Etsy to increase transaction fees by 30% in April

By MixDex Article may include affiliate links

Etsy has announced that it will be hiking seller fees by 30% while also promising to reinvest the extra funds in initiatives designed to bring in more customers and sales.

Etsy currently takes 5% of sales made on its platform but will increase that to 6.5% in April 11, 2022. The site also charges a 3% plus 25 cent payment processing fee on top of the transaction fee and that practice will continue at the same rates. Sellers also pay a 20 cent listing fee per item that’s good for four months or until the item sells out.

That brings the total amount a sale is reduced by due to fees to about 9.5%, not including the listing and base transaction processing fee, which would be an additional 45 cents per listing (though the per item cost decreases slightly for merchants who use the same listing to sell multiple quantities of the same item).

Overall, it’s a 30% price hike, with a $10 purchase seeing fees go from 50 cents to 65 cents.

While not necessarily a huge hike, it’s still significant enough that sellers might need to consider their margins and if they simply will pass that fee along to customers by raising prices slightly.

The move comes as prices for everything from raw materials and shipping increase nearly across the board, meaning that sellers are also facing increased costs of producing their handmade items.

Etsy, meanwhile, says that it plans to reinvest a “considerable portion” of funds generated by the rate hike in marketing, customer service and developing new features and services.

It did not designate how much will go toward those initiatives and how much the company will simply pocket.

In a statement, Etsy emphasized that one of its goals is to increase lifetime value of customers for its sellers and it hopes that will help offset the price increase.

Etsy already provides customer support for certain issues not handled by the seller directly but it’s likely it’s seen hikes in labor costs for the team that handles those.

While the announcement triggered some seller complaints and threats to move to another platform, Etsy also has the advantage of being able to deliver significant traffic to its sellers given its role as a global marketplace. Its basic fee structures are also more of a “pay as you go” model, which generally ties costs to sales.

Some sellers may defect to standalone ecommerce solutions such as Shopify or Big Commerce, but these sites would likely have trouble attracting the traffic volume Etsy does, especially in the beginning. These solutions also come with a fixed, monthly cost that doesn’t change no matter how much or little you sell, meaning it may only be a viable alternative for high volume sellers.

The site’s 12% to 15% offsite ads fee will remain the same. This is a feature where Etsy places ads across advertising networks outside of its site and, if one of these ads results in a sale, the merchant is charged a flat rate. 

Etsy Ads, which is a sealed bid generalized second price auction system billed as cost per click that lets merchants dictate an approximate amount they are willing to spend for potential sales, will remain in place. Because these ads are driven by bids, the cost structure won’t change, though there could be some shifts because some advertisers may opt to back down a bit on ad bids to help cover the fee increases.

For higher volume sellers, Etsy offers Etsy Plus, which costs a flat $10 per month for $3 worth of listing credits (the equivalent of 15 listings). It also includes $5 in Etsy ad credits that sellers can use to promote their items within Etsy search results and other locations on the site.

Plus subscribers also get a free .store domain name or 50% off domain registrar partner Hover’s normal prices for select domain extensions.

There are also a handful of other benefits, mostly including discounts on third party products and added features such as restock requests and advanced store customization.