How to calculate Etsy profit, including your labor

01 / Start with the whole order

The per-order profit formula

Start with what the buyer paid for the item and any shipping or gift-wrap charge you collected. Subtract discounts and refunds, then subtract every cost that belongs to making and fulfilling that order.

For a useful comparison, calculate margin as profit ÷ net sales revenue × 100. Here, net sales revenue means the item and buyer-paid shipping or gift-wrap amounts after discounts and refunds. Do not count sales tax Etsy collects from a buyer and remits as your revenue. This is a planning measure before income tax; your own accounting treatment may differ.

Keep two numbers if you need them: cash left before paying yourself, and profit after the labor allowance you set. The second helps show whether the price pays for your time as well as your supplies.

02 / Give your work a cost

A practical way to value your labor

Choose an hourly target that makes sense for your shop and the work involved. There is no single rate that fits every seller. Use a rate you would be comfortable paying for the work, or a target for what your own working hour should earn.

1. Time the work attached to one sellable item. Include cutting, making, finishing, quality checks, personalization, and order-specific packing.
2. For batches, divide total hands-on minutes by sellable units. If a batch takes 180 minutes and yields 6 good items, use 30 minutes per item.
3. Multiply hours by your chosen hourly target. A 30-minute item at $24 per hour has a $12 labor allowance: 30 ÷ 60 × $24.
4. Spread one-time product work deliberately. If you include product photography, listing setup, or design time, divide it across a reasonable estimate of sellable units and revisit that estimate as sales come in.

Do not count the same time twice. If your hourly target already includes paid leave, benefits, or other labor overhead, do not add those again under a separate cost line. Otherwise, account for business overhead separately and consistently.

03 / Build the cost list

Count the costs that travel with a sale

Use one line per real cost. A complete estimate usually includes:

• Materials and componentsUse the amount consumed by one sellable item, including normal waste.
• Your laborApply your target hourly rate to the per-item work time.
• Packaging and insertsInclude the box, mailer, padding, label, tape, and any included extras.
• ShippingInclude postage or a label you pay for; subtract what the buyer paid only by counting that charge in order revenue.
• Marketplace and payment feesCheck listing, transaction, processing, regulatory, deposit, and currency fees that apply to your shop.
• AdvertisingTrack Etsy Ads spend separately from an Offsite Ads fee charged on an attributed order.
• Other order and shop costsAllow for personalization supplies, replacement risk, and a consistent share of tools, software, studio, or insurance costs.

Which Etsy fees should you check?

Etsy currently lists a $0.20 USD listing fee and a 6.5% transaction fee on the total order amount in your listing currency; the transaction fee applies to shipping and gift wrap charged to the buyer. Listing renewals and additional quantities can add listing fees. See Etsy’s fee and tax guidance.

Etsy Payments processing is a percentage plus a fixed amount that varies by the country of your bank account. For example, Etsy’s published United States schedule currently lists 3% + $0.25 USD per order. Processing is based on the sale price, including shipping and any applicable sales tax. Fees such as regulatory operating, currency-conversion, deposit, or taxes on seller fees may apply in some regions. See payment processing rates by country.

Offsite Ads are separate from your own Etsy Ads budget. Etsy lists 15% on an attributed order for shops below its $10,000 USD threshold in a consecutive 365-day period and 12% once a shop reaches that threshold, with a $100 USD per-order cap. Shops that reach the threshold are required to participate; sellers below it may be able to opt out. Check Etsy’s current Offsite Ads policy and your Shop Manager for your status.

These are sourced fee terms, not a promise of the amount Etsy will charge your order. Rates and fee bases can depend on your account country, listing currency, tax handling, order details, and policy changes. Confirm the current terms in your Etsy Payment account before setting a price.

04 / Work one order through

Illustrative example: a handmade item

This example uses a $42 item price and $5 buyer-paid shipping, for $47 in order revenue. It assumes one item, no discount, refund, buyer tax, or Offsite Ads attribution, and a US seller bank account. The fee terms below were checked against Etsy’s official pages on October 27, 2026. All non-fee costs and ad/overhead allocations are sample estimates, not researched prices or recommended rates.

The point is not that these sample costs fit your shop. Replace each estimate with your own order, material, time, and fee data. If an Offsite Ad is attributed, add the applicable fee; if you ship internationally or collect tax, check the fee base and rate for that transaction.