How To Make Money On Etsy? Everything You Need To Know

These days, almost everyone old enough to use the internet has heard of the site Etsy. After a total of 12 successful years in the online retail space, Etsy has developed itself as...

Adam Eleiko
Adam Eleiko
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How To Make Money On Etsy? Everything You Need To Know

business people walking in the city

These days, almost everyone old enough to use the internet has heard of the site Etsy. After a total of 12 successful years in the online retail space, Etsy has developed itself as the quintessential platform for those looking to sell their goods and share their art around the world. In 2016 alone, Etsy had over $2.8 billion in sales, which was spread over an impressive 29.7 million buyers.

There is just so much to love about Etsy. One of the best features is that the platform provides an easy and accessible way to both showcase one’s talents and start a side hustle business from the comfort of your own home. Anyone who has ever thought about starting their own home business most likely has a few questions about how feasible it truly is. How much money can you make? How much time does it take to set up your online store?

To adequately answer these questions, we talked to 20 Etsy shopowners about their experiences on the platform. If you have ever wondered about opening your own Etsy store, or even have a shop but want to reach more customers, keep reading to find out what it takes to be an expert Etsy seller.

What Exactly is Etsy?

how to make money on etsy

Etsy is a user-driven, online marketplace in which users can set up virtual storefronts to sell handmade items, unique goods, vintage wares, and even crafting supplies. In the past decade, the marketplace has seen substantial growth. It started back in 2005, and by the year 2007, the market grew to over 56,000 sellers. That is no easy feat when competing with retail giants such as eBay and Amazon. Today, Etsy has well over 1.8 million active sellers as of April of 2017. Etsy defines an active seller as to any individual shop that has sold at least one product in the past year.

So how does Etsy make money? Etsy makes money by charging sellers a small fee to list their products. The marketplace costs $0.20 to list an item, which will remain active for four months. When the product sells, Etsy will then take 3.5% of the selling price as commission. Another way Etsy makes money is by charging sellers a fee in order to prompt their items for sale, and also by providing shipping label services. The costs for both of these fees can vary depending on what the seller is selling.

Will Etsy Make a Good Side Hustle?

If you are simply looking to make a quick buck, Etsy probably isn’t the best option for you. It will take a significant amount of time to create quality products that people will want to buy.

hand made products how to make money on etsy

It also takes effort to set up a decent shop, take quality photos, and add optimized titles and descriptions so that people will land on your page. As the marketplace expands, the more competitive it is actually to sell products. This means that sellers need to have a lot of patience to gain some traction and create a following of customers.

However, that does not mean it is impossible. There are many small shops out there that are creating a decent side income just by selling a few of their products. Around 75% of the store owners that we interviewed were either working-full time outside of Etsy or stay at home parents. In reality, only 25% of Etsy sellers view their store as their full-time job.

When it comes to a side-hustle, vs a career, Etsy store owners land on both sides of the spectrum. The amount of time you are willing to commit, the amount of money you bring in, and how you manage your long term goals are entirely up to you. If you are just looking to make some extra cash and have a creative flair, opening an Etsy store can be a great side hustle. One crucial factor to keep in mind is that Etsy was designed for people with a lot of passion. It isn’t accessible to fake creativity!

How Much Can Etsy Sellers Make?

make money on etsy

The short answer is: there is no limit. Some fantastic shops, such as Simple Shapes make over a million dollars a year. That is precisely what Etsy wants you to see when you are contemplating opening up a shop. However, for every shop that is raking in the big bucks, there are around 100 that are making next to nothing. An Etsy shop is just the same as any other small business. There is always a significant risk of failure. You must first and foremost, be willing to put in a decent amount of work before you can see any cash flow in.

With that said, all of the shopowners that are featured in the Showcase can make some income from their store. Many of these shops are seasonal stores that pick up significantly around the Christmas holiday season, or spring. In our interviews, these businesses tried to relate their best approximation of how their average monthly sales look. In this next section, we will not mention any shops by name to keep everyone’s income and productivity levels anonymous. However, there is a lot to learn from only running the numbers all the same.

Sales Figures

Out of the 20 shopowners in the Showcase, we saw a broad range of sales figures. The lowest volume store had an average sales amount of just three sales per month, while the highest-grossing store sold over 700 products per month.

etsy profits making money on etsy

Looking at the median range, Showcase participants made around 20 separate sales per month. Realistically speaking, this does not accurately depict what is going on. There is a massive difference between selling a few quilts and 700 hairclips or even printable menu planning forms. The price and the time allocated to create the products will differ significantly.

At the median value, these shop owners had a monthly income of $537.50 total (about $518 after all of the Etsy fees). The range of product pricing started at $3 and went up to $175. The average price of each product was just $40. If you are thinking about adding a side hustle to your life, over $500 doesn’t sound that bad. But what about the fees?

Profits

On a monthly average, the Etsy store owners that we interviewed, typically priced their products at around a 68% markup to cost. We thought these numbers were a bit staggering and predicted that these sellers would be making huge profits. However, except for just a few individual high volume shops, including Etsy fees and store costs, the median stop brought in only $700 in profit every month.

etsy store profits how much money on etsy

Even the smallest shop that was surveyed made a minuscule $8.50 per month. The largest shop that we talked to made over $5,000 in profits. While we agreed not to name shop names, what we can tell you is that the most prominent shop we talked to is operated by someone who works full-time outside and has a family (with kids) to tend to. Talk about a superhuman.

How Does it Break Down Hourly?

The actual scary part of selling in an Etsy shop can be startling. Have you ever been browsing Etsy products and come across something you thought was way too expensive? Or possibly you saw a product and thought that the cost to make the outcome is far lower than what they are selling it for? You are in for a rude awakening.

Considering an hourly basis, about 50% of Etsy store owners are making less than the Federally mandated minimum wage rate of $7.25 per hour. Two shop owners that we talked to are making less than $1 per hour, accounting for all of the many hours that were spent building and shipping the products. These hours also include responding to the needs of the customers, as well and managing the actual shop storefront.

hard work making money on etsy

Considering the amount of hourly income, we must conclude that Etsy is an appropriate side hustle if you actually have a passion for your craft and would create regardless of whether you made money or not. If you want the most value for your time spend, there are dozens of other side hustles that you can do for a higher rate. You need to love what you are making to get the most out of an Etsy store.

The one exception to a difficult product would be creating a beautiful printables to sell. Many people design printable journals, nursery art pieces, notebooks, journals, and similar low-effort content. These products allow many users to create a passible passive income. You will not need to worry about shipping products, Etsy simply sends the file to the customer upon purchase. The two biggest printable shops that we found in the Sidehustle Showcase were both making well over $100 per hour and were among the highest earners that we interviewed.

What do Etsy shop owners enjoy about managing their shops?

The Etsy store masters who engaged in the Showcase universally experienced joy while running their stores. They all had a multitude of reasons for why they gained satisfaction and validation from peddling their goods, but we asked them to each narrow down what they fancied as their top 3 attributes.

While everyone is entitled to their personal opinions, we were very interested in seeing these three themes emerge from almost every response:

    1. Successful and exciting interactions with customers.

    2. The ability to be flexible and work from home, or on your schedule.

    3. Have a suitable outlet for creativity.

how does etsy make money

Etsy creates an environment where users can follow their artistic dreams and pursue their passions. They are also able to make money from doing something they enjoy. A decent Etsy storefront will allow the owner to gain the experience and realize the joy and satisfaction involved with seeing the labour of their love make a profit. It is a fantastic feeling seeing something you made being loved and valued by others.

Perhaps, the owner did not realize it would take a month to make their first sale. Maybe they thought that they would sell hundreds of items instead of just a dozen. However, the value of the experience is still positive overall.

The graphic below details some of our favourite quotes from sellers and what they truly love from the Etsy marketplace.

What do Etsy shop owners hate about running their shops?

Okay, so it hearing about all of these success stories and grateful shop owners are making use want to go and open our first shop immediately. Before we do that, let’s press pause on the feel good train and take it back to reality. Creating and running an Etsy shop, just like any other business, is not all sunshine and roses. There are also some unsavory aspects of the Etsy shop life (not to mentions the whole making less than minimum wage issue). Here are the top three complaints from those who are currently running an Etsy storefront:

making money on etsy shipping mess

    1. Search Engine Optimization (SEO): Opposition on Etsy is powerful, so you need to adequate research keywords to make sure that your products show up in customer searches. This can mean less time for the creative aspect of your store.

    2. Shipping and Handling: Trying to calculate costs, preparing things correctly, and controlling random delays can be a real effort!

    3. Dealing with unsavory or rude customers: Luckily, rude customers are quite rare, but they do exist. Some owners have mentioned that dealing with unreasonable customers is the worse aspect of running an Etsy store.

For the most part, Etsy is an enormous venture. It is a standard selling platform that was set up to move nonstandard items. The creative minds that love Etsy are also those that often struggle with operating between the bounds of the Etsy system. New sellers need to treat their Etsy shops as a successful small business and commit time and effort to learn the rules and creating a successful marketplace. When you have done all of these steps, the income will begin to pour in.

The graphic below will describe some famous quotes from actual humans who are talking about what items to sell or not sell.

How do you become a great Etsy shop owner?

The lower hourly pay rate for the majority of Etsy shop owners means that it is likely only a worthwhile side hustle if the craft is something that you would be making anyway. You are not going to get rich instantly from opening up an Etsy store. You will initially need to put in quite a bit of effort in order to get your store up and running. The one exception to this rule, which we have mentioned several times, is the high quality, printable products. If you happen to have an artistic eye for quality printable goods, craft patterns, planning tools, or even hoe to e-books, Etsy can be a great place to create a solid passive income.

The idea is that you will end up spending less time creating a product and when you sell printables, you will not need to pay a shipping fee upon making a sale. In either case, the competition in the market is quite high. You will need to set aside some time to set up your shop and to be sure you have a brand this is different from any other artist in your area.

So, the idea is that, if you love your craft, you have everything to gain. The initial cost of a start-up company is low in most cases. This is because you only need to pay $0.20 to list an item, then you can send it to friends, post it on Instagram, Pinterest, and even Facebook to promote yourself. Etsy also has a very helpful Sellar Handbook that many of the shop owners that we surveyed listed as highly valuable.

If you would like to visit the Etsy Seller Handbook to get your shop up and running, it is available here.

Top advice from Etsy shop owners

Among the shop owners that we surveyed, many of them expressed the desire to share with potential Etsy artists and sellers that once you find your passion, the creative portion is not difficult. However, you must be absolutely original. The market is saturated and if someone is selling a better product than you, they will make the sale instead.

making money on etsy chocolate console controller

In a side hustle that is so competitive, it was fantastic to see artists who wanted to support each other and offer so much advice to beginners. This welcoming attitude was so uplifting and very unique to the Etsy community.

The most significant piece of advice that we heard from fellow Etsy artists was to just jump in and try it out. It is very crucial to network with other shop owners. You should also have a passion for your product and know it inside and out. You should also not be afraid to self promote your goods.

Experts recommend read the Etsy Seller Handbook, cover to cover, in order to understand every aspect of the business. You should also strive to treat your customers well and never be afraid to self promote your page. These very shop owners also suggest joining local Facebook groups to give you a free resource and sounding board to find answers and inspiration. You are sure to have a lot of questions when you first start out, so these groups are a great resource.

Many of the shop owners that we surveyed in the Showcase were able to establish their shops with the support of their family and friends. These people around them were able to see value in their talent and ability and the shop owner’s decided to give Etsy a try. These owners were all at various levels of readiness and preparation and no matter where they were at, they learned a lot by actually doing.

Many owners started their own shops with as little as 1-3 items. Some others started with upwards of 40 items. On averages, most sellers started with around 10 items. This is comparable to the amount that Etsy officially advises at 8 items. You always want to be certain that you have enough items in your shop to appear established. This also allows customers to view the range and quality of your work.

Out of the shopowners we interviewed, all but three of them promoted their shops immediately upon opening. Facebook, Instagram, and Pinterest are fantastic tools for spreading the word about your store through family and friends. Any positive momentum you can create for your store is crucial.

You should create pages that are specific to your storefront. You can also use these pages to create a following without worrying about your followers seeing personal family photos on your feed. You should make your site look as legitimate as possible in case a customer happens to stumble upon it.

Getting your first sale

make money on etsy

When talking to our shop owners, many said that it took over a month to get a legitimate sale that wasn’t from their family or friends. The setup takes a lot of work and can be discouraging for many people. One user claimed that she spent over 20 hours just setting up her shop for sales and she was a graphic designer by trade.

Setting up the shop might feel tedious, but once you set it up, things will run beautifully and efficiently. This will surely make things easier for you in the future.

Tools to start selling

etsy seo

When it comes to Etsy, Search Engine Optimization (SEO) is the name of the game. Etsy’s marketplace is so large that is functions effective as a search engine. For example, when we signed into Etsy and searched for a “green shell necklace” over 4,000 results came up. You need to be certain that your shop contains the right keywords to make your search to the top ten in the results. Many people search on one or two pages but most likely will not click on a link that is number 68 on the site.

Many shop owners stated that before they opened their shop, they watched several Youtube videos on the subject. They also signed up for Etsy courses, joined Facebook groups, and did general SEO research on their own. They Etsy handbook also has some interesting information about how to improve your page’s SEO content.

Some other things that need to be taken into consideration if you require to increase your Etsy sales are as follows:

A Photoshop Course

etsy photoshop course

Taking and editing beautiful pictures is a crucial part of securing customers. In an online, handcrafted market space, customers can't touch and feel your products physically. You need to take quality photos and provide a detailed description.

The quality of your photos will set you apart from your competition and shows that your relly put a lot of effort into your shop. If you are not trained or comfortable in using Photoshops, several online courses are well worth the investment.

A Bookkeeping System

make money on etsy

After all is said and done, Etsy is a business and needs to be treated like one. You will need to file taxes on your shop, which will mean that you need to keep track of your income and claim expenses on your tax report. If you are just starting, a simple spreadsheet will do. As you go on, you can get more complicated.

If your shop begins to grow, many shopowners recommend using Quickbooks Self-Employed, which is a compelling accounting system.

Want to know more about our Etsy shop owners?

To write this specific piece, we interviewed 20 different Etsy shop owners. These interviews ranged from brand to being over eight years old. These incredible shopowners are known to sell a wide array of products which include wreaths, custom dog collars, jewellery, shorts, and printables.

Say what you want about printables, but I appreciate them.

The Main Takeaway

how to make money on etsy

Etsy is not a platform for everyone. Many shops in the current marketplace make little to no money at all. The time that one is required to committing to creating a product is staggering (remember, they need 8 to start). Setting out a shop can take a significant amount of time.

If you are searching for a side hustle to pay off your student loans or to save a time-sensitive, expense, I would suggest looking elsewhere. Etsy has opened a whole new crafting word. This platform has given thousands of different options when it comes to searching and selling. For many artists, Etsy is a game-changer. This platform has given thought to people accessing a platform that allows them to turn a hobby into a hustle. Etsy isn’t for the faint of heart. If you are ready to give it a try, be sure to come up with something creative and make it enjoyable!

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Adam Eleiko
Adam Eleiko
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