Would you like to make more money? Silly question - the answer is always yes. For Etsy sellers, however, the “yes” may come with some “buts” like “it’s not that easy” or “that would mean I have to produce more”…
We have good news for you: there are ways to optimize your pricing strategy so you can make that profit margin wider on each product without producing more. The 5 strategies we include here can be implemented quickly and make a big impact on your bottom line.
Related: Pricing Psychology for Craft Success
We work with thousands of crafters to help them manage their inventory, stay on top of their bookkeeping, and get their pricing right, so we know what goes into a good Etsy pricing strategy.
Here’s how you can optimize your Etsy pricing:
5 Etsy Pricing Hacks: How to Create a Smart Pricing Strategy for Etsy
1. Get Your Organization in Order
You may think you already have this down - but wait before you skip this point. If you don’t keep track and know every aspect of what goes into your pricing, you’re going to essentially be guessing at how much profit you can make. If you’re not tracking something, you may overlook it.
Some Etsy sellers use spreadsheets to keep track of things like your price list, material costs, labor, markups, and profits, and while this is better than doing nothing, it’s not as good as using software like Craftybase.
Craftybase automates a huge amount of this work for you so you can analyze where additional profit can be made.
2. Know (& Keep Track of) the Fees
Etsy offers you the opportunity to get in front of buyers looking for products like yours and in return, they charge you fees. There are a few different fees involved:
Listing Fees: this is the fee you’re charged for creating a listing and is currently $0.20 (USD) per listing. This fee is charged regardless of whether a listed item sells (listings last for 4 months) and is also charged each time an item is purchased.
So, for example, if you create a listing to sell a scented candle and you make 10 of them, you’ll be charged $0.20 each time one of them sells. The fee is also the same if the listing auto-renews.
Transaction Fees: This fee is charged when an item sells and is currently 5% of the total order amount, in your chosen currency. This 5% includes the cost of shipping (and gift wrap, if applicable). (This is a good reason to offer free shipping - read our blog here for more.) Note: this will be increasing to 6.5% as of 11 April 2022.
Payment Processing Fees: This fee is more difficult to calculate because it differs depending on the country you’re in and sometimes the country your buyer is in, too. In general, it’s a set fee plus a percentage of the order total. For the US, these fees are 3% + $0.25.
📓 Want the lowdown on all of Etsy’s fees so you can price your products better? Download our free Complete Guide to Etsy Fees eBook here →
Shipping: You can handle all the costs of shipping on your own, but it’s worth noting that you can purchase shipping through Etsy. You’ll need to do some research to find the cheapest (and best) option for your business, but Etsy says you can save up to 30% by buying shipping labels from companies like FedEx and USPS through them. These fees need to be worked into your product price as another expense - it shouldn’t eat into your profit.
You may also choose to opt-in to Etsy Plus, which is a subscription option for growing sellers that is $10 (USD) per month, not including sales tax for your state. This membership gives you $3 worth of listing credit plus $5 of ads credits, plus a custom Etsy domain, customers can request restocks, and more. If you choose Etsy Plus, you’ll need to work those 15 free listings (and your ads budget) into your product pricing. Learn if your craft business is a good fit for Etsy Plus here »
3. Get Smart About Your Pricing
As long as you’re located in the US, you can provide a free shipping guarantee for your customers and use Etsy’s smart pricing tool to adjust your prices to recover shipping costs. As we mentioned earlier, offering free shipping can be a major selling point and is used by global brands as a marketing tool all the time.
To take things a step further, Craftybase’s Pricing Guidance feature gives you the whole picture and with precise unit costs. While Etsy’s smart pricing tool is good, it is not tailored to your business. With Craftybase, you don’t have to try and factor in something
Etsy cannot account for. Nor do you have to do all the math beforehand to figure out your pricing before using the smart pricing tool. With Craftybase, you can track all costs and adjust as needed to find the right price point for you.
Use our The Etsy Pricing Calculator (updated for 2023) to quickly generate prices that take Etsy fees, materials and labor into account.
4. Monitor Your Etsy Metrics
You probably didn’t get into your Etsy business to do data analysis, but data is essential for your business. When you know your metrics, such as listing traffic (called views), conversion rates, and search queries, you can change your pricing to optimize profitability or better suit (or understand) your customers’ expectations.
For example, if your conversion rate is especially high, it may be a sign that you’re pricing too low. That may sound counterintuitive–since after all, a sale is a sale–but you may be able to increase your profit and make more, without turning off many potential buyers.
Once your listing has gained some traction with good reviews and a solid conversion rate, this is another good sign that you could increase the price.
Of course, if your listing is getting views but has a very low conversion rate for what it is, that may be a sign that your pricing is too high–or at least, you’re not conveying the value well enough in your listing.
5. Try Offering Coupon Codes
You’re thinking, “how will lowering my price help me make more?” Stick with me: while using coupons might feel counterintuitive to boosting sales, promotional sales and coupons can help you make more because it will encourage customers to buy now, and often more.
Think of black friday and the shopping craze of discounted prices. Every customer loves getting a deal, and while some people prefer not to buy things on the clearance rack, no one is immune to a coupon code.
Better still, Etsy will notify buyers who have favorited your item that it’s on sale. If a buyer has push notifications on for the Etsy app, that notification may even pop up on their phone or tablet at an opportune moment and you’ll get a sale you wouldn’t have otherwise.
Your brand will dictate how often you run promotions, but offering discount codes for return customers and limited-time promotions a few times the year is nearly always a good idea. (If you’re not sure how to set up coupons, see this link.)
Maximizing your profit comes down to two things: knowing your expenses and costs inside out, and conveying your product’s value correctly to your ideal customer. While the latter is something you often need to tweak over time to get right, the former you can do in just a few minutes with Craftybase. Our Etsy Pricing Calculator is free and will help you figure out your profit margin and what you should be charging.
If you want to dive deeper into this topic, check out our other pricing blog posts here, or download our free pricing strategies ebook. If you don’t have concrete numbers on your costs yet, find out more about Craftybase here.