How to Make Money on Etsy: A Beginner-Friendly Guide
Note: The term ‘Etsy’ and other Etsy graphics are trademarks of Etsy, Inc. This article is not endorsed by Etsy.
Etsy is an online marketplace that’s full of potential buyers (81.9 million of them, to be exact) and a ready-made audience looking for exactly the type of products you make.
For both experienced small business owners or those of you who are selling your creations for the very first time, starting an Etsy store is an exciting step in turning your hobby or creative passion into a money-making endeavor.
In this guide, we’ll teach you everything you need to know about how to make money on Etsy—whether you’re looking for a side hustle to your day job or you’re trying to turn your craft into a full-time career.
What is Etsy?
Etsy is an online marketplace focused on handmade, vintage, and craft items. For artists and crafting connoisseurs, the creation of Etsy in 2005 was an opportunity to bring their handcrafted products to a wider audience, and the platform has continued to grow at a rapid pace ever since.
If you’re thinking about how to make money selling on Etsy, there are plenty of opportunities out there. In the final quarter of 2020 alone, customers from all over the world spent a total of 3.3 billion USD on the site and more than 61 million individuals made a purchase (that’s more than the entire population of Italy).
Do you actually have to make something to sell on Etsy?
The focus for Etsy has always been on an artist-centered community, where creators can sell their products that customers can’t find in brand-name retail stores. With that in mind, you might be wondering how to make money on Etsy without making anything, and that’s certainly more possible than it was when the platform was first founded.
You’re able to use a third-party manufacturer to craft the final product, but as the seller, you must show your involvement in the creative process. Uploading a unique design that you’ve created and using an outside manufacturer to print this onto a bag or t-shirt is acceptable under Etsy’s guidelines.
Why should you start an Etsy shop?
If you’ve never done something like this before, working through an established platform like Etsy—a place that consumers know and trust—means you’re more likely to get discovered and make a sale (which is an essential part of how to make money on Etsy fast). Here’s why.
1. You can skip the payment headaches
While you’ll need to get your shop up and running, selling through an existing platform means you can skip the hassle of figuring out secure payments for your customers.
Etsy customers have a secure member login and there are a number of safe ways for them to pay directly through the platform. When you’re eager to learn how to sell on Etsy and make money, the less time you need to spend on upfront setup, the better.
2. You can get in front of an existing audience
Another perk is that there’s a whole audience ready and waiting for the type of products you sell, which means that you can spend less time marketing and more time creating.
For example, if you’re thinking about how to make money on Etsy as a graphic designer, you can rest assured that the site’s algorithms are helping users to find sellers just like you quickly and easily.
3. You don’t have to invest a ton of money
There’s also the cost to consider. Running your own website isn’t cheap—there’s hosting, domain, and management fees to think about and those can become pricey when you’re a brand new business. Etsy takes care of this for you. You’ll still need to pay some fees to use Etsy and sell your products, but it often works out to be cheaper than self-hosting. That means that more of your budget can be used for marketing or product development instead.
4. You can use it as a supplement to your other sales channels
If you already have a website of your own, you can make use of a multichannel selling strategy that allows potential customers to find you and purchase your products all across the internet.
There are significant advantages to a multichannel selling approach, like creating opportunities for multiple streams of income and diversifying your risk across separate channels. We’ve all experienced the frustration of not being able to access a site during a large sale. If your site goes down, having an Etsy store can be the ideal backup. You’ll also look like a more established brand if customers can find you in more than one place, giving you a level of credibility that sellers on a single platform may not have.
Working across different channels also helps to improve your conversion rate and increase your customer retention by meeting your potential customers wherever they are. You’ll be able to target certain segments of your customer base uniquely on each platform, further increasing your chances of a sale. Whether you’re looking for how to make extra money on Etsy or simply trying to cast a wider net, operating on a multichannel basis is an excellent approach.
What types of products can you sell on Etsy?
No matter what type of products you make, you can find a home for them on Etsy. From handmade furniture, custom t-shirts and hats to engraved jewelry, keychains or personalized calendars, your options are limitless.
We aren’t here to give you an exhaustive list of what you can sell on Etsy, but when you’re thinking about what kind of products are most popular, they typically fall into the following categories:
- Art & Collectibles
- Crafts and Supplies
Let’s take a closer look at some of the most popular items to sell on the platform.
Art and digital art
As an artist or designer, the first decision that you’ll want to make is about the type of artwork you want to sell, and that will likely come down to the kind of creator that you are.
If you spend hours creating single pieces, you can charge more as they’re one-of-a-kind. But if multiple buyers are interested in that single piece, you’ll ultimately only be able to sell it to one of them. And if there’s nothing else they’re interested in, they could walk away without spending any money at all.
When you’re trying to find ways to create a consistent income from your art, learning how to make money selling digital art on Etsy can be useful—as you can sell the same design or product as many times as you’d like.
Taking high-quality photographs of your work carries a lot of weight on Etsy. For repeated designs specifically (where you’re selling the same design over and over again), spending the time to craft an excellent product page, including clear photos and a detailed listing, will help you sell that same artwork to multiple customers.
Prints and photos
Prints and photos can be sold repeatedly, so you’ll need to decide whether to sell your work framed or unframed if you opt for a physical product, or whether a digital download is the best way to go.
If you’re not a photographer, you can still learn how to make money with public domain images on Etsy. These images are no longer under copyright restrictions, which means that anyone can use them. But remember, while this is an advantage in helping you to cut down on product creation time, anyone else can also use the same image as you, which makes standing out in the crowd more difficult. You can make your designs more unique by turning these images into something else, like putting text around or over the top of the image, or editing them with different colors or effects. That way, you’re still adding your own artistic flair to make something original.
Source: Whispering Winds Shop
One of the most competitive categories for Etsy sellers is jewelry. When you’re working on how to make money selling jewelry on Etsy, the best approach is to make yourself as unique as possible. Whether that’s in the design that you use or the materials that your products are made from, find a way for your store to shine.
Don’t offer too much variety in your jewelry style though. Customers gravitate toward particular stores because they’re drawn to that style, and they’re more likely to become repeat customers as a result. You can offer customization or personalization options (which are incredibly popular with customers), but try to stick to only one or two variations for each product.
Interested in knowing how to make money selling stickers on Etsy? Designing stickers on Canva or Procreate for iPad is straightforward and simple (perfect for those still working on their artistic skills), which can help you to turn around new products quickly.
Logos, bumper stickers, and die cuts are the most popular types of stickers that Etsy customers tend to buy. They’re one of the fastest ways to sell lots of products at a low manufacturing cost and, just like artwork, the designs can be resold.
Using a print-on-demand (POD) service like Printful is a great solution if you want to avoid having to create and stock hundreds of stickers at home. Instead, whenever your customer places an order, the stickers will be printed and handed for shipping by Printful.
When you’re trying to find out how to make money selling clothes on Etsy, there are a number of different avenues that you could take. Vintage or upcycled clothes have become very popular on the site, but making and selling your own handmade creations is also a great business model.
Learning how to make money on Etsy selling t-shirts is likely one of the best ways to get started on the fashion side of the site. The best designs usually feature funny sayings and memes or are customizable for bridal and baby showers.
What is a print-on-demand (POD) service?
Once you’ve decided what you want to sell on Etsy, one of the first areas you’ll need to nail down is how you’re going to stock your shop and build up your merchandise. That’s where POD services come in.
Printful integrates directly with your Etsy shop, taking care of all of your customer fulfillment and shipping needs. Once you’ve created your Etsy account and published your first few products, Printful’s system takes over so that you can spend your time managing your online store and marketing your products.
Printful doesn’t charge any monthly fees (you’ll only be charged when an order is fulfilled) and everything is white-labeled. That means no Printful logos are placed on any of your products. It’s all your own designs and branding, just like it would be if you had created and shipped the product yourself. You can start to make money with Printful on Etsy in a few quick steps.
Your guide to setting up your Etsy shop
You now know why you should start an Etsy shop, what types of products to sell, and how a POD service can help.
But, there’s another big thing you need to figure out: how to actually get your Etsy store up and running. Fortunately, Etsy’s incredibly user-friendly for sellers and makes it easy to launch your own shop.
Head to the “sell on Etsy” page, log into your existing account, or create one. Etsy will then walk you through the further steps you need to take to become a seller on the platform.
Beyond actually creating your shop on Etsy (and eventually your products), there are a few other nuts and bolts you’ll need to take care of. We get that it’s not exactly the most fun part of creative entrepreneurship, but it’s important nonetheless.
You might be asking yourself “how much money can I make on Etsy before I have to buy a business license?” That depends on exactly where you’re located, and we’re not just talking about the state—there are some cities with rules that overrule state regulation.
Etsy itself doesn’t require you to have a business license, but keep in mind that you may need to register for sales tax in your state or city.
Do your research and see what rules apply to where you live specifically. If you ship your products to people abroad, check whether or not sales tax should be charged to customers outside of your own country too.
Taxes and fees
If you’re serious about turning your Etsy shop into an established business, you may be wondering “how much money can I make on Etsy before I have to pay taxes?”
Again, this is all going to depend on where you live. For US-based sellers, any income that you earn from Etsy will be considered business income and will need to be reported on your annual Schedule C tax form. Etsy will report your gross (or pre-tax) income via a 1099 form to the IRS and it’s important that you check that this matches your own income records when you receive this.
Since every country and state has different tax regulations, how much money you need to make on Etsy to have to do taxes will vary based on the country you’re selling from. However, earning more usually means paying more taxes. The good news is that you’ll be able to deduct expenses to lower your overall taxable income. This can be anything from the cost of materials used to make your products, any advertising that you’ve paid for, and even shipping charges.
You’ll also need to be aware of the payment processing fees that a credit card processor will charge, along with the fees that Etsy charges for using their service. While there’s no seller membership cost on Etsy (unless you opt for the premium plan), you’ll be charged 20 cents to list each item and there’s also a transaction fee of 5% for each product that you sell. While these fees can all be written off as expenses too, that’s something you’ll need to factor into your business budgeting.
If you’ve never had to deal with self-employment tax before, here’s a quick example for you to work from:
- During one year, you made $30,000 by selling your products on Etsy. This is your total before factoring in any expenses or taxes.
- The cost of materials that you used to make your products was $10,000.
- Your Etsy fees (listing and payment processing) were $1,400.
- This means that your total business expenses came to $11,400.
- To calculate your taxable income, use the formula:
- Sales Total – Expenses = Taxable Income
- Sales Total – Expenses = Taxable Income
- Your taxable income for this tax year would be $18,600. This means that you’ll only be paying taxes on this amount, not the whole $30,000 that you earned.
Finding out how to offer free shipping and still make money on Etsy is an important part of becoming a seller. Customers love free shipping (in fact, 75% of them say they expect it on their orders). But free shipping can significantly cut into your profits if you’re not careful.
One way to handle free shipping is to include the shipping fees in the product price. You’ll need to work out an average cost for shipping each product to long-distance locations compared to local customers so that you can find a middle ground and fairly charge everyone for those products. Even if you’re using Printful to ship your products, building this into your product cost means that you’ll be able to keep more of your profit for every product you sell.
We wouldn’t recommend providing free shipping to international customers, as those costs can add up very quickly. As you’ll be charging the shipping cost to the customer, offering them a small discount when they order multiple products to acknowledge the higher shipping fee can be a great way to encourage overseas shoppers to buy from your store.
An important point to note: only stores with free US shipping receive priority in the Etsy search algorithm, so it’s really only worth it to offer it to US-based customers.
Starting to make money on Etsy with thoughtful marketing
With the basics out of the way, you’re ready to launch your shop and start earning some income from your creative endeavor. How long it takes to make money on Etsy is really down to you and a little bit of luck, but here are a couple of tips and strategies that you can try.
Marketing and followers
There isn’t a set formula when it comes to how many followers you need on Etsy to make money. It all comes down to good marketing and having a product that people want.
Make sure that you’re tagging your products and writing keyword-rich descriptions. This will help the Etsy search algorithm pick up your products and highlight them to potential customers who are searching for something similar.
You can even make use of broad hashtags on your social media accounts to drive people to your Etsy store. Cross-promote your products and store as a whole on your social media channels to help draw your audience in from different places around the web. If you do in-person events, make sure that you have business cards with a URL for your Etsy store printed on them. You never know when that customer could become a repeat shopper.
Collaborating with other sellers is also a good way to cross-promote your products to new audiences and benefit from the Etsy community. You’ll be able to benefit from getting your products in front of a new and possibly well-established audience. Not only that, but you’ll also be seen as a trusted seller by that audience and other sellers, which is a great way to boost your name within the Etsy community.
Get creative when it comes to your marketing and try different approaches until you find success.
Products and stock
How many listings do you need to make money on Etsy? Well, that’s also not an exact science. The recommendation from Etsy is to have at least 20 listings when you start your shop so that customers have a few different options to choose from and for you to gain some attention. But having hundreds of items isn’t necessary and can even give your customers choice paralysis (where they’re overwhelmed by the number of options).
So it’s not just about the number of products you have in your shop, but how you make them different from each other and the products of other Etsy sellers.
Make sure that all of your descriptions are unique for each product, even if they’re somewhat similar items. Think about what makes the product special. Is it made from a specific material or can it be customized in a particular way? Think about how different audiences might be searching for these types of products and add those keywords and phrases into the descriptions.
Embrace your creativity (and make some money too)
Selling your products on Etsy is the perfect way to build a business, regardless of whether you’re trying to become a full-time creator or make some extra cash on the side.
As with anything, there’s a little bit of trial and error involved (and that’s half the fun of trying something new anyway). Keep testing different strategies until you find the ones that work for you and you’ll soon start to see your Etsy shop pulling a profit.
Read next: How to Sell Printful Products on Etsy