ETSY ANNOUNCEMENT: Effective July 16, Etsy’s transaction fee will increase from 3.5% to 5%

[DecorDesignsAndMore]

ETSY ANNOUNCEMENT: Effective July 16, Etsy’s transaction fee will increase from 3.5% to 5% and it will also apply to the cost of shipping. All other fees, including listing fees, will remain the same.

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5% minus 3.5% = 1.5%

On $100 sale a 1.5% increase = $1.50
On $50 sale a 1.5% increase = $0.75
On $25 sale a 1.5% increase = $0.38
On $10 sale a 1.5% increase = $0.15

https://www.etsy.com/seller-news/2018-june-update?campaign_label=everybody&utm_source=adhoc&utm_camp...

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Etsy - "We’re planning to invest even more in making Etsy the best place to run your creative business. To help make this happen, we’re updating our transaction fee to 5%, and it will now also apply to the cost of shipping. This change goes into effect July 16, 2018."

The PROS and the CONS of the 1.5% increase . . .

The CONS = a loss of $0.15 per sale per each $10 sale amount including shipping.

What this means is that Etsy Sellers will best consider that this is not just a 1.5% increase in their cost of doing business and a 1.5% reduction loss in the sale's profit margin . . . it really means an additional charge of 5% selling commission on shipping charges being added to their sale costs as well as the 1.5% increase in the product sales price.

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"We’re introducing optional monthly packages that give you access to a suite of new tools designed for shops at different stages of growth. You can still access all the tools you know and love without paying for a monthly subscription and you can switch at any time."


The above will be a subject of another post here for members later.


The PROS = Etsy will be increasing their amount of revenue from sales from 3.5% to 5% and just under 43% increase in this revenue. In addition Etsy will be receiving new revenue based on the 5% charged on shipping amounts.


If the shipping amount is $3.00 then Etsy's revenue will increase by 5% of $3.00 and $0.15 per sale made. If the shipping amount is $5.00 then Etsy's revenue will increase by 5% of $5.00 and $0.25 per sale made. If the shipping amount is $10.00 then Etsy's revenue will increase by 5% of $10.00 and $0.50 per sale made.


In other words, Etsy's revenue will increase somewhere over 50% on selling commissions depending on the cost of shipping.

Before this change it cost the Etsy seller only the selling commission on the amount of the item and with this change it will cost the Etsy seller the selling commission on the amount of the sale including shipping.

So financially there is no longer a benefit from the Etsy seller to have shipping added to the price of them item. The selling commission will be the same either with or without shipping included.

Guiding Question --- "Maybe the Etsy seller may want to considering including the price of the shipping now with the price of the product; and, thus be able to offer the price with Free Shipping (AKA shipping included)?"

Another thread post here later will present the PROS and the CONS of offering Free/Including Shipping . . .

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Members; please share your thoughts and analysis below; thank you . . .

[DecorDesignsAndMore]

For more information on this you may wish to visit this ANNOUNCEMENT DISCUSSION here . . .

Important updates to selling on Etsy: Admin Q&A thread

https://www.etsy.com/teams/7722/discussions/discuss/18737155/

[DecorDesignsAndMore]

What is the rationale for charging a fee on shipping costs?

"This practice helps to promote fairness and transparency in the marketplace by removing the incentive for a seller to "hide" part of their pricing by having a low item cost and a high shipping price."


[& increase Etsy's revenue per sale too]

[DecorDesignsAndMore]

NEWS ARTICLE: "Online marketplace Etsy soars after increasing the fees it takes from each sale"

https://www.cnbc.com/2018/06/14/etsy-stock-soars-after-increasing-take-rate-revenue-guidance.html

Etsy said Thursday it was raising the transaction fee it charges when a seller makes a sale, effective July 16.

It increased its full-year revenue growth estimates to 32 percent to 34 percent as a result.

Shares rose as much as 35 percent Thursday.

[DecorDesignsAndMore]

NEWS ARTICLE: Etsy Explodes 26% After Seller Fee Hike

https://www.thestreet.com/investing/etsy-soars-after-seller-fee-hike-14622702

[DecorDesignsAndMore]

NEWS ARTICLE: Etsy thinks raising fees will lure sellers away from eBay

It sounds backwards, but there's logic to it.

https://www.engadget.com/2018/06/14/etsy-thinks-raising-fees-will-lure-sellers-away-from-ebay/

Normally, a company taking a larger cut of your sales is a bad thing. Etsy, however, thinks differently. As part of a sweeping set of changes, the craft marketplace is raising the seller fee from 3.5 percent to 5 percent (which now includes shipping) on July 16th as part of an effort to "invest even more in bringing buyers to Etsy." If there's more revenue, the company argued, it could dramatically hike its advertising outlay (spending is jumping 40 percent in 2018 alone) and attract more buyers. The company has even teamed with NBC on a competitive reality show, Making It, that might reel in people who have never heard of Etsy before.

[DecorDesignsAndMore]

DOMESTIC SHIPPING: Based on domestic shipping costs.

INTERNATIONAL SHIPPING: Based on international shipping costs.

VAT (Value Added Taxes) will be extra for the buyers.

[DecorDesignsAndMore]

FROM: https://www.ecommercebytes.com/C/abblog/blog.pl?/pl/2018/6/1528979451.html

Etsy Raises Commission Fees and Adds Shipping - Etsy is raising its commission fees, which will now include shipping in addition to the selling price.

EXCERPTS:

In dollars and cents, today's announcement means an Etsy seller who lists an item for $30 and charges $3 for shipping and currently pays $1.05 in transaction fees will pay $1.65 under the new fee structure - 60 cents more, or an increase of 57% in this case.

That's significant, and some sellers may revisit their own pricing to see if they should raise prices - and determine if they should raise prices to build free shipping into any of their products. They have until July 16th before the new fees take effect.

To put it in perspective, the average commission fee on eBay is 10% of the selling price plus shipping - so that $30 item with $3 shipping would incur commission fees of $3.30, while Amazon Handmade charges a 15% ($1 minimum) "referral" fee - and beginning in 2019, Amazon will require sellers to pay $39.99/month for a Professional selling plan. (Note that only sellers who participate in Amazon Handmade have access to the fees page.)

Etsy explained the reasoning behind the move in today's announcement:

--- Why is Etsy raising fees? ---

We're updating our transaction fee to help us invest more in bringing buyers to Etsy, building tools that make it easier for sellers like you to run your shop, and providing the support you need to grow. As always, our goal is to make Etsy the best place for running a creative business online, and we think these changes will make Etsy even better.

Etsy said it plans to increase its marketing budget this year by at least 40%. In 2017, Etsy spent $78 million in marketing to bring buyers to the site; it plans to spend over $110 million in 2018.

It won't cost sellers more to list on the site. The question is whether Etsy's increased marketing budget will benefit every seller equally - or if some sellers will simply pay more in commission fees for the same amount of sales they're already getting.

One thing eBay learned when it began charging commission on shipping is that every year, it gets a fee increase without having to announce a rate hike. That's because every year, all major shipping carriers raise their shipping rates. Etsy will likewise benefit by receiving more in fees every time shipping rates increase - which is a double-whammy for sellers.

ARTICLE: Etsy Raises Fees, Promises to Boost Marketing

https://www.ecommercebytes.com/2018/06/14/etsy-raises-fees-promises-to-boost-marketing/

Etsy is raising seller fees and introducing new subscription plans while promising to boost its marketing budget to bring more buyers to the site. One positive thing worth noting: listing fees are not increasing. But transaction fees (commissions) are rising from 3.5% to 5%, and they will begin including not just the selling price, but shipping as well.
An Etsy spokesperson told EcommerceBytes, “These changes were designed not only with the input of our sellers, but with the benefits to our sellers in mind. That reflects our focus on the fact that Etsy is only successful when our sellers are successful. That’s one reason why we are making the subscription bundles optional. We want sellers to try them, to see value in them, and continue to invest in their success on Etsy.”

More information here: https://www.ecommercebytes.com/C/abblog/blog.pl?/pl/2018/6/1528979451.html

What do you think about this?

[DecorDesignsAndMore]

First, "What do you think about this?"

and,

Second, "What will you do about this for your shop's benefit?"

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What about what it costs for you to ship? Domestically? Internationally?

Your shipping costs will now be 105% of what you charge your buyers for shipping.

Your product costs will now be 101.5% of what you charge your buyers.

(approximately)

EXAMPLE

If you selling price is $10.00 then multiply by 1.015 to get $10.15

If your shipping price is $5.00 then multiply 5 to get $5.25

$0.15 plus $0.25 equals $0.40

$0.40 divide by $10.00 product price equals 4% increase plus a little more . . .

Easy formula is just increase your selling price by 5% or just a little more . . .


$10.00 times 1.05 equals $10.50 will be your new item selling price.


Maybe consider increasing your item price to say $10.95 so you will have an extra cushion as your other costs increase during the year and next year?


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Should you consider paying another $10 per month for a better tooled shop that Etsy will be offering? What did you do with your option to add Pattern?



Maybe just wait and see?

[DecorDesignsAndMore]

Interesting Article . . . that might be beneficial to review to make sure you are covering all of these important areas . . .

6 Things to Do Before Opening an Etsy Shop

https://www.businessnewsdaily.com/8523-etsy-shop-opening-tips.html

and, how about this article to compare Etsy benefits to others . . .

12 Etsy Alternatives for Crafty Entrepreneurs

https://www.businessnewsdaily.com/5287-etsy-alternatives-handmade-sites.html

plus, with the change in "net neutrality" which will be best for you?