The Ultimate Beginner's Guide to Making Money on Etsy

So, you want to open your very own Etsy shop? This could be one of the best decisions of your life. And with this no-nonsense, beginner’s guide to making money on Etsy, you will be up and running in no time.

I will share exactly how you can start a profitable Etsy shop, attract buyers and make your side hustle dreams a reality. If you’re looking for the definitive, no nonsense guide to making money on Etsy then you are in the right place.

So you have decided to start an Etsy shop but you don’t know where to start. I’m going to help you with that.

Whether you are looking for a lucrative side hustle to supplement your income or just wish to share your crafting hobby with the world, in this guide you will learn exactly how to get started with your Etsy journey.

Here I will explain everything that helped me get started on Etsy where I generated over £1800 in a Month after only 4 months of selling.

I have always wanted to help people reach financial freedom and even show them how it is possible to do that without a “real” 9-5 job.

Etsy is an excellent tool to do that, and with my help, you will be well on your way to your financial dreams.

Ready?

Let’s get started.

What is Etsy?

Before we can get to the good bit, we must first understand what Etsy is, who it is for, and if it is right for you and your product.

When most people think of Etsy, they usually know it sells homemade, one of a kind goods.

But what is it really?

Etsy is an ecommerce marketplace that allows anyone to sell handmade or vintage items. The range of products sold is incredible, from diamond rings to dog bandanas it seems like Etsy has it all!

But unlike other platforms such as Ebay, Amazon or Vinted, Etsy is more picky about what is sold. Your product must be handmade, vintage or a craft supply.

Etsy recently updated their terms so that you can also now work with a production partner to make your items. A production partner is “a company or individual (who’s not part of your Etsy shop) that helps physically produce items based on your own, original designs”.

This is a massive advantage if you sell or are looking to start selling Print on Demand (POD) products and you want to make Etsy more of a Passive income stream. More on this later.

Don’t be fooled by Etsy’s handmade, niche appearance. It is a major player in online marketplaces. It is currently ranked 5^th in the world’s top global online marketplaces.

With an astonishing 397.5M visits/month you will have no shortage of potential buyers.

I know what you’re thinking, “that’s great but can I actually make real money from this?”

Can you make money on etsy?

YES! I am a firm believer that anyone can make money on Etsy. But the amount you can make depends solely on if you are willing to work for it.

In a study by smartmoneymamas, they interviewed 20 sellers in various niches and found their average monthly profit from Etsy was $291. An extra $300 in the bank every month would be pretty sweet right?

The range of profits was from $8.50 to over $5000 per month! And that was just in a survey of 20 sellers!

The most successful shops on Etsy rake in over $50,000 per Month.

I’m not saying you will earn thousands and be able to pay off your mortgage in the next month.

But with potentially unlimited earning potential, Etsy is an amazing opportunity to make money.

I know, as a beginner, you may be thinking “but I could never be a top seller”. But what you must remember is:

Everyone starts somewhere.

and

If they can do it… so can you!

Seeing the potential of selling on Etsy inspired me to become a seller (again) in the summer of 2021. And although I did not dedicate as much time as I could have, I still managed to earn over £1800 in a month in revenue, 4 months after my shop opened.

Below I have included proof to hopefully inspire you and help you realise that it really is possible to make money on Etsy.

“Believe you can and you’re halfway there”

– Theodore Roosevelt

How much does Etsy cost?

As a beginner, Etsy does not require a lot of upfront investment. Here I outline all the basic fees that Etsy charges, and when they occur.

Listing fee

First is the listing fee where you will be charged $0.20USD (or £0.20GBP) per listing that you upload to Etsy. This is charged whether you sell the item or not.

Your listing will expire after 4 months if it has not sold. You can set your listing to “Auto-renew” meaning after 4 months your listing will renew automatically and you will be charged another $0.20. Or you can choose to manually renew them once they expire, which would still cost $0.20 when you choose to renew them.

If you list multiple of the same item, the initial listing fee will be $0.20 and the listing will be automatically renewed for $0.20 after the sale of each of the items.

Get your first 40 listings for FREE when you sign-up through my link (and I will also get 40 free listings, so thank you in advance!).

Transaction fee

Once you make a sale, you will be charged a transaction fee of 6.5% of the price you display for each listing including the amount you charge for delivery, gift wrapping and personalisation (if offered).

This will be deducted from your balance as each sale is made.

Payment Processing fee

To give the buyer as many payment options as possible, Etsy created “Etsy Payments”. This means the buyer won’t be put off at the checkout when you don’t offer their preferred payment option. These include options such as credit/debit card, gift card, paypal, applepay etc.

When an order is made through Etsy payments, you are charged a small fee for this service. This fee varies depending on the location of your bank account.

In the US it is 3% of the total sale price + $0.25USD.

In the UK it is 4% + £0.20GBP.

Depending on your country you may also be charged a Regulatory Operating Fee which is a small, fixed percentage of the total sale price.

To make it easy, I have made a simple graphic of each of the selling fees on Etsy.

These are the basic fees that come from selling on Etsy. Next we will look at the fees involved in marketing on Etsy.

Advertising and Promotional Fee

Etsy offers two services that can help you find more customers and produce more sales.

Etsy Ads

Etsy ads are a completely optional service where you set a daily budget that Etsy is allowed to spend. Your budget can be as small as $1 per day. You will not be charged more than your maximum budget per day.

Etsy will then use that budget to “bid” your listings against others for ad space. Your listing can then appear in a more prominent place in Etsy search for your keywords.

Offsite ads

Offsite ads are there to work for you without you doing anything.

Etsy pays to advertise on other sites such as social media or search engines. If your item is advertised, clicked on and then purchased by that person within 30 days, when you make the sale you will be charged an advertising fee.

The standard fee is 15%. This does feel like a lot but as you only pay it when you make a sale, in my opinion it is totally worth it.

You will just have to make sure your profit margins are not too small that the fees explained eat away all your profits. Don’t worry, I will explain how to correctly price your items and calculate your profit margins later.

Choosing the right product

Ok, we know what Etsy is and how much it all costs. But now we need to decide what the best product for you to sell is. I have split them into 3 categories to help you narrow down your options.

Physical

The classic approach to Etsy is to sell physical items that you create, package and ship yourself. This is the preferred option for most, especially those with a creative hobby to share.

Bestselling Products on Etsy

Here are just a few of the top selling product categories on Etsy that sell like hotcakes!

Jewellery

Searching for jewellery on Etsy will produce more than 19 million results! It’s no surprise that so many people go to Etsy when looking for something sparkly.

Most products are self-designed or customisable.

TIP: Offering custom products is a brilliant idea, as one of a kind, custom gifts are much more popular than generic gifts now.

Depending on the product you can charge more for customisation meaning higher potential profits for you.

Craft & Supplies

There is so much in this category that you could sell, from stickers to buttons, beads and charms.

If you are not particularly creative yourself, why not sell the supplies others need to be creative.

Wedding Items

No wedding prep is complete without some inspirational research on Etsy first.

The average person spends over $30,000 on their wedding. So, if you can tap into this niche with the right product, it could be very profitable indeed.

Wedding items to sell:

Handmade Invitations
Bridesmaid dresses
Bachelor/Bachelorette party shirts or décor
Signs
Table Numbers or Centrepieces
Personalised gifts for wedding party

And much, much more.

Vintage Items

You know what they say…

“One man’s trash is another man’s treasure.”

You may have many vintage items that you have forgotten about that are worth selling.

As Etsy is one of the few marketplaces that allow vintage pieces, it is almost a no-brainer!

Keep in mind Etsy consider “vintage” to be items that are more than 20 years old.

Art & Home Décor

Etsy offers one of the most eclectic art collections online. From paintings, drawings, prints and sculptures, there is everything a new home needs to add the personal touch.

So if you are particularly artistic, consider Etsy your main audience, and let your imagination run wild!

Digital

Digital products have really taken off and you would be surprised at how much you can make from selling digital files.

Instead of spending time creating their own planner or invitation, many people would rather pay a small fee for a premade, professional looking product that they can download immediately and use how they would like.

Digital items you could create and sell include:

Printable Art
Planners
Crochet patterns
Invitations
Kids Colouring Pages
Photo editing Presets

The best part about selling digital products is once you have made the product and uploaded it once, you can sell it thousands of times!

All with no shipping costs, no material costs and very little work from you after the initial set up.

This is one of the first passive income streams I tried and it really is surprisingly simple. Once you set it up and find your niche, it can lead to great profits and a very professional looking shop.

Print on Demand

The final category you could sell on Etsy is print on demand.

Print on Demand is a business where you would create a design e.g. a funny saying on a t-shirt, and then once you make a sale, you would use another company to print the t-shirt, package it, and ship it to the customer. All without you ever having to hold inventory or interact with any physical products.

This is a great business model for beginners and those who want very little start-up costs because you only pay for the base product once you have made the sale.

Etsy only recently allowed this type of shop, but as long as you set it up right, it can be a very passive and efficient business model.

On Etsy, you must disclose that you have a “Production Partner” and how they help you in your business. You also must have designed or created part of the product yourself.

In other words, you cannot just buy an item from a third party and sell it straight on etsy. This is known as Drop-shipping and it is prohibited on Etsy- It will result in your shop being shut down and you could be suspended from selling and buying on Etsy completely.

If you are looking to start a Print on Demand business be sure to check out my ultimate beginners guide to Print on Demand.

How to start selling on Etsy

“You don’t have to be great to start, but you have to start to be great.” -Zig Ziglar

Open your Etsy Shop

Simply go to Etsy and click “Sign in” in the top right corner and Register (or click “Open a shop today” to gain your 40 free listings).

Skip this step if you already have an Etsy account.

On your profile menu click “Sell on Etsy” and then scroll down and click “Open your Etsy Shop”

Fill out the basic information and you will be ready to go!

Note: To set up your shop you will need a name for your shop and one product ready to list. (Don’t panic, you will be able to change the name of your shop and edit the listing later).

2. Setting up your shop

Naming your Shop

You have 20 characters to hopefully make your shop memorable and indicate to your potential customer what you are offering.

Brainstorm all words you want your business to resonate with. From what you are selling, to the vibes you wish to create in your shop, note everything down first.

Some of the simplest and most effective shop names simply state what they are selling, along with a descriptive term to give the customer a feel for their shop.

For example “Bespoke Bangles”, “Fabulous Prints”, “Urban Candles”.

You could also include your own name if you want to keep your brand very personal.

Alternatively, you could choose an abstract word or phrase. This may take more thought, but it has the potential to be much more memorable.

Once you have a potential name, make sure to do your research.

Search it on Etsy to make sure it doesn’t already exist. Then google it and check it doesn’t exist on any social media you may use for your business in the future.

You will also want to check no part of your name is copyrighted or trademarked already, as this can cause big problems down the line.

TIP: As your name cannot contain any space or punctuation, use capitals if you have multiple words, to make it easier to read. E.g. “urbancandles” becomes “UrbanCandles”.

Shop Bio

This is where you can use up to 5000 characters to introduce your business, inspiration and design process. This is where your customers will go to really learn your story. So if you have qualifications that you use in your shop, include them. If your business is themed then explain why you have chosen that theme and why you started your shop.

Go into the heart of your shop’s “why” and your customers will start feeling a loyalty towards your business.

Shop Members

Here you put your seller profile. Add a profile photo and write a short sentence on what you do in the business.

If you have multiple people in your business then add them here too.

Shop Policies

To setup your policies go to your “shop manager”, click on “Settings” then “Policy Settings”.

Here there are several sections to fill in but etsy provides a template for each, so it is quick and simple.

TIP: If you plan on selling to the EU make sure you fill out a GDPR-compliant privacy policy. The Etsy Seller Handbook have a sample for you to use and customise for your own shop.

Shipping

According to Etsy, shoppers are 20% more likely to complete their purchase when the item has free delivery.

I would highly recommend offering free international delivery.

Obviously, for you, shipping will cost, but if you can factor this cost into the price of the item, you will cover the delivery charges and entice customers by offering free delivery.

Create & Optimise listings

While online shopping is arguably more popular than in person shopping now, it is still more difficult to buy online.

The customer cannot see the product in real life before they commit to purchasing. So it is your job to create top quality listings that are packed with all the information a customer would need to make an informed purchase.

Use Beautiful and Truthful Images

Image Quality is the most important factor in deciding to purchase an item according to Etsy’s customer research. It ranks higher than shipping cost, customer reviews and even the cost of the item itself!

In other words, to have a successful Etsy business you must have high quality product photos.

The photo that best shows off your product should be used first as your thumbnail, so that when a buyer is endlessly scrolling through Etsy, they choose to click on your product.

Then proceed to add All 10 Images Etsy allows.

You should show the item from multiple angles, in a clean and simple setting.
Show the item being used, worn or held.
If you offer variations of one product, make sure to show each variation in your photos.
If applicable, having a face in a photo with the product could increase sales as it builds more trust with the buyer.
Use natural light, without flash for the best true colours.

If you can, including a product video is also shown to increase sales compared to listings without one.

Learning and Using SEO

I know.

SEO is the one word that strikes fear into the hearts of every seller. It seems that every day there is a new way to use SEO, a new way to do it wrong and a new article telling you your shop is doomed.

But don’t worry.

For now, we will keep it simple and stick to the facts.

SEO stands for Search Engine Optimisation. Essentially it is what keywords and information you tell Etsy about your product. Etsy then uses an algorithm to use that information to rank your listing in their search.

Your SEO is what is going to determine what customers would have to type in to the search bar to find your listing.

There are four parts of your listing that factors into your SEO:

Titles
Tags
Categories
Attributes

Titles

You have 140 characters to accurately describe your item, what it does and who it is for.

Here, you want to use keywords separated by commas or dashes, but most importantly make sure it is clear and readable for your customer.

Don’t fall into the trap of “keyword stuffing” every relevant word into 140 characters and leaving it as a jumbled mess that makes no sense.

Put your most relevant keywords that describe what your item actually is at the beginning as this is what the reader can see first, especially when shopping on a mobile.

Tags

Tags are an additional 13 phrases that you can add to your listing that describe your product. Each one is an opportunity to be found in Etsy’s search so make sure to have a variety.

USE ALL 13 TAGS!

Each tag can be 20 characters long, so try to use multi-word, descriptive phrases, and do not just use 13 single word tags.

If you are in a very competitive niche then try to focus on keywords that will be more unique to your product.

For example, “Gold necklace” will be a very competitive keyword. But “Gold flower necklace” is much more specific so you have a better chance of showing up in search for that tag.

Categories

Categories are like tags. They narrow down your product into more specific groups.

Try to be as specific as possible when selecting the correct category.

Don’t worry your product will still show for the broader subcategories it is in as well as the final category.

For example, a product in “Pendants” will still show up under “Necklaces” and “Jewellery”.

As they act like tags, you do not need to include the name of the category again in your tags.

Attributes

Attributes are extra details you can add to give a better description of your product. Some are quite general like colour and material. Others will be specific to the category you selected. For example for a pendant, you can also specify Gemstone, Necklace length, Shape and Setting.

Attributes also act like tags, so add every relevant attribute you could use to describe your item.

Like Categories, you also do not need to copy any attributes directly into your tag section.

But what keywords should I use?

After the first couple of keywords that describe what your item is, it can be difficult to think of what keywords to use next.

First, I would suggest using the Etsy Search Bar for research.

Type how you would describe your product into Etsy search and see what Etsy suggests underneath. Here you will see what others have searched, related to your description.

This should give you more ideas of keywords for you to use. But don’t just rely on this as you have no way of knowing if those suggested keywords are very valuable or saturated.

For a more comprehensive look at keywords, I suggest using ERank.

ERank is an online tool where you can search a keyword and it will suggest many other keywords to use. It will also give you extra information like the Etsy Competition for that keyword, average searches for the keyword and much more.

You can see if a keyword has too much competition, making it unlikely for you to rank.

There is also a paid version of Erank you can use that will give many more statistics, but for a beginner I think the free version does the job very well.

What about the Product Description?

Whilst your descriptions may not contribute to your ranking, they play a vital role in the selling process.

You should include all of the most important information about the product first.

That is, what it is, what it does, what problem it solves (if applicable), any useful measurements, and anything else you think is important to your item.

I would also recommend writing your shipping times here as well.

Once the important information is covered you can use your description to market your product and convince your customer they need to buy it now!

You can write some of your brand’s story here or even the process of creating the product.

Finally, include anything else you think the customer should know before buying.

The trick is to answer any questions they may have about the product before they have to ask you.

How to price your product

Pricing your product is tricky business. You have poured your heart and soul into your creation so you need to price it accordingly. However, you want to be competitive against other products in your niche.

This is quite a conundrum and over time you will adapt your pricing as you see trends in your shop and in Etsy overall.

For now I will give you the general guide for your initial pricing, which you can then tweak later.

You need to work out how much it costs you in base materials to make one product. This will be your Material Cost.

Next you need to calculate any Overheads. This would be things such as annual subscriptions you use for your business. Machine costs and repairs, costs of renting a studio etc. This will vary for each business and could be quite low if you are just starting out. Also include advertising costs into this figure.

Then divide this cost by the approximate number of items you will make in a year, to give your Overhead/item cost.

You then must set your own hourly rate. You will have to judge this on how difficult the task is, how much time you spend away from any other income streams (like a regular job) and how much you aim to make.

Once you have an hourly rate, multiply this by how many hours you spend making one product. This will then be your Labour cost.

Now with those three figures you can calculate the Base Cost of your product.

To do this, Add your Material cost, Overhead/item and Labour cost together.

Material cost

Overhead/item

Hourly rate

=base cost per item

X2 = Wholesale

Base x4= Retail

Take your Base price and double it to get your Wholesale Price. This is the price you would use if you were to sell to other retailers, or in bulk.

For your Retail Price, simply multiply your Base price by 4 (or double your wholesale).

This is your Final Price that you should list your item for on Etsy.

Now you have your final price, research other similar products on Etsy to check if your price is reasonably close to them.

If it is much lower than your competition, then you may get more sales at first, but you could imply your product is of lower quality.

However, if yours is priced a lot higher than your competition, you may not get many sales, unless your product is clearly of much higher quality than the others.

Tip: Don’t fall into the trap of under-pricing your item just to be competitive.

This can cause a downward spiral where everyone tries to undercut each other, and as a result, this cheapens the value of the whole product category.

Now you have your shop and great listings, next is…

Marketing!

The beauty of Etsy is that unlike your own website, there is already a massive audience of potential customers ready to buy.

However, trying to compete for those sales against more experienced and established sellers can be very difficult as a beginner.

The answer?

Marketing!

If you can build your own audience to direct to your shop then you will have your own group of loyal customers.

The best way to do this is testing out different social medias to see which is best for your niche.

Personally, I would recommend Pinterest as it is already full of buyers looking for inspiration. Create your own boards showcasing your own products, along with other pins that your customers would be interested in.

Should I invest in Etsy ads?

As mentioned above, Etsy ads are a service offered by Etsy, where you set a daily budget and Etsy bids for ad space to place your listing, hopefully leading to more sales.

There are many contradicting views on if Etsy ads are worth it.

In my experience I believe they are worth it when used correctly.

You should use them the right way or you will end up out of pocket with no sales to show for it.

Don’t just advertise every listing in your shop. Pick out your very best, most purchased products and only advertise those.

Use the data Etsy gives you to see what listings have the most sales, and best conversion rate (you’re looking for a conversion rate of at least 1%).

If it has sold before, it will sell again.

If you have a new listing you could advertise it for a short period of time to get some data, but then don’t be afraid to deactivate the ad if it is not converting.

What else will help me get Sales?

5 Star Reviews

According to Etsy’s customer research 73% of shoppers consider reviews “extremely” or “very” important when considering a purchase.

If you have a good set of 5-star reviews then customers are much more likely to purchase from you because they feel they can trust you.

On the other hand, if you have some bad reviews this could easily put buyers off.

Don’t fret, every Etsy seller will get a bad review or two, even when they do everything right. But having a majority of 5-star reviews will encourage customers to buy from you.

To get good reviews, go above and beyond for the customer!

Make sure your packaging is practical but attractive.

Have good communication with your customer (but don’t spam them!).

Above all, make an incredible product!

Then once the customer has received the item, you could send them a little message asking if they love their item and if they do, you could politely ask them to leave a review.

TIP: Only ask once, don’t hassle the customer because either they won’t leave you a review, or they could leave you a negative review just because you annoyed them!

Dispatch on time

Make sure you dispatch every product on time (or early if you can).

In the age of next day delivery, everyone wants their order now!

Whilst Etsy is for small businesses and so allows for longer processing and shipping times, they do want you to keep to the times you set.

There’s no easier way to disappoint a customer than for their product to arrive late.

Response Rate

When someone asks you a question through Etsy, they are probably very close to purchasing.

So, try to get back to them as soon as possible to help.

Nearly every question I have ever had on Etsy has led to a sale, so don’t miss out!

Star Seller

Not only will the above tips help you get sales and a reputable shop, but they also can help towards gaining a Star Seller badge.

This is a new idea Etsy has implemented to reward shops for providing consistent, high quality customer service.

It has a set of criteria that you must have met for 3 months consistently. If you do that you will receive the star seller badge on your shop for the next month. This can be seen by shoppers and will set you apart from the competition.

The criteria are as follows:

4.8 star rating average in 3 months.
Respond to buyer’s initial messages within 24 hours.
At least 5 orders (that total a minimum of $300USD or £200GBP) within the 3 month review period.
95% of orders dispatched on time, with tracking when needed.

I know it sounds like a lot, but if you are already doing these things to try to provide a good experience for the customer, then getting a star seller badge is a fantastic bonus.

Running a Sale

One of the best ways to encourage potential customers to buy from you is running a sale.

Afterall, who doesn’t love a bargain?

Etsy makes it easy for you to run a sale, on any or all of your products. You can choose the percentage discount, or free delivery, and how long the sale runs for.

You can also create coupons to send to loyal customers after they have made a purchase or favourited one of your listings.

Should you choose Etsy to sell your product?

Now we have gone through everything you need to start selling on Etsy… but is it right for you and your product?

Let’s have a final look at some Pros and Cons of Etsy.

Pros

The biggest pro is the ready-made Audience. You won’t have to start by finding your own customers from scratch.
Simplicity of use and getting started. I know everything we just covered sounded like a lot, but it’s easier than you think and much easier than building your own website.
Safety– Etsy is a large, well-known marketplace, meaning it is well trusted, and can help you if you are faced with any scammers. It also has very secure payments for peace of mind.
Low start up costs– As a beginner, you only have to pay out $0.20 to create each listing. As a business goes, that is a very small start-up cost.

Cons

Lots of fees– Whilst the start-up cost is low, once you start selling, it can feel like the fees are piling up and eating away your profits.
Competition– Etsy has over 4 million active sellers, so no matter how unique your product or niche is, you will probably be facing some stiff competition.
Brand Personality– There are not many opportunities to customise your shop to further develop your brands image.
You are not in control– If something drastic were to happen tomorrow and Etsy shut down, you would lose everything. As opposed to running your own shop which you can always control.

You also have to be very careful to follow all of Etsy’s regulations or they can and will shutdown your shop with little explanation. You can appeal but it is quite a long and frustrating process.

I have been selling on Etsy on and off for years, having both successful shops and complete failures.

Etsy even wrongfully shut my shop down for a time!

I can still confidently say that I believe Etsy is worth it.

There it is!

The Ultimate Beginner’s Guide to making money on Etsy

With this guide you have a great head start!

I made all the mistakes as a beginner so you don’t have to.

If you’re still here, firstly well done! And thank you for reading.

I know you may think its too late to start an Etsy shop because some shops have been running for years.

Whilst the best time to start Etsy was 5 years ago.

The second best time to start Etsy is TODAY!

So push aside the doubts and “what ifs” and just START.

Believe me your future self will thank you!

If you have any more questions about Etsy leave me a comment below or email me at [email protected]

Disclaimer: This post may contain affiliate links and/or referral links which means I may earn a small commission or incentive if you choose to purchase or signup (at no additional cost to you). Please note that I will only ever promote products that I truly believe in and would recommend with or without earning a commission.