Business finances are not always the most enjoyable business activity if you are a creative person, but making sure you know your financial numbers is vital to run a successful, and profitable, Etsy shop. So here is a series of posts to help any Etsy seller get on top of their Etsy financials so they can work out their Etsy earnings and the Etsy seller fees they will be charged.
- How much does Etsy cost?
- What do Etsy’s revenue figures mean?
- How to know if you are really making a profit on Etsy
- How to make Bookkeeping easy for your Etsy shop
When I first started out on Etsy, the one thing that caused me the most frustration was trying to work out what my actual Etsy earnings were.
Maybe I was a bit naive, but I thought that as Etsy is so large, it must display figures that were useful to its sellers. I also assumed they would be transparent on how they calculated them. Unfortunately, this isn’t the case.
Initially, I compared the revenue figures on the Dashboard and Stats pages to give me an idea of my Etsy earnings. I quickly realised that that was not a good indicator of what I was actually getting paid into my bank account.
I then decided I would use the Sales & Credits value minus the Fees & Taxes value from the payment account. Again, I assumed this would give me a good idea of what my Etsy earnings were and in turn what payment I could expect to receive in my bank account. I got paid monthly, so surely the monthly figures would relate to the monthly payment. Nope, that didn’t work either.
So out of frustration, I spent many days researching how each of the figures was calculated. I wanted to find out if there was an easy way to calculate what my actual Etsy earnings were.
The quick answer is that there isn’t, but understanding how the figures get calculated is useful to know.
Here is the result of my research.
Let’s talk about payments from Etsy.
So you’ve made your first sale and you want to know how you are going to get your hands on the cash.
Firstly you have to pick your Etsy payment method.
As of 2020 Etsy Payments is the primary way to get paid by Etsy if you are located in these specific countries (see if you are in the list here). This means if you run your shop from a country in Etsy’s list, you have no other choice than to use the Etsy Payment mechanism.
This is not necessarily a bad thing. You get the benefit of your customers being able to choose from a wide variety of methods to make a payment, without you having to have an account to be able to receive each payment type. Etsy does all the hard work. These payment types include:
- Credit cards
- Debit/bank cards
- Etsy Gift Cards and Etsy Credits
- Apple Pay
- Google Pay
- Klarna Invoice payments (Germany)
- iDEAL (the Netherlands)
- Sofort (Austria and Germany)
If you live in a country that is not on the list, then you have to use Paypal. This means that your customers pay directly into your Paypal account. This means you encounter Paypal payment processing fees rather than Etsy payment processing fees.
As most countries these days are on the Etsy list I won’t talk about PayPal here, all you need to know is that the only difference for you in terms of fees is that the Payment Processing fee will be different.
How often do you get paid?
When you make a sale through Etsy Payments, the funds are first added to your Payment Account in your Shop Manager->Finances.
Then, according to your deposit schedule, your available funds will be sent to your bank account.
To receive payments you must have funds available in your Payment Account, and they must meet applicable minimum criteria for your location (if you are interested in the requirements this is what Etsy says.
By default, your shop will be set up with a Weekly schedule, which sends you the funds every Monday. You can change this to daily, bi-weekly, weekly or monthly in your Shop Manager->Finances->Payment Settings.
If you set your schedule to Monthly, the funds get sent on the first Monday of the following month. You get paid whatever your Balance is in your Payment Account.
Please note, the balance on your Monthly Statement is NOT the amount you will be paid. This will only happen if you have no further transactions between the statement being generated and your payment being made.
How much will I get paid?
The amount Available for Deposit is the amount you will be paid in your Etsy Payment Account. This equates to the sale price minus all the fees, refunds and taxes. This calculates automatically. So if you haven’t made any sales since your last payment and you add some new listings, your Balance will be negative due to the listing fees. If it is still negative when your next payment is due you will get requested to MAKE a payment rather than receive one.
This is one of the reasons why I don’t choose Daily for my payment schedule. I’d rather gain some sales to cover any fees. But this is my personal choice.
Now we have covered the basics this is where it starts getting confusing/interesting.
What do all the different numbers mean?
Sales & Credits
Your Sales & Credits total in your Finances is your Etsy sales minus the payment processing fees and the market place taxes collected by Etsy for the time range you selected. It is not your Etsy earnings.
This Sales & Credits total is still a gross value as it includes shipping and all other fees and taxes (other than the payment processing fee).
It also sometimes includes tax collected and remitted by Etsy from buyers.
Finally, this value does not include any refunds that you may have had to process.
I recommend that you do not use this amount for anything important. It should not be used on your tax forms.
Fees & Taxes
The Fees & Taxes total shows your fees and taxes for the time range you selected. It includes fees for listing items, receiving sales, marketing your shop and taxes collected by the seller and VAT collected by Etsy on selling fees.
The Fees & Taxes chart does not include tax collected and remitted by Etsy from buyers.
Refunds are also not included in this figure. So, if you assume that your Etsy earnings is a simple calculation of Sales & Credits minus Fees & Taxes, you would, unfortunately, be wrong.
You can get a full list of all your sale credits, fees and taxes by downloading the monthly statement. Please do this if you want an accurate picture of your sales, don’t rely on the totals in the charts, dashboard or stats.
The monthly statement download does include everything, including refunds, so using your own calculations, you can work out your actual income.
Using your downloaded monthly statement, you can calculate the following:
Sales & Credits = sum up the Net column where all the rows where the Type = sale.
Fees & Taxes = sum up the Net column where the Type doesn’t = Sale, Refund or Deposit from your monthly statement.
These figures should match the amounts you see in the Payment Account charts.
To calculate your Etsy earnings correctly, take a look at this post about bookkeeping.
Available for deposit or Balance
This is the actual figure that you get paid and is a running balance as soon as there is a sale, fee transaction, refund or a payment made. However, it is ever-changing. You only know the amount of cash that you will receive at the time the payment is generated. This is because it takes whatever sales you have had at the time of processing and subtracts the fees, refunds, etc. and gives you the Balance.
The running Balance for the month is shown in Payments Accounts but is unfortunately removed from the monthly statement download.
Personally, once I came to terms that this amount is whatever it is at the time that I’m paid, I pretty much ignore it. The only thing I use it for is to check that what has been paid matches what I expected at the time the payment was made.
The bottom line for how much you will get paid is the Amount Available for Deposit, or the Balance field (which should be the same).
Revenue is displayed on your Shop Manager Dashboard and Stats page. Again this can’t be used as your Etsy earnings. This value equals your sales (sale price + shipping) minus any discounts you provided to buyers. This total doesn’t include any fees, postage costs or orders that you have refunded and cancelled.
To calculate your Revenue total, you need to download your Orders CSV file from Shop Manager->Settings->Options->Download Data and choose to download the Orders file.
Using the Order Value and Discount Amount columns from the downloaded file do the following calculation:
Revenue = sum of Order Value – sum of Discount Amount.
This figure can be useful to compare month to month to check your performance. BUT it should never be used to complete your tax return, nor can you use it as an indicator of how much profit you have made.
Please be careful when you are looking at your numbers to make sure you are comparing like with like, otherwise you will get in a real pickle.
You can find out your monthly sales figures in your Etsy Payment Account (Shop Manager->Finances->Payment Account).
Unfortunately, you can only download this monthly, you can’t do a full year in one go. You may also find that some transactions in this statement are from the previous month. I assume this is a timezone thing.
The monthly statement is in the following format:
Date – Date of transaction, this is in US format so needs to be converted if you have a different date format.
Type – This is the type of transaction. The naming should be reasonably obvious to indicate what it is for, but if you need to know what the fees are for check out this post.
Title – This gives a bit of information about where the transaction came from. Unfortunately, it does not use a consistent reference number, such as the order number, so you have to make a judgement call to determine what order it relates to.
Info – Again a bit more information about the transaction and again, a consistent ref number is not used, although it does display another number that we have no knowledge of!
Currency – This is the currency of your shop. The amounts in the file are displayed in this currency.
Amount – This is the sales amount, including any marketplace sales tax that Etsy has paid. The marketplace sales tax is usually for any orders outside of the US. This is a sales tax that Etsy pays and is never documented anywhere. It can only be calculated by the following calculations.
Gross Sales = Net – Fees & Taxes.
Marketplace Sales Tax for Etsy = Amount – Gross Sales.
Fees & Taxes – This is the amount you have been charged in fees. If this is on a row where the Type = Sale or Refund, then this is the payment processing fee. All other rows have the fee type detailed in the Type column.
Net – This is the net amount of the payment after all taxes. Due to the Marketplace Sales Tax for Etsy, explained above, you cannot assume this is the same as Amount minus the Fees & Taxes (never use this calculation for your figures).
To calculate what payment you are due, you sum up all the values in the Net column.
The running Balance is visible on the Payment Account screen but isn’t included in the file. This is a real shame as it is quite tricky to calculate yourself and get the same results as Etsy. The running Balance is dependant on the order of the transactions, and the order can be different from those on the screen.
While all the above is interesting, what you really want to know is how much profit you are making, and you will not find this out from Etsy figures alone.
This is why I created the Etsy Seller Profit Plan. It takes both the Monthly statements and Orders download and works out your income each month. It also breaks down and totals all the fees, tax, etc. so you know where you stand without doing the hard work.
Why do Sales & Credits minus Fees & Taxes not equal Etsy earnings?
Before my research into how the figures all worked, I assumed that Payment = Sales & Credits – Fees & Taxes. But in reality, I could never get this to balance.
One significant factor that I think affects the difference in Payments to statement balance is timing. If you get paid Monthly, the payment is generated on the first Monday of the month. This could be up to 6 days after the end of the month. The payment includes all the sales from these extra days, rather than the expected amount from the monthly statement.
Trying to balance the payment with the Monthly Statement numbers just doesn’t work.
You need to dig deeper and do your own sums with the monthly statement download.
Secondly, both the Sales & Credits and Fees & Taxes numbers and charts have a few gaps in them. The refunds and marketplace sales tax that Etsy pays are missing from both of these figures. I would hope that if you have never issued a refund and don’t sell outside of the US, then Sales & Credits – Fees & Taxes = Total Payments. But that may just be wishful thinking!
The only way to make sure you are looking at the correct numbers to calculate your Etsy earnings is to create a good bookkeeping process. This should include taking all the data from the statements and order files and do your own calculations. If you want more details on how to do your Etsy bookkeeping look at this post.
If you want an easy way of doing your bookkeeping, and to avoid having to do the calculations yourself, why not look at our Etsy Seller Profit Plan bookkeeping spreadsheet. This takes your downloaded files and automatically calculates your monthly income, fees, taxes and generates the totals. This will help you quickly reconcile them and fill out your tax return.