How to Make Money on Etsy

How to make money on Etsy? On this page we’ll be covering how to make money on one of the fastest growing market places for vintage and hand-made products: Etsy!

As described above, Etsy is an online market place for vintage and hand made products. A bit like eBay but then mainly for people who like to craft things their selves. Etsy’s popularity has grown quite fast the last few years. Along with it has grown the amount of people wondering how to make money on Etsy. The platform was founded in 2005 with a handful of sellers. As of today (2020) the platform has grown to almost 2.5 million sellers and over 40 million active buyers. Each year over 4 billion dollars is spent on Etsy.

Etsy makes money by charging their seller fee’s. It costs a seller $0.20 to list an item that stays active for four months. If a seller sells the item, Etsy charges them 5% of the selling price as a commission. Additionally Etsy makes money by allowing their sellers to promote items or use their shipping label service.

How much money can you make on Etsy?

There’s over 4 billion dollars in revenue per year to be distributed among the sellers on Etsy. So the trick to how to make money on Etsy should be rather straight forward right? Depending on how well you market your products you can try and claim a share of these 4 billion dollars. This means that Etsy as a platform is big enough for you to make some serious money. The sky is practically the limit.

There are several sellers on Etsy who make a very good living from what they sell. Some of the most popular shops even make over 100.000 to a million dollars per year. Good to know is that those well running shops are not limited to one specific category on crafts. There are people earning thousands of dollars per month in several different categories. Shops in woodworking, clothing, art work, invitation cards, painted mugs and jewelry are just some examples.

However, making money on Etsy is not really easy. As with everything you sell you’ll have to build a strong brand for yourself. The average person selling things on Etsy doesn’t see it as a full time business. For most people, Etsy is a side business. A way where people can sell the creative crafts they make.

How to start selling on Etsy?

Opening a shop is the first step to how to make money on Etsy. Starting a shop on Etsy is incredibly simple. All you have to do is register an account on the platform and you can get started. After registering an account you’ll have to fill out some details and pick a store name. Etsy requires every store name to be unique so you might need to be a bit creative. If you have thought of a beautiful name that is already taken you might want to consider adding “store”, “boutique” or “shop” to the name to make it unique.

Don’t take the process of picking a name lightly though. Your store name is the first choice you make in an elaborate branding strategy. A strong brand name can be very favorable for you in the future. For a brand name to be strong it must be catchy, simple, easy to remember and relatable to the items you will sell.

Etst art & collectibles

The Etsy Art & Collectibles section

After you’ve created your store, it must be approved by Etsy. When it is approved you can start by listing products you want to sell. You can upload photo’s, give your products a title and a description and appoint it to categories and subcategories. You can also divide your shop in different sections and appoint your products to a certain section. You’re allowed to have up to 10 different sections for your shop.

When you list your products you’ll want to guarantee that your product stands out from the crowd. Especially if you create products of which there are more on Etsy, you’ll need a way to catch people’s attention. Don’t become one of the 2.000 bracelet sellers who sells nothing more than just “bracelets”. Sell a story. Sell a unique experience. Not just one of the gazillion bracelets.

To make your product stand out you can implement the following tips:

  1. Make sure you have good photo material of your products. Take the time to create professional photo’s or have a pro do it for you. Don’t be afraid to be creative. Your photo’s don’t need to look like standard factory issue photo’s with a sterile white background and perfect lighting. Be creative, but ensure that the photos are appealing in some way.
  2. Create a catchy product title that grabs people’s attention. Don’t be the dime in a dozen who sells a “selfmade silver bracelet”. Everybody sells selfmade silver bracelets. It’s Etsy. Not Amazon.
  3. Create a catchy product description. Be sure to provide detailed information about size, color and different options. Also include what makes your product unique. What makes your product different from all the others? What’s the unique story behind it? What’s the experience you’re selling to those who will wear the bracelets?
  4. Tag your products with the right keywords. Etsy is known for being very focused on SEO. SEO means that you’ll need to use the right keywords as tags, in your title and in your description in order for your product coming out in the top of the search results.
Etsy custom name bracelet

A Unique Etsy Product Example by NamePersonalized

Determine your price

As we’ve covered in the start of this article, Etsy makes money from fees that sellers need to pay for listing and selling their products. This is an important factor to take into account when pricing your products.

A first is that you need to pay $ 0.20 for every item you list, for every four months that it is listed. Want to have an item listed for a year? That’ll cost you $ 0.60. Next to that, Etsy charges you a transaction fee of 5% of your sale price.

You’ll also face payment processing fees of approximately 3% of the transaction price. Payment fees vary based on payment provider but 3% is an average. If the product you sell is a physical product you’ll also have to take care of shipping. The larger, and thus heavier an item is, the more expensive shipping will be.

If you want to advertise the product on Etsy you’ll also end up paying advertising costs. At last, crafting a physical product evidently requires you to purchase the materials and tools to do so.

When pricing your product you’ll need to take these costs into account. The best way is to first track how much crafting a product will cost you in time and materials. Based on this, you can determine how much profit you want to make on top of your labor and selling costs. If a product takes you an hour to craft then making 10 dollars profit seems like a decent deal. However, if it takes you ten hours to craft then ten dollars of profit is rather high risk.

Once you know how much profit you want to make you can start working backwards. Let’s say you create bamboo world maps. It takes you four hours to create one map. Your selling price must be equal to your costs + your desired profit. For the sake of this example we’ll assume that your desire is to make 40 dollars profit.

Profit: 40 dollars

Labor costs:  60 dollars (4 hours at 15 dollars per hour). You can determine your own labor costs but be wary of how it will influence your total selling price. You might earn 50 bucks per hour at your current fulltime job but this doesn’t mean you can project this on to your labor costs. People are more than willing to pay a bit extra for hand made products but there’s a limit to it as well.

Material costs: 20 dollars for the bamboo and 5 dollars for the tools

Etsy expenses: 8 dollars

Payment and shipping: 20 dollars

Total selling price: 153 dollars

By selling your bamboo world maps for 153 dollars you make 40 dollars in profit for around 4 hours of labor. Which is reasonable, given that in the sales price you are already reimbursed for your labor costs.

Becoming a successful shop on Etsy

We’ve just covered how to get started on Etsy and how to price your products. We’ve also covered that Etsy has over 2.5 million active sellers. Unless you have a very unique crafting skill or talent the odds are high that whatever you sell will also be sold by several others. Becoming successful on Etsy is not only about listing your items. It’s a long process. A process of strategic brand building, excelling in marketing and excelling in storytelling. Below are 5 tips to become a successful seller on Etsy.

  1. Put effort in your product listing. We’ve already covered several tips on how to make your product listings more appealing. Implement them. Test things. Be experimental and creative.
  2. Build a strong and consistent brand. Don’t change your name every week. Create a brand logo and use the same consistent and attractive product titles and descriptions.
  3. Don’t limit your brand building to Etsy. Build a brand outside of the Etsy platform and recommend potential customers to your Etsy shop. As you’ll likely be selling creative crafts there are a ton of platforms that you can use to promote your products and brand. Think of Instagram and Pinterest for example. You can even build your own website and blog.
  4. Focus on customer service and your relationships with customers. Answer questions in a timely manner and be available for them. Ideally you’ll want your current customers to become your ambassadors.
  5. Think about not only selling physical products but digital products as well. Preferably digital products that you only need to produce once and you can sell an infinite amount of times. This way you can scale your revenue infinitely while you labor remains the same. Your Etsy side business turns into a passive income stream. With physical products the balance between revenue and labor always remains the same.

Some last thoughts on how to make money on Etsy

As an entrepreneur I like Etsy. A lot. I admire people who are creative and have the talent to make beautiful things from raw materials. The opportunities of making money on Etsy are limitless and the platform is large enough for anyone to make some serious cash. But do beware though that it is also a very competitive platform. A platform with a lot of really talented craftsmen and -women.

If you expect that you can fold some origami birds in five minutes and earn a few thousand bucks on the side in no time you’re fooling yourself. Becoming popular on Etsy takes really hard work. It takes excellent brand building skills, marketing skills and customer relationship building

I would recommend you not to start out with Etsy in your mind as your short term end game. As a short term replacement for a full time job. But rather as a creative outlet. As a way to earn some cash on the side for your creative talent. For the creative talent you would otherwise pursue anyways.

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