Understanding Etsy vs Shopify fees is important for choosing which platform is right for you. You also need to know these details to manage your costs and profitability.
So, let’s dive into some fee breakdowns and comparisons so you can drill down to the pros and cons.
Importance of Understanding Platform Fees
Fee structure is a crucial consideration when choosing between the Etsy and Shopify platforms. Knowing what Etsy vs Shopify fees you will pay helps you accurately calculate your profit margins and pricing. This is how you will determine your profitability.
Fee structures also help you choose which platform best aligns with your business model and budget. Then, you can look at different strategies to cut unnecessary costs and maximize your profits.
Breakdown of Etsy Fees
Etsy Listing Fees
Etsy gives sellers 40 free listings per month. Etsy listings typically expire after four months, so they have to be renewed. Sellers need to pay a listing renewal fee if the item doesn’t sell within that period.
Etsy Transaction Fees
Etsy charges a two-fold transaction fee. This is composed of a percentage of the item price of each sale, plus a fixed fee. The percentage varies according to the item’s category.
Etsy Payment Processing Fees
Etsy partners with independent payment processors like PayPal and Payoneer, which charge their own fees for payment processing. These fees also vary based on your account type and the customer’s location and payment method.
Additional Etsy Fees
Etsy charges additional fees for certain features under their add-on services.
The Etsy Plus subscription plan offers unlimited listings, customizable shop banners, advanced shop analytics, and priority customer support. The cost varies depending on your location and subscription duration.
You can pay for your listings to be featured in Etsy’s search results to reach a wider audience. The fee varies based on how long you run the promotion.
Etsy’s Offsite Ads program promotes listings on external platforms. You pay on a cost-per-click model.
You can also get access to experimental features and tools with Etsy Labs. Not all of them come with additional fees.
Etsy allows sellers to use a custom domain name for a fee that covers purchasing the domain and setting it up.
If you want to create shipping labels through Etsy’s partners, you can get discounts. If you choose your own carrier, you will pay based on their rates for the weights and dimensions of your packages.
Breakdown of Shopify Fees
Shopify doesn’t charge listing fees or transaction fees.
Shopify Payment Processing Fees
Shopify has its own payment processor, known as Shopify Payments. This typically offers lower fees than third-party options. The fees vary based on your location and the specific payment methods you accept. You can enjoy lower fees, in some cases, if you have higher transaction volumes.
External payment gateways that you use with Shopify, like Stripe or PayPal charge their own fees. These can vary based on your location, payment methods you want to accept, your transaction volume, etc.
Additional Shopify Fees
Shopify offers a lot of different add-on features to enhance your online store.
Shopify Apps has over 8,000 tools that can add functionality to your store. The cost of these apps varies depending on how complex it is and what features it offers.
The Shopify Theme Store offers more than 160 customizable and mobile-responsive themes. They are optimized for online selling and have pre-loaded features. Some are free, and some premium themes can cost a lot.
Shopify sellers can buy and manage domain names through the platform. The cost depends on the domain name and the registrar you purchase from.
If you want to allow other people access to your Shopify store, you need to pay a fee to create staff accounts.
If you want to create shipping labels from within your Shopify store, you will pay based on the shipping carrier and the weight and dimensions of your package.
Cost Comparison: Etsy vs Shopify Fees
Initial Setup Costs
For the most part, Etsy has lower initial setup costs than Shopify. If you stay within the limits of the free listings, you won’t pay any listing fees, unless you renew listings. To sell on Shopify, on the other hand, you must purchase a monthly subscription. You may also need to buy a premium theme, depending on how much you want to customize your store.
Etsy vs Shopify fees for using custom domains depend on the domain you want and the registry you buy them from. The same goes for additional store functionality. The costs for Etsy Plus and Shopify Apps vary. With the right Shopify premium theme, though, you may not need extra features or integrations.
Ongoing Monthly Costs
Etsy also has generally lower ongoing monthly costs compared to Shopify subscriptions.
Aside from any Etsy Plus monthly fee for additional features, you only pay for listing renewal on listings you want to keep live. Shopify requires a monthly subscription. Renewing domains costs on both platforms, and depends on your domain registrar.
Transaction Costs and Profit Margins
Etsy charges a percentage and a fixed transaction fee on each sale, while Shopify doesn’t charge any transaction fees directly.
Scaling Your Business: Which Platform Is More Cost-Effective?
Etsy vs Shopify fees can be big factors in determining the more cost-effective platform for your business. Especially if you want to scale, you need to understand the greater costs for doing bigger business.
Higher sales volumes on Etsy mean that transaction fees will pile up. Having a Shopify subscription can be more cost-effective in comparison. That can also depend on the type of products you sell, though. Etsy has strong community for handmade and vintage items, and that’s priceless.
Consider your longer term business goals, too. If you want to build a strong brand, you’ll probably want to have a unique store design and offer a more customized shopping experience. Shopify is the more flexible option in this case, especially if you sell a wider range of products.
Pros and Cons of Etsy vs Shopify
Advantages of Selling on Etsy
Etsy is a niche marketplace that’s great for sellers whose target audience is into handmade, vintage, and unique items. Etsy shoppers trust this platform to deliver on these one-of-a-kind goods. Sellers can also get support, advice, and networking opportunities within the Etsy community.
Etsy has built-in SEO optimization tools for listings as well as other marketing tools for product promotion. They also offer integrated payments and discounts on shipping labels if you buy through the platform.
Disadvantages of Selling on Etsy
Etsy transaction fees can get heavy, impacting profit margins, especially on low-priced items. Since you get very limited shop customization options, it can be hard to stand out and attract higher-end buyers. You will also face high competition on Etsy in popular categories.
Advantages of Selling on Shopify
Shopify is great for selling a wide variety of product types. It’s more about helping rands to stand out than it is being part of a popular marketplace where you can find customers.
Shopify offers sellers a high level of customization and control. You can use one of many flexible templates to build a store with your unique branding.
While Shopify isn’t inherently SEO friendly, it’s not bad for search engine visibility. You can also use the available built-in marketing tools to boost your presence. Shopify offers email marketing, social media integration, and abandoned cart recovery, among others.
Shopify is designed for businesses that will scale at some point. This means that you will easily be able to handle increased sales and traffic to your store.
Shopify Payments makes handling sales so much easier, and it’s typically cheaper than third-party payment processor fees. Shopify also takes care of any issues, which is more convenient than handling glitches yourself.
Shopify’s inventory management system is really efficient, and you can even automate processes like order fulfillment and tracking updates.
Disadvantages of Selling on Shopify
Shopify typically costs more at first because of the monthly subscription fee. You might also incur additional fees for premium themes or apps. Shopify can be more complex to learn than Etsy because of all the custom options.
Choosing the Right Platform for Your Business
Factors to Consider When Deciding
Etsy vs Shopify fees are a major factor when deciding what the right platform is to build your business.
Remember that Etsy is designed for selling handmade, vintage, and otherwise unique items. Shopify is ideal for a wider range of products. Etsy offers a curated audience while Shopify offers more customization so you can build a strong brand identity.
If you’re just starting out with niche products, Etsy will cost less. This platform is also easier to use for beginners in the ecommerce space. As you work on expanding, consider a Shopify store to limit transaction fees and reach wider audiences. Note that greater customization options means that you need more technical knowledge.
Tools and Resources to Calculate Your Costs
The official Etsy Fee Calculator that sellers can access from the “Price & Inventory” section of a listing. It helps to estimate transaction fees based on the product’s category and price.
Shopify also has their own official pricing calculator that helps sellers determine what monthly plan to get based on their business needs.
If you use third-party payment processors, they may also have fee calculators on their websites that you can use.
Other than these, you can find a variety of Etsy fee calculators online to estimate fees and help you set profitable pricing.
FAQs
How do Etsy’s Offsite Ads fees compare to Shopify’s advertising costs?
Etsy’s Offsite Ads platform operates on the CPC model, so you pay based on how many people click your ad. Since it’s focused on promoting only Etsy listings, it could come out more expensive.
Shopify’s advertising features can promote products that you sell on any ecommerce platform. The costs to use marketing features on Shopify depend on what specific tools and services you use.
The only way to really know is to try selling on both platforms to test the differences and see what works best for your business.
Can I sell on both Etsy and Shopify to reduce fees?
Because these platforms have their own strengths, you can take advantage of both. Just make sure you have a solid plan that mitigates their weaknesses. And make sure you can manage the time and effort it will take to operate two separate platforms.
For example, selling unique items on Etsy to a curated audience is great. Shopify is better for reaching a much wider audience to sell a variety of products, and curating your own brand following.
How do I decide between Etsy’s transaction fees and Shopify’s monthly subscription costs?
Generally, if you sell a lot of items, particularly lower-cost items, Shopify can turn out less expensive. If you need access to a pool of loyal shoppers and are targeting a specific niche market, Etsy is worth the transaction fees.
What are the tax implications of selling on Etsy vs Shopify?
Tax considerations vary depending on your location, business structure, sales volume, and other factors. We recommend consulting with a tax professional to get specific advice on your situation.
Generally, you should know that Etsy collects sales tax in states that require it. Shopify does not. Ultimately, you are still responsible to remit the correct amounts, either way.
Sellers must pay income tax no matter what platform they use. They must also pay payroll taxes for any employees.
Are there any hidden fees on Etsy or Shopify that sellers should be aware of?
Some Etsy fees that might not be obvious include listing renewal fees, custom domain fees, third-party payment gateway fees, and fees for additional features on Etsy Plus.
The Shopify fees that could creep up on you include app subscriptions, theme costs, and third-party payment gateway fees.
What Is EcomBalance?
EcomBalance is a monthly bookkeeping service specialized for eCommerce companies selling on Amazon, Shopify, Ebay, Etsy, WooCommerce, & other eCommerce channels.
We take monthly bookkeeping off your plate and deliver you your financial statements by the 15th or 20th of each month.
You’ll have your Profit and Loss Statement, Balance Sheet, and Cash Flow Statement ready for analysis each month so you and your business partners can make better business decisions.
Interested in learning more? Schedule a call with our CEO, Nathan Hirsch.
And here’s some free resources:
- Monthly Finance Meeting Agenda
- 9 Steps to Master Your Ecommerce Bookkeeping Checklist
- The Ultimate Guide on Finding an Ecommerce Virtual Bookkeeping Service
- What Is a Profit and Loss Statement?
- How to Read & Interpret a Cash Flow Statement
- How to Read a Balance Sheet & Truly Understand It
Conclusion
Knowing what Etsy vs Shopify fees you might need to pay on a regular basis can make a big difference. Fees usually factor into deciding what to sell, where to set up shop, and what pricing strategy to use. We hope this rundown of the basics helped you make the best choice for your business.
