My intentions this week was to talk about the next 3 steps of selling on Etsy, Cost of doing business, opening the store and loading your first photographs. However, I had an incident this week with a Customer so I thought I would focus on the Cost of doing business. This will include the Cost to list a photograph, the cost of a sale and Marketing, the cost of shipping , and finally the cost of keeping the customer happy.
COST TO LIST A PHOGOGRAPH OR ITEM
For each item you list on Etsy, you are charged 0.20 cents/4 months listing or 0.60 cents/year from the time it is uploaded to Etsy. So in my case if I stay with 190 prints next year, my cost would be $114/year. At the end of the 4 months you can choose to automatically renew or not. If you choice to not renew, then it will be removed from the store. Additionally if the print is sold during that 4 month, then unless it is set to automatically renew it will not appear on the site. So it does not matter if you sell a print or it you wait the 4 months. If it is not set to auto renewal, it will disappear from your site. It will stay in your list, but customer will not see it.
When I first set up the shop I set everything to auto-renewal. For the first 8 months I just let the prints renew, regardless of how much activity they have had over the period of time. Mistake #4, not monitoring what is popular and what is not. So I was paying for photo that had not views/sales. The first thing I did was set all photo to manual renew. Then as they come up, I look at how many time they were viewed/sold and if they have an average of at least 10 views over the course of the 4 months, I renew them. If not I let them expire. Why pay for stuff that customers do not have any interest in. As a note, I do the same thing when I do craft show. At the first of the year I review those that have had no sale in the past 3 years and remove them from my inventory.
COST OF A SALE AND MARKETING
Congratulations, you have made your first sale, now Etsy want its take. The easiest way to explain this is to walk through one of my transactions.
A customer purchased a 16 x 20 print at a cost of $56.
- Listing à As explained above, once the photo was sold Etsy automatically renewed it, not because I set it to auto- renew, but I had set the inventory to 2 (will discuss later). So that was a $0.20 Deduction
- Marketing à Etsy, has an option to advertise your shop. It costs a min of $1.00 a day. For this Etsy advertised on Google, Facebook, Instagram and other social media sites. This will cost you no more than $1.00/day, unless you sell the item. If the sales is the direct result of Etys Ads, then depending on how much you made in a year, they either deduct 15%, if you make more than $10,000/year. If not then you get a discount of 12%. So in my case, I received a $7.70 Credit
- Transaction Fee à Transaction fees are the fees Etsy collects when a customer makes a purchase from your shop. Unlike listing fees, transaction fees are only collected on listings that sell. Etsy take 5% of the sale price as a fee for processing the transaction. In this example $2.02 was Deducted
- Payment Processing à I use Etsy pay to collect my payments in place of PayPal or Square. I did this because both square and PayPal are better used for in person sales. Etsy collects 3% of my sale. So in this case $1.93 was Deducted.
So when all was said and done, the sale of $56.04 netted me $38.90.
We will discuss how I determine my sales price when we review listing your photos.
COST OF SHIPPING
Now I only ship prints, the largest being a 16 x 20. I am able to ship them in shipping envelopes or in the case of the 16 x 20 I may now use a shipping tube. Etsy provides the ability to print a USPS 2-Day priority label directly to your own printer. Since they do such a large volume there is a discount. To ship most of my prints costs between $7 and $9, depending how far it goes. If you want to ship via UPS or FedEx, then you would have to go to their physical store to ship. I have always used the Etsy/USPS shipping options just to save time, plus UPS and FedEx is about $4 more to ship to the same place.
THE COST OF KEEPING A CUSTOMER HAPPY (or how not to get a bad review)
Now, first of all some of you may not agree with how I handled a customer issue, however getting bad reviews on Etsy, with the number of photographers I am competing against, could really put me far down on the search list. Also I have not found a way to add my comment to any review so it would only be their words in the review. So here is what happened.
A customer order a 16 x 20 print. I packaged the print in a plastic sleeve, then put it between 2-3/8 sheets of form board and placed it in a plastic shipping envelop. I was sure that with the 2 layers form board the picture would be safe. I put labels on the bag in BIG PRINT, Do Not Bend Photographic. Sent it via USPS priority mail to a southern state. Customer received the print and indicated that it arrived damaged. It appears that somewhere along the line the print was bent. Now I offered the customer a new print, but the customer wanted a refund. (I asked and received photo of the damage, as well as the fact the USPS tracing indicated it was left on the porch, not in a mail box. So I am not sure where in the process the print was bent). Now I could have told the customer that my site indicates I am not responsible for prints damaged and that I wanted the print back before sending a refund, but there was a risk. Based on the tone of the email, this could have ended up as a bad review. Also at the time I thought I could get a refund from USPS. So I refunded the cost. (as reference my out of pocket loss was $20 for print and shipping)
After checking on how to get a refund from USPS, it appears that this year they changed their policy, thank you new postmaster. Now to get a refund you have to go to a post office with the damaged item and even then they can reject your claim. I knew there was no way that this customer would talk the packaging and damge print to the post office. Also based on what I have read in the Etsy forum, most of the shop owners just give up.
So, this should give you a little idea of what the cost of doing business on Etsy could be. As we will see in next week’s blog on creating and pricing your listing I have taken all of these cost into account when I set my prices. Please contact me if you have any questions.