fee is calculated on.
Here is one order, made up so the arithmetic is easy to follow. A shirt listed at $28, $6 shipping charged to the buyer, and 8.25% sales tax collected by Etsy on the $34 subtotal — $2.81. The buyer pays $36.81.
Four fee lines, worked twice. First the way a typical calculator does it, then the way the charge actually lands:
- Listing fee — $0.20 both ways.
- Transaction fee at 6.5% — $1.82 both ways.
- Payment processing — $1.09 if you run 3% plus $0.25 against the $28 item price. $1.35 once you run it against the $36.81 the buyer actually paid.
- Offsite Ads at 15% — $4.20 charged against the $28 item. $5.10 charged against the $34 order total.
Typical calculator total: $7.31. What actually gets charged: $8.47.
That is $1.16 on a $34 order — about 3.4 points of margin, gone quietly, on an item where you probably thought the margin was fine.
One honest note: I held the 6.5% transaction fee identical in both versions. I checked the processing-fee base directly against Etsy's documentation, but I did not independently confirm the exact base Etsy applies the transaction fee to, so I left it flat rather than guess. The real gap is more likely to be wider than $1.16 than narrower.
The listing fee is charged per unit sold, not per listing
This one hits sticker sellers, print sellers and anyone moving volume through a single listing. Etsy charges $0.20 to publish a listing, and then $0.20 again for each additional quantity you sell from it.
Sell ten $6 stickers off one listing and you have paid $0.20 plus $1.80 — two dollars, not twenty cents. On $60 of revenue that is 3.3% off the top line. Treated as a single $0.20 listing fee, it looks like 0.3%.
Every cheap calculator I examined either got this wrong or ignored it entirely. It is not a rounding error for anyone selling small, inexpensive things in quantity — which describes a large share of the people reading this.
The percentage in your spreadsheet is probably right. The number it is multiplying is probably wrong.
Offsite Ads is charged on the cart, not on the thing they clicked
Most models treat Offsite Ads as a flat percentage of the item that got the click. Etsy applies it to the order total
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Mockwren