Guide · By DQ · October 5, 2026
A lot of sellers set shipping as a simple pass-through: "the label costs $5, so I charge $5." On Etsy that quietly loses money on every order, because several Etsy fees are charged on the shipping you collect, not just the item price.
This guide explains which fees apply to shipping, how much they add up to, and how to set shipping prices (or free shipping) without leaking margin. Fee facts come from Etsy's Help Center, linked at the end, and use US rates unless noted. Fees change from time to time, so check Shop Manager for your shop's current rates.
Etsy charges 6.5% of the total order amount, and says the fee "applies to shipping and gift wrapping (if you charge your customers for those)." On your Payment account, the shipping part of the transaction fee is itemized separately, which is why you see a separate "shipping transaction fee" line.
Etsy Payments processing (3% + $0.25 per order for US bank accounts) is taken from the item's total sale price, "including its shipping fees, and any applicable sales tax." In other countries the percentage and flat fee differ (for example 4% + £0.20 in the UK), but shipping is included the same way.
If a buyer clicked one of Etsy's Offsite Ads and bought within 30 days, Etsy charges 15% (or 12% for shops that have made $10,000+ in any 365-day period) on the order total, capped at $100 per order. Etsy's Fees & Payments Policy defines that total as the listing price plus shipping and gift wrap (and taxes in some jurisdictions).
Sellers in the UK, France, Italy, India, Spain, Türkiye, Vietnam and Canada pay a regulatory operating fee as a percentage of the order total, which includes item price, shipping and gift wrap (but excludes tax collected by Etsy). The rate varies by country.
The listing fee is a flat charge per listing (and per additional unit sold). It doesn't depend on shipping.
Labels bought through Etsy Shipping Labels aren't a percentage fee. You pay the label price, which depends on your selections, and Etsy deducts it from your current balance when you buy the label.
Take a US seller who charges $5.00 shipping and pays $5.00 for the label:
| Fee on the $5 shipping charge | Organic sale | Offsite Ads sale (15%) |
|---|---|---|
| Transaction fee 6.5% | $0.33 | $0.33 |
| Processing 3% (the $0.25 is charged once per order regardless) | $0.15 | $0.15 |
| Offsite Ads 15% | — | $0.75 |
| Lost on "pass-through" shipping | ≈ $0.48 | ≈ $1.23 |
Fifty cents doesn't sound like much. Over 1,000 orders it's about $475, before any Offsite Ads sale. On cheap items it can be most of the profit.
To recover a label cost after percentage fees, divide by what's left after those fees:
Shipping to charge = label cost ÷ (1 − 0.095) for organic sales (6.5% + 3%) Shipping to charge = label cost ÷ (1 − 0.095 − ad rate) to cover Offsite Ads
For a $5.00 label: - Organic: $5.00 ÷ 0.905 = $5.52 - Offsite Ads at 12%: $5.00 ÷ 0.785 = $6.37 - Offsite Ads at 15%: $5.00 ÷ 0.755 = $6.62
(Outside the US, swap in your own processing percentage. With UK processing at 4%, it's $5.00 ÷ 0.895 = $5.59, before any regulatory operating fee.)
You don't have to make shipping break even line by line. Many sellers recover the difference in the item price, which is fine as long as you do it on purpose.
Free shipping moves the cost. It doesn't remove the fees. Etsy's own example: an item at $35 with $5 shipping becomes $40 with free shipping. The buyer pays $40 either way, and so does the fee base.
| $25 item + $5 shipping | $30 item, free shipping | |
|---|---|---|
| Order total | $30.00 | $30.00 |
| Transaction fee 6.5% | $1.95 | $1.95 |
| Processing 3% + $0.25 | $1.15 | $1.15 |
| Listing fee | $0.20 | $0.20 |
| Total Etsy fees | $3.30 | $3.30 |
The fees are identical. Free shipping is a presentation and conversion decision, not a fee-saving trick. What matters is that the item price really includes the postage you'll pay, plus the fees on that postage.
Etsy lets shops set up a free shipping guarantee for US buyers. It applies free shipping to individual items of $35 USD and up and to orders totalling $35 USD and up. A few details from Etsy's Help Center are worth knowing:
Before accepting the smart pricing suggestion, check it against your real label cost plus the fees on it. An "average buyer" figure may not match your heaviest or farthest orders.
If you want to see this for a real order, Canopio has a free calculator that applies the 6.5% to item + shipping, adds processing, the listing fee and optional Offsite Ads, and shows the true profit. It runs in your browser. An optional $9.90 one-time Shop Audit (no subscription) checks every live listing at once. Canopio is independent and not affiliated with Etsy, so confirm rates on the Etsy pages below.
Yes. Etsy's transaction fee is 6.5% of the total order amount and applies to shipping and gift wrap you charge.
Yes. Payment processing is taken from the total sale price, including shipping and any applicable sales tax.
Yes. On an attributed order, the 15% or 12% fee applies to the order total, which includes shipping and gift wrap, up to a maximum fee of $100 per order.
No. If you build the postage into the item price, the order total and fees stay the same. Free shipping changes how the price looks, not what Etsy charges.
Canopio is independent and not affiliated with Etsy, Inc. Examples are hypothetical and use US rates unless noted. Confirm current fees in your Shop Manager.