Most Etsy pricing questions are the same question: “what should I charge for this?” The answers on forums usually amount to “double your materials” or “see what similar shops charge”, and both fail in the same way: they ignore your labour and they ignore fees. This guide gives you a four-step method and a formula you can run on paper or in the free Etsy calculator, with a worked example for a UK seller. Sellers in Türkiye have a Turkish version with lira figures.
Step 1: know your real cost per item
| Cost line | What goes in | Example |
|---|---|---|
| Materials | Everything consumed by one unit, at what you actually paid, including the offcuts | £6.00 |
| Labour | Minutes per unit at an hourly rate you would accept from an employer. 40 minutes at £15 an hour | £10.00 |
| Packaging | Box, tissue, tape, insert card, label | £0.80 |
| Overhead per order | Rent of your space, tools, software, Etsy Ads budget, listing photography, divided by orders per month | £1.20 |
| Cost per item | £18.00 |
Two rules. Labour is a cost even when you are the labour: a shop that pays you nothing is not profitable, it is a hobby with revenue. And overhead is per order, not per item type: if your fixed costs are £120 a month and you ship 100 orders, every order carries £1.20 before you make anything.
Step 2: decide the profit you want
Profit is what remains after every cost, including your wage. Set it as a number, not a feeling. Common targets: 30% to 50% of cost for handmade goods with steady demand; more for items with a unique design or a limited run; less for consumables and repeat orders. In the example the target is £9 per item, 50% of cost.
Step 3: work the fees in properly
Etsy’s fees are a mix of percentages and fixed amounts, and they apply to the whole order, shipping included. The 2026 UK figures:
| Fee | Rate | Charged on |
|---|---|---|
| Transaction fee | 6.5% | Item + shipping + gift wrap |
| Payment processing | 4% + £0.20 | Order total |
| Regulatory operating fee | 0.48% | Item + shipping |
| Listing fee | $0.20, about £0.16 | Per unit sold |
| VAT on fees | 20% | All of the above, unless you are VAT-registered and have entered your number |
| Offsite Ads | 15% (12% above $10k a year) | Orders attributed to an Etsy ad, capped at $100 |
Add the percentages: 6.5 + 4 + 0.48 = 10.98%, and with VAT on fees 13.18%. Add the fixed amounts: £0.20 + £0.16 = £0.36, with VAT £0.43. That gives the formula:
Order total = (cost + shipping label + target profit + £0.43) ÷ (1 − 0.1318)
You then subtract the postage you charge the buyer to get the item price. If you are VAT-registered, drop the VAT uplift: divide by 0.8902 and use £0.36.
Step 4: run the numbers
Cost £18.00, label £3.20, target profit £9.00, postage charged £3.50.
- Order total = (18.00 + 3.20 + 9.00 + 0.43) ÷ 0.8682 = £35.28
- Item price = 35.28 − 3.50 = £31.78, rounded to £31.95
Check it at the rounded price. The buyer pays £35.45:
| Line | Amount |
|---|---|
| Transaction fee, 6.5% of £35.45 | £2.30 |
| Payment processing, 4% + £0.20 | £1.62 |
| Regulatory fee, 0.48% | £0.17 |
| Listing fee | £0.16 |
| VAT on fees, 20% | £0.85 |
| Total fees | £5.10 (14.4%) |
| Cost + label | £21.20 |
| Profit | £9.15 |
Now the same order attributed to an Offsite Ad: 15% of £35.45 is £5.32, plus VAT £1.06, so fees rise to £11.48 and profit falls to £2.77. If a large share of your sales comes through Offsite Ads, either price for it (divide by 0.6882 instead, which gives an item price of about £41) or decide whether to opt out, which is only possible under $10,000 in trailing-12-month sales.
Step 5: round, sanity-check, revisit
- Round to a price point that fits your category: £31.95 or £32, not £31.78.
- Check the market last, not first. If competitors sell the same thing at £18, the question is not “should I charge £18” but “is my labour rate or my material sourcing wrong, or is their product different”. Copying their price copies their mistake.
- Recalculate when an input moves. Postage rates, material costs and Etsy’s fee schedule all change; the regulatory fee alone moved from 0.32% to 0.48% in June 2026. A price set in January can be loss-making by July.
- Shipping is not free. “Free shipping” means the label and the fee on it are inside the item price. Run the formula with postage charged at £0 and the label still in the costs.
Where the calculator saves you the arithmetic
The free Etsy fee and profit calculator has the 2026 fee schedule for the UK, US, EU and Türkiye built in, switches the payment processing and regulatory rates by country, includes the EU €3 per-item duty and country regulatory fees for cross-border sales, and shows break-even, profit at your price and the recommended price for your target margin. The Offsite Ads toggle shows the two outcomes side by side. Nothing you type is stored.
Frequently asked questions
What is a good profit margin on Etsy?
After all costs including your own labour, 30% to 50% of cost is a common target for handmade goods. Below 20% after fees, one postage increase or one Offsite Ad order wipes the margin out.
Should I price with or without Offsite Ads?
Look at your last 90 days: if more than a fifth of orders were ad-attributed, price for it or opt out. If it is occasional, price for the standard sale and accept the lower margin on ad orders.
Do Etsy fees apply to the shipping I charge?
Yes. The transaction fee and payment processing apply to item plus shipping, so a £3.50 postage charge carries about 38p in fees, 46p once VAT on fees is added.
Do I pay VAT on Etsy fees?
If you are not VAT-registered in the UK, Etsy adds 20% VAT to its fees. If you are registered and have entered your VAT number, Etsy applies the reverse charge and you account for it on your return.
How do I price a multi-quantity listing?
Fees are per unit for the listing fee and per order for the payment fee, so bulk orders carry slightly lower fees per unit. Run the formula on the order, not the unit, when you offer quantity discounts.
Is the formula the same for the US or Türkiye?
The structure is the same; the rates differ. US payment processing is 3% + $0.25, Türkiye is 6.5% + ₺3 with a 1.67% regulatory fee and usually a 2.5% currency conversion. The calculator switches these for you.
Figures as of September 2026
Fee rates are Etsy’s published UK schedule; Etsy announces changes with about a month’s notice, so check the calculator’s date stamp before relying on a number.
Run your own product through the free Etsy calculator and compare the recommended price with what you charge today. If the margin is fine but sales are not, the problem is usually listings and search rather than price; the Etsy Shop Audit looks at both together.