How to Price Items on Etsy (The Smart Way)

Beginner’s guide on how to price items on Etsy

When I first started selling on Etsy, I had no idea how to price my products properly. Between the fees, the time it took to make things, and the uncertainty of what buyers were willing to pay—I was guessing more than I’d like to admit.

Fast forward to today, I run two Etsy shops selling both digital and physical products, and I have tested a ton of Etsy pricing strategies. The good news? Pricing on Etsy can be simple once you understand how the pieces fit together.

If you are wondering how to price your Etsy items in a way that’s fair, profitable, and scalable, this guide is for you.

The Basics: How to Calculate Your Etsy Product Price

Let’s start with a simple pricing formula when it comes to pricing Etsy items:

Cost of Goods Sold + Etsy Fees + Shipping + Time + Profit Margin = Your Final Price

Let’s break it down:

• Cost of Goods Sold (COGS) – This includes your materials or tools, such as paper, fabric, printing, or software. For digital products, it might be design tools or stock elements.
• Etsy Fees – Etsy charges listing fees, a 6.5% transaction fee, a payment processing fee (which varies by country), and VAT (Value Added Tax) on both shipping and transactions, depending on where you’re selling from. Here’s a detailed look at Etsy fees if you want to deep dive.
• Shipping – You can either offer free shipping by rolling the shipping cost into your product price or list shipping as a separate fee. Just be consistent in how you present it to your buyers.
• Time – Your time is valuable. Whether you are making handmade pieces or designing templates, estimate the time it takes and assign yourself an hourly rate.
• Profit Margin – If you are asking “What should my profit margin be on Etsy?” – Ideally, you want to aim for a 30–40% profit margin. That means you are not just covering costs—you are building a sustainable business.

Common mistake: Many new sellers forget to update their prices after Etsy pricing plans change—or they underprice their digital downloads, not factoring in their time or tools. Stay updated and adjust as needed.

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Etsy Pricing Tips

Beyond the formula, Etsy has a few quirks that you can turn to your advantage. Here are three smart pricing techniques I use in my own shops to increase perceived value and maximise profit.

1: List a Higher Price, Then Apply a Deeper Discount

Let’s say your ideal price is $20. Instead of listing it at that amount, list it at $26 and apply a 25% discount.

This does two things:

• It gives buyers a sense that they are getting a deal
• It raises the perceived value of your product

Etsy even shows the discounted price with a little “On Sale” badge, which draws attention in search results.

This tip is great for raising prices on Etsy without scaring off buyers. Just remember to keep your Etsy pricing formula in mind to maintain profits.

2: Offer Quantity Variations

If you sell physical products or printable items, you can offer multiple quantities as a variation—e.g., “1 card / 2 cards / 4 cards.”

Here’s why this works:

• You are encouraging bulk orders
• You reduce the total Etsy fee percentage (because fewer separate transactions = fewer transaction fees)

Just keep in mind: if you don’t offer free shipping, Etsy will calculate shipping for a single item for all variations. Some fixes you can do are either bundle shipping into the product price for larger quantities, or offer it as free shipping and bake it in.

3. Create Product Bundles Within a Listing

If customers often buy two or more of your items together, consider bundling them into one listing. For example, if they frequently buy a planner + a finance tracker, combine them into a “Productivity Bundle.”

Benefits:

• You can set a custom bundle price (e.g., 2 items for $35 instead of $20 each)
• You only pay one listing fee
• You can control the shipping fee more easily when it i’s one listing—no need to include individual shipping in the product price

For anyone wondering how to price items on Etsy without losing profit on fees and shipping, bundling is a smart move.

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Etsy Discount Strategies

Sales and promotions are a powerful way to increase conversions and get the Etsy algorithm on your side. But instead of running random discounts, try these three Etsy discount strategies that I have used to grow my shops.

1. Promote Different Product Categories on Different Days

Instead of putting your entire shop on sale, schedule daily category promotions. For example:

• Monday: Printable Planners
• Tuesday: Kids Activities
• Wednesday: Wall Art
• And so on..

Each day, Etsy displays a countdown timer, which creates urgency and encourages quick decisions. This is a smart way to grow your Etsy business while keeping things manageable.

2. Use an Order Minimum Discount

Encourage buyers to spend more by offering a discount that only kicks in when they:

• Add X number of items to their cart
• Reach a minimum spend amount (e.g., “Get 15% off when you spend $60”)

Example: If your average product is $23 and you want buyers to get 3 items, set the minimum order at $70. This slight stretch encourages them to add just one more thing to their cart.

3. Discount New Products at Launch

Give new products a boost by:

• Setting a limited-time launch discount
• Doing a promotion for the entire product category that your product sits in
• Pairing a new product with a best-seller in a bundle to cross-sell

This builds visibility and trust right away—critical for digital downloads or brand-new listings, especially since Etsy’s algorithm rewards engagement in the first few days.

There is no “one-size-fits-all” formula when it comes to how to price on Etsy, but you don’t need to guess your way through it. Use the cost formula to set a solid foundation, then experiment with these pricing and discount strategies to see what works for your shop.

Start small, test often, and remember—your work is worth the price.

This post is all about how to price items on Etsy.

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