Etsy after four months

[bstark]

So far on Etsy, in 112 days since first sale, I have sold 77 items. I made a total of 145 items. I absolutely love working in my shop, and can't wait to make many more items.

Things I have learned, shipping and package are expensive. I offer free shipping (which is usually $5 is USPS first class, and 7-18 if Priority mail, which is what it has to be if over 13 ounces. So say I sell an item for $20, the cost breakdown is:
$5 for shipping,
$1 for box (and that is buying in bulk)
$1.30 Etsy transaction fee
$1 Etsy payment processing fees
20 cents listing fee
$5 dollars Etsy adds (this is an average)
$4 wood blades etc... (guesstimate)
= $17.50 in costs

On top of all that, I will have to pay 30% taxes on the sale, because I don't have a business currently, so it will be on my individual taxes. So I think that puts me about negative 3-4 dollars for a few hours work.

Despite that, I found that I do actually love making items for other people. I was worried that it would feel like work, and for the most part it doesn't. I do feel pressure to remake items I sold, but I don't *have* to do that. I wan't to be able to make new things also.

I think I can get my own domain name via Etsy, and potentially drop Etsy adds, and then maybe just transition to my own website (helps that I am a programmer). But that sounds like more work at the computer, which is what I am trying to get away from with woodworking. =). I think making a business will keep me from paying that 30% in taxes, which would probably make sense for this year. Items $35 plus, I can at least come out positive, though those are items that usually take 4-7 hours of work lol. Ah well =). It is a wonderful hobby, and at least now I don't worry as much about buying wood etc...

[ddockstader]

Your calculations are exactly why I closed my Etsy shop last year after over 10 years. Oh, you forgot your self-employment tax over you regular tax bill. And you can't even make a contribution to your 401K. I love making things for other people as well, but I will have to limit it now to friends and family. I won't get any income, but at least I won't be losing money.

[bstark]

It is disappointing that Etsy turned into what it is. The people that make a lot of money are doing one demand things that take a push of a button, or digital downloads, printing etc... and I think the search engine is attracted to those shops because they obviously make more money. How can you not be a starred seller when your item is downloaded instantly? They don't have to worry about shipping etc... BTW, my one ding on stared seller was because I hand delivered an item to a relative because I was seeing them at Thanksgiving. Etsy put a reserve on the item, but also counted it as not meeting my deadline for shipping (even though they had it in their hands faster than if I shipped it).

Also, digital downloads etc.. are more likely to just get 5 stars, because, what could go wrong? I had one person give me a 4 star review, and all others were 5 star, and that one almost dropped me out of star seller because hand crafters can't make as many items. But unfortunately now, with all the insta-things on Etsy now, real handcrafted stuff may look overpriced at first glance.

I don't have a problem with digital downloads and things like that per se... in fact I am glad they exist as I have bough many patterns that way, but wished somehow they separated the real handcrafted things from everything else.

I still think that if I dialed back what I was doing, and utilized all the tricks like stack cutting etc... and kept to items $35+, maybe the bottom line would look a little better. Once I hit retirement in 6-7 years (fingers crossed), losing money won't acceptable. But I would really love to figure out how to keep making things.

[Linda In Phoenix]

Definitely sounds like becoming a legit registered and licensed business will benefit you. And if you are registered as such you can take advantage of increased deductions of those expenses on your taxes. If you have losses you can carry them forward to a profitable tax year to make the income in those years taxed at a lower rate. Pros and cons of everything, but I keep finding more advantages to having my business license.

I used to sell on Etsy. I too experienced many of these issues. I have my own website, but don't really see much activity directly from it. Where I see my sales come from is going to fairs and the like. People buy more when they can directly interact with the maker of them because they can sense your passion. And, our pieces look so much better in person than in pictures!

No matter what though, DO WHAT BRINGS YOU JOY!

[BadBob]

All of your expenses are tax write-offs.

Etsy adds costs more than they are worth. You don't know what they will charge per click upfront. I think most people lose money running ads. I know I did,

You should join this Facebook group.

https://www.facebook.com/groups/HomeBasedBusinessAndEtsyTips

[Rolf]

Bstark I had no idea how Etsy worked, thank you for the enlightenment! It is certainly not what I want to do.

In general I believe the items that we make need to be seen in person to be fully appreciated. I only do a couple of events a year and make what appeals to me. On very rare occasions I will make a special item for a friend or a consignment. We have several stores in the village that would gladly sell my work But then I would have to make a commitment. This is fun for me and I need to keep it that way.

Have looked locally to see if there was a consignment shop or something like that.?

[bstark]

Bstark I had no idea how Etsy worked, thank you for the enlightenment! It is certainly not what I want to do ... In general I believe the items that we make need to be seen in person to be fully appreciated

Have looked locally to see if there was a consignment shop or something like that.?

I am pretty sure I could find a shop for consignment, especially with being near the coast, where there are tons of craft stores. There are some places that have artesian fairs every Fri-Sun too, but you have to commit to a season and have to have your shop open all the time. My schedule doesn't permit that yet as I am still working 5 days a week. But some day... Consignment there is actually really attractive to me, because we have a small place at the beach (complete with mini-shop), so it is easy for me to restock.

I think I will eventually cut off advertising, and I would always switch to buyer pays shipping. The whole experience is teaching me how to make things that can make a profit. There are also a lot of tricks to SEO (search engine optimization) that help with Etsy that I have learned. Etsy also has shown me, that people really do appreciate handmade items. I have been overwhelmed by some of the reviews.

The other not so great thing about Etsy, is, you have to ship whenever there is an order. Since I travel back and forth to the beach a lot, that can be a pain. I drove 100 miles back from the coast over Thanksgiving and Christmas just to ship orders. If the family isn't with, I can usually get someone to ship for me from home.

I agree with you that the items do need to be seen in person. I try to do the best photos I can, but you can't always get a great feel that way. I saw someone else listed and sold one of the same items I made. I zoomed in on their photo, and there really was no comparison between what they sold and I did. But if you didn't zoom in on the photo, I am not sure you would notice.

I also have learned so much more about producing quality work that I ever thought I would achieve. I am sure everyone here already figured them out, but I used to make up with some shabbier cutting with good sanding... but when trying to sell things you have to do everything you can to make the best product in the least amount of time, and I definitely had a lot to learn in that department.

[Rolf]

I make and sell a hardware kit for one of the clocks I I test cut for the magazine back in 2013. I don't make much money on the kits but mostly It helps people that want to build the clock. I have always charged for the shipping and the cost of the package, I also no longer ship overseas.

[mowerman1193]

It'd be interesting to know what you're selling, and looking at your store. I sell on etsy and have been for 13 years. I do fairly well on there.

One mistake you might be making is buying shipping boxes. USPS has a lot of free boxes available and you can order them from their website and they'll deliver them to you free of charge too. You just have to buy in quantity of 10 or 25.

Also unless the rules just recently changed you can ship up to 16oz. for First Class.

Just because etsy encourages you to do free shipping doesn't mean you have to do that. and if you do offer free shipping then you need to calculate it into your product price, so you are either way to low priced for the product at hand or selling the wrong products to make a profit.

Selling as a business you can take many deductions that you cannot for hobby income. You can deduct your supplies, tools, mileage you drive to go get supplies or to drop off / deliver, magazine subscriptions, pattern books, internet, cell phone if you have the etsy app and use it for business. sooo many more things.

I see a lot of folks that do shows that don't seem to count their time at the show. There is a lot of work there to prep, pack up, load car, go to the show and sit all day, food, gas, travel time, pack back up load car come home unpack car blah, blah, blah. While you do all that work I'm still setting at my saw making orders for the online customers. I get antsy setting in one spot all day and shows don't work for me well as I also don't like being in crowds etc..

There is good and bad in both cases, and Etsy used to be a good outlet for those that just wanted to run a small hobby, but the place is saturated and if you want to get sales you need to work at it. If you've been doing it like me for years you already have an established store and returning customers.

I mostly sell Christmas ornaments..

Price $17.97
Shipping 4.50
Total 22.47

Expenses
Etsy fee 1.12
Listing fee 0.20
Payment Transaction 0.79
Ornament Gift Box 0.75
Shipping mailer 0.75 estimated
Bubble wrap 0.14
Product materials 0.60 estimated..
Mscl supplies 2.50 printer ink, paper, shipping labels etc.


how much is a 1/8" BB ply 4 x 4 inch cost and a piece of fabric ribbon. dipped in Danish oil, LOL. even if my cost is $5.00 I'm still turning $10 profit on 1 ornament. I stack cut 5 at a time and typically cut 20 of them per hour. I sell more than just ornaments but most my profits are from ornaments. I also sell other things but just an easy example of a breakdown cost similar to what you have wrote in that price range.

Amazon Handmade charges no listing fee, but they do charge a flat 15% fee that includes the transaction and processing fees.

You can make money on there but. not really by just making whatever you feel like making and only by pricing right. Don't price items for what you'd pay for them is the biggest lesson I learned. Price them to where you are making a profit. I can't sell $18 ornaments locally nor could I get the 22.50 price including the shipping cost, but etsy is worldwide and there are people ordering them. I priced them like that because I get a lot of request from businesses for wholesale pricing, or just running a sale. Don't price at your bottom dollar, also have to price based on demand and supply. That is how I arrived at my price points.

[RJweb]

Thx for your input, what is your esty store, RJ

[Shane Speal]

Ah Etsy. It's just one of many ways to sell.

While Etsy is an easy way to start selling, you can also take a look at arts and crafts festivals. There's just as many headaches in doing these as with Etsy, but if you're looking to increase your sales, it's a possibility.

I wrote an article a while back for my followers in the cigar box guitar community: Selling At Festivals - Things I've Learned. https://www.cigarboxnation.com/forum...s-at-festivals. Maybe you'll get a few ideas there.

BTW, I'm a newbie here. My name is Shane Speal and I just joined the team at ScrollSaw Woodworking & Crafts Magazine. (You should see the woodshop they have in this place. There's at least 8 different scroll saws to choose from!!!). My background is in making cigar box guitars and I've sold on Etsy, eBay and elsewhere.


IMG_1732.jpg

[Jimern]

On top of all that, I will have to pay 30% taxes on the sale, because I don't have a business currently, so it will be on my individual taxes. So I think that puts me about negative 3-4 dollars for a few hours work.

Just to clear up some confusion.
By virtue of the fact that you opened a store on etsy, you do have a business. And if you get paid more than $400 in a year or if you get issued a from 1099 the net profit will be taxable. It is a sole proprietor and you will file a schedule C in addition to the 1040 you now file.

Schedule C reports all income and expenses related to the conduct of the business. The net income will add to your taxable income on the 1040. There is also a small business credit that might apply when you figure out the taxes, It is complicated, my suggestion is to use tax prep software which will take care of it, and the purchase of the tax software is a business expense.

There will also be self employment taxes at 15.3% of the net income. But on the 1040 there is a credit for half the amount, thus reducing the actual SE tax you have to pay.

[mowerman1193]

Yes this is true.. a business is defined as selling a product with "intent" to make a profit. I believe that is what my accountant told me. I sold on etsy for the first year before going all out and getting my DBA and sales tax licence. Maybe it's changed now or maybe I misunderstood it 13 years ago but I didn't think you could take deductions of your expenses without doing a DBA. Though I'm no tax expert, I've always had a accountant that actually specializes in business taxes ( in fact only does business taxes and not personal taxes ) handle all my tax needs.

[KarlB]

So does the intent to make a profit apply to garage sales, consignment shops and craft shows? I know the government wants their pound of flesh I don't believe this is just. I don't recall seeing about this in our founding fathers documents. Maybe this is why our current government has hired thousands more IRS agents to go after every person who makes money and helps keep the economy going. If you get free money from the government I'm sure you are getting it tax free. It won't be too terribly long before ALL forms of transactions will be tracked by the government to get their pound. So whether you are on Ebay or Etsy, doing craft shows or flea markets, busking or selling extra eggs, selling plants or selling finds from metal detecting, giving money to family or getting money from friends -- it will all be tracked with digital dollars and you WILL be taxed accordingly! If you don't like what is happening and speak up, you will be found out and be penalized by not having access to your money - perhaps even taken away. If you make more than you "need" some will be taken away and be given to others who don't work and expect to be taken care of by Big Brother!

Sorry for the rant, but it ticks me off to see this happening to our great country!

Karl

[Jimern]

What you sell over and above expense is income that is taxable.
Should you claim yard sales, if done regularly yes you should (hardly anyone does).
Craft fairs and consignment shops are selling with the intent of making a profit, so yes you should claim the income and expenses.

Having a dba is fine, but just the fact that you sell regularly is all that is necessary to have a business. The business can operate under your name and/or under a d/b/a. In fact a sole proprietorship enters the owners name and ssan when filing taxes, the d/b/a name is an optional entry on tax forms. d/b/a means doing business as, a false name in other words.

Income tax was not in the founding fathers documents, it was not included in an amendment (the 16th) until 1909 and ratified in 1913. That is when it became required for individuals. Though there was an income tax back in 1862 used to finance the Civil War (for the north of course).

I would suggest that you not mention the lack of sales taxes collected/paid for a year, especially if the time period is before ebay and other started collecting and paying your sales tax. State revenue departments are notoriously greedy IMO.

Want to see how much you pay in taxes? On every tax form is a line called adjust gross income, that is the total income you received. On another line is the total tax due. Divide total tax due by adjusted gross income and multiply by 100 to see what your actual tax rate is (as a percentage).

I'm in Texas so I do not deal with State taxes at all. I guess that is the premium you pay to live there (joking).