How to Sell on Etsy in 2026: Fees, Shop Setup and Your First Sales

Etsy is where Americans go for handmade, personalized and vintage goods, which makes it the natural first marketplace for makers, artists and small craft businesses. Selling there is cheap to start, but the fees stack up on every order, and many new sellers don't price for them. This guide covers how to sell on Etsy from scratch: the fees as Etsy publishes them today, what you're allowed to sell, setting up the shop, pricing and shipping, getting found, and the taxes that come with it. All figures were checked against Etsy's policy pages and IRS guidance in October 2026.

Quick answer

To sell on Etsy, create an account, open a shop, pay any one-time set-up fee, add listings with photos, prices and shipping profiles, and connect a US bank account to Etsy Payments. Etsy charges per listing and per sale, collects sales tax for you, and pays out to your bank.

• Listing fee: $0.20 per item for four months

• Transaction fee: 6.5% of item price plus shipping and gift wrap

• Processing: 3% + $0.25 per order (US bank accounts)

• Offsite Ads: 15% on attributed orders; 12% and mandatory at $10,000 in sales over the prior 365 days

• 1099-K only above $20,000 and more than 200 transactions, but all profit is taxable

Etsy fees in 2026: the full list

Etsy's fees fall into three groups: what you pay to list, what you pay when you sell, and optional extras. Here's every fee a US seller is likely to see, from Etsy's Fees & Payments Policy and Payments Policy as published in October 2026.

Three details catch new sellers out. First, the transaction fee applies to the shipping you charge, so moving cost from the item price into shipping doesn't avoid it. Second, the processing fee is calculated on the total including sales tax, even though the tax isn't yours. Third, auto-renew is on by default: each listing renews for $0.20 when it expires or when a unit sells, so a 10-quantity listing can run up ten listing fees.

How Offsite Ads work

Etsy buys ads for your listings on Google, social networks and other sites. If a shopper clicks one and buys from your shop within 30 days, you pay the Offsite Ads fee on that whole order. While your shop has sold less than $10,000 in sales over the prior 365 days, the fee is 15% and you can opt out. Once you cross the threshold, you're in for good at 12%, even if sales later fall. Each attributed order's fee is capped at $100.

What you can sell on Etsy

Etsy's Creativity Standards say every item must be made, designed, handpicked or sourced by you. In practice:

• Made by you: handcrafted, hand-altered or hand-assembled items, or items you produce yourself with tools like a laser cutter, 3D printer or Cricut from your own design.
• Designed by you: your original designs sold as digital downloads, or produced by a printing or manufacturing partner, which you must disclose along with where the item ships from. AI-generated creations are allowed if made from your own prompts and disclosed in the listing.
• Handpicked by you: vintage items at least 20 years old, items from nature and curated gift sets you assemble.
• Sourced by you: craft supplies, party supplies and items personalized with the buyer's text or image.

Reselling mass-produced goods you didn't make or design isn't allowed, and Etsy removes those listings while still keeping the fees. If that's your model, look at selling on Amazon instead.

Products with extra rules

Some categories carry legal requirements beyond Etsy's rules. Toys, baby items and other products meant for children 12 and under need a Children's Product Certificate under federal law, backed by testing. The CPSC lets registered small batch manufacturers skip third-party lab tests for some requirements, but never for core rules such as lead in paint and small parts, and the certificate is always required. Cosmetics, candles, food and pet treats each have their own labeling or licensing rules, so check them before your first listing.

How to open an Etsy shop step by step

Setting up takes an afternoon if you have photos ready. Etsy now asks new sellers for more identity and payment details up front to keep out fraud, so have your ID and bank details to hand.

Open your Etsy shop

1. 1

   Create an Etsy account and choose "Sell on Etsy"

   Set your shop language, country and currency. List in US dollars if your bank is in the US to avoid the 2.5% conversion fee.

2. 2

   Pick your shop name

   4–20 characters, no spaces. Check it isn't someone else's trademark, and register a DBA if it differs from your legal or LLC name.

   Brainstorm shop names
3. 3

   Create your first listings

   Add several photos and ideally a short video, a title buyers would actually search for, 13 tags, attributes, price, quantity and variations. You need at least one listing before the shop can open.

   Tip: Etsy requires original photos of the finished item for anything 'made by a seller' — no stock or mock-up images as the main photo.

4. 4

   Set up shipping profiles

   Choose processing time, where you ship from and to, and whether you charge calculated or fixed shipping. Reuse one profile across similar items.

5. 5

   Connect Etsy Payments

   Add your bank account, your SSN or EIN, and your personal details as on your ID. This is where Etsy collects tax information for any 1099-K.

6. 6

   Add a card and pay the set-up fee

   Enter a card for fees your balance doesn't cover, and approve the one-time set-up fee if Etsy shows one. Then complete any security verification and open your shop.

Fill in the About section, shop policies and a clear return policy before you start promoting. Buyers check them, and Etsy's search favors complete shops with good service records.

Pricing: a worked Etsy fee example

The safest way to price is to start from costs, add your labor and profit, then make sure the result survives Etsy's fees. Here is one order for a handmade necklace in 2026: price $40, shipping charged $5, and the buyer's state sales tax of $3.60, which Etsy collects and remits.

Two lessons. The fees on an ordinary order are about 11%, which is manageable, but an Offsite Ads order more than doubles them, so price with some room. And if you spend an hour making each necklace, $25.86 is your hourly wage before tax, so work out what you need with the markup calculator before you set prices.

Try it — profit on an Etsy order

Selling PriceProduct CostReferral / CommissionFulfilment & ShippingAd Cost per Sale

Marketplace Fees₹9.07

Total Costs₹19.02

Net Margin57.72%

ROI on Product Cost273.42%

Net Profit per Unit₹25.98

Open the full Marketplace Profit Calculator (PDF, save, compare)

In the calculator, the 9.5% commission combines the 6.5% transaction fee and the 3% processing rate; the ad field holds the $0.25 processing charge plus the $0.20 listing fee. Change the ad cost to $6.75 to see an Offsite Ads order.

Shipping on Etsy

Shipping is where small sellers quietly lose money. Weigh and measure every item packed, then decide between three approaches:

• Calculated shipping: Etsy prices postage from the buyer's address and package weight. Most accurate for heavy or variable items such as pottery.
• Fixed shipping: one price per item, simplest for light, uniform goods like stickers and jewelry.
• Free shipping, built into the price: buyers like it and it makes listings easier to compare, but remember the transaction fee applies to the whole price either way.

Buying labels through Etsy gives you discounted USPS, UPS and FedEx rates and automatic tracking, which protects your shop rating. Set an honest processing time; late orders hurt your shop's visibility and can cost you Star Seller status.

Getting found: Etsy search and ads

Most Etsy sales start in Etsy search. It matches the buyer's words to your titles, tags, categories and attributes, then ranks results using listing quality (clicks, favorites and sales), shop service record, shipping price and how recently you listed. Write titles that start with what the item is ("Personalized dog collar, leather, engraved name tag") rather than brand-style names, and use all 13 tags on real phrases buyers type.

Etsy's two ad programs

	Etsy Ads	Offsite Ads
Where ads show	Etsy search and pages	Google, social networks, partner sites
How you pay	Per click, up to your daily budget	Percentage of attributed orders only
Cost	You set the budget	15% or 12%, max $100 per order
Optional?	Yes	Only below $10,000 in sales over the prior 365 days in yearly sales
Best for	Testing new listings and seasonal pushes	Higher-margin items that can absorb the fee

Where ads show

Etsy Ads

Etsy search and pages

Offsite Ads

Google, social networks, partner sites

How you pay

Etsy Ads

Per click, up to your daily budget

Offsite Ads

Percentage of attributed orders only

Cost

Etsy Ads

You set the budget

Offsite Ads

15% or 12%, max $100 per order

Optional?

Etsy Ads

Yes

Offsite Ads

Only below $10,000 in sales over the prior 365 days in yearly sales

Best for

Etsy Ads

Testing new listings and seasonal pushes

Offsite Ads

Higher-margin items that can absorb the fee

Outside Etsy, a simple Instagram, Pinterest or TikTok presence pointing to your shop costs nothing and drives sales that carry no ad fee.

Taxes for Etsy sellers: sales tax, 1099-K and income tax

Sales tax. Etsy calculates, collects and remits sales tax on orders delivered to US buyers, so you don't charge it yourself on Etsy. If you also sell at craft fairs or on your own site, you'll usually need a state seller's permit for those sales.

Form 1099-K. Etsy files a 1099-K only when your gross sales exceed $20,000 and more than 200 transactions in a calendar year. That threshold was restored retroactively by the One, Big, Beautiful Bill Act, so the planned $600 limit never applied. The form shows gross sales, not profit.

Income tax. All Etsy income is taxable, form or no form. The IRS decides whether you're a hobby or a business by looking at factors like whether you keep proper records, change methods to improve profit and depend on the income. A business reports on Schedule C, deducts Etsy fees, materials, shipping and equipment, and pays self-employment tax of 15.3% once net earnings reach $400. Hobby income goes on Schedule 1 with no deduction for losses against other income. See our guide to small business tax deductions.

Licenses and structure. Your city or county may require a business license or home occupation permit even for an online shop; see how to get a business license. As sales grow, an LLC separates business risk from your personal assets.

Mistakes new Etsy sellers make

• Underpricing for fees and time. Price for an Offsite Ads order, not just an ordinary one, and pay yourself an hourly rate.
• Weak main photos. Natural light, a clean background and the item at actual scale beat clever styling.
• Listing too few items. A shop with 20–30 listings gets more search entry points than one with five.
• Undercharging shipping. Weigh packed items and use calculated shipping until you know your costs.
• Ignoring product rules. Children's products, cosmetics and food carry federal or state requirements, and Etsy can remove non-compliant listings.

Official links

• IRS — Form 1099-K threshold FAQs (OBBB)$20,000 and 200-transaction threshold
• IRS — Hobby or business?The factors the IRS weighs
• CPSC — Small batch manufacturersHandmade children's products
• FTC — INFORM Consumers ActHigh-volume seller verification
• Etsy — Fees & Payments PolicyPrimary source for all Etsy fees
• Etsy — Creativity StandardsWhat's allowed on Etsy

What to do next

List five to ten items, price each one through the marketplace profit calculator using the fees above (including an Offsite Ads scenario), and review your numbers after the first 20 orders. If you also have products that don't qualify as handmade, compare Amazon's fees in our how to sell on Amazon guide.

This is general information, not legal or tax advice — confirm on the official source or with a professional. Etsy can change fees with notice, so check its Fees & Payments Policy before relying on these numbers.

Frequently asked questions

How much does Etsy take per sale in 2026?

On a typical US order Etsy takes a 6.5% transaction fee on the item price plus shipping and gift wrap, and a 3% + $0.25 payment processing fee on the total including tax. Add the $0.20 listing fee and most sellers pay roughly 10–11% of the order. If the sale came from an Offsite Ad, add 15% (or 12% for larger shops).

Can I sell on Etsy for free?

No. Opening a shop can involve a one-time set-up fee of about $15–$30 (shown at sign-up), shown during sign-up, and every listing costs $0.20 for four months whether or not it sells. There's no monthly fee unless you choose Etsy Plus at $10 a month. Transaction and processing fees are only charged when you make a sale.

Can I opt out of Etsy Offsite Ads?

Only while your shop has made less than $10,000 in sales over the prior 365 days. Below that, you can opt out in Shop Manager; if you stay in, attributed orders cost 15%. Once you reach the threshold, participation becomes mandatory for the life of the shop at 12%, capped at $100 per order.

Do I have to pay taxes on Etsy sales?

Yes, profit from Etsy sales is taxable income. Etsy collects and remits US sales tax on your orders, but income tax is your job. Etsy sends a Form 1099-K only above $20,000 and more than 200 transactions, yet you must report all sales either way. A shop run to make a profit is a business reported on Schedule C, where you can deduct fees, materials and shipping.

Do I need a business license to sell on Etsy?

Etsy doesn't require one, but your city, county or state might, even for a home-based shop. Many places require a general business license or home occupation permit, and you'll need a DBA if your shop name isn't your legal name. Check our business license guide and your city's website before you open.

What sells best on Etsy?

Items buyers can't easily find elsewhere: personalized gifts, jewelry, home decor, wedding and party items, digital downloads such as planners and templates, craft supplies and vintage goods. The common thread is a clear gift or occasion, good photos and a specific niche, such as custom pet portraits rather than generic art prints.

Sources & verification

Figures on this page were checked against the sources below when it was last reviewed on 7 October 2026. Each rate and limit is stored once with its own official source and review date, and official update channels are monitored daily so changes are picked up. How we verify

1. 1.Fees & Payments Policy — Etsy · accessed 7 October 2026
2. 2.Etsy Payments Policy — Etsy · accessed 7 October 2026
3. 3.Etsy's Creativity Standards — Etsy · accessed 7 October 2026
4. 4.Etsy moves to variable shop setup fee — Value Added Resource · accessed 7 October 2026
5. 5.IRS issues FAQs on Form 1099-K threshold under the One, Big, Beautiful Bill — IRS · accessed 7 October 2026
6. 6.Know the difference between a hobby and a business — IRS · accessed 7 October 2026
7. 7.Small Batch Manufacturers FAQ — U.S. Consumer Product Safety Commission · accessed 7 October 2026
8. 8.Informing Businesses about the INFORM Consumers Act — Federal Trade Commission · accessed 7 October 2026