@BootifulLabels
As before, your argument in favor of offsite ad fees is self-defeating and, on more than one point, completely outside the context of this thread.
First, let’s not compare apples and kiwis. Tax concerns are irrelevant in making the calculation of fees as a percentage of item price! For the purpose of calculating the “REAL cost of Esty fees as a percentage of item price”, shipping IS a wash unless the seller is making a profit on the shipping charge. Yes, the shipping charge collected from the buyer is treated as income “by the tax man” and the cost of shipping is an expense. Again, unless the seller is making a NET profit on shipping, it’s a zero-sum part of the equation.
You’ve mentioned (several times) that offsite ads come into play on a relatively small percentage of sales. I would like to know the source of that information. While such information may be correct for many shops much of the time, I have first-hand knowledge of shops that have recently had offsite ad fees applied to more than 50% of their sales – in one case, offsite ad fees were applied to 19 of the 21 sales a shop made during the month of December. It’s a certainty that a “2-4%” increase in item prices and shipping would NOT have offset the cost of the fees for that particular shop. For my shop, as of this writing with about 34% of sales attributed to offsite ads, my Etsy fee cost as a percentage of merchandise sold is 26% for the month (Dec. 2024) – for every dollar in merchandise sold, Etsy took 26 cents – more than double the cost without the offsite ad fees. If prices were based on 50% gross margin (100% mark-up), only 24% of total revenue would be left to cover general operating costs and realize a profit. AND, all sales attributed to the offsite ads were comprised of 6 items out of the 85 active items in my shop – 4 of those 6 were my most popular and profitable items in December of 2023 and would have been this in 2024 as well – if not for the ad fees. I didn’t have the other 2 items until very recently. My most profitable items became marginal, at best.
Adding a small percentage to all item prices and shipping charges to cover the cost of the Offsite Ad fees ONLY works when a small percentage of sales are subject to the ad fees and even then ONLY if all items sell in equal or near-equal quantities. While using such a long period as “12 months or more” to determine a price increase may result in a more acceptable (smaller) percentage, it is completely irrelevant -- the method still only works with sales of all items in similar quantities. Without sales of all items in similar quantities, the ad fees will grind away at profits on popular items while the less popular items inherently produce less of the fee-offsetting revenue required to make such system effective.
Consider this: A shop lists items with an item price of $10 plus shipping charges of $5 per item. Anticipating offsite ad fees, the shop owner adds 5% to both resulting in $10.50 and $5.75, respectively. By selling 25 items through offsite ads, the shop realizes additional revenue of $17 (18.75 less Esty’s regular fees) from the 5% price/shipping increase but has incurred $48.75 in offsite ad fees leaving $31.75 not covered by the 5% increase. The shop must make 47 additional sales NOT attributed to offsite ads to cover the remaining amount of offsite ad fees.
It makes absolutely no difference how long Etsy fees have been the same – the offsite ad fees are and always have been an unfair cost to the seller. As Etsy algorithms and AI make the ads more visible and the targeted advertising becomes more effective, seller cost will only increase as the result of more clicks on the ads.
While Esty has done a great job of selling the line that the fees are only applied to a small percentage of sales and “..ONLY on sales that result from an ad…”, it’s simply NOT true. If sales from the ads actually occur so infrequently, how is the program cost effective without gouging the seller for the cost? Not only are the ad fees applied to the “advertised item”, but to all items a shopper buys after clicking on one of the ads. It’s completely contrary to the principle of the most common promotion strategy – appealing to buyers with the hope that once they’re in the store, they’ll buy items other than the advertised (and many times, sale-priced) item. The offsite ad program effectively hacks the price of everything purchased – the buyer pays the same, the seller gets less, and Etsy gets the benefit.
Unfortunately, many sellers do not understand the cost in relation to item price. Regardless of any amount of double-speak or sugar-coating, the REAL cost of Etsy fees AS A PERCENTAGE OF ITEM PRICE can easily approach or exceed 30% when the offsite ad fees come into play. Regardless of how long it’s been that way, it’s excessive! As mass-merchandisers steadily migrate to Etsy, the burden on the small sellers to remain competitive and profitable increases with every passing day. Etsy should re-think the Offsite Ad Program before the site becomes another eBay!
