Etsy charges its 6.5% transaction fee on the shipping you charge, too. Enter one order below to see how charging for shipping versus offering free shipping changes your fees and profit — and which leaves you better off.
| Scenario (same item, two ways) | Charge shipping | Free shipping |
|---|---|---|
| Order total the buyer pays | — | — |
| Listing fee | $0.20 | $0.20 |
| Transaction fee — 6.5% | — | — |
| Payment processing | — | — |
| Your item + shipping cost | — | — |
| Profit on this order | — | — |
"Free shipping" here means rolling the same shipping amount into the item price — the buyer pays the same total, but you get the free-shipping badge.
Many sellers assume shipping is passed through untouched. It is not. Etsy's 6.5% transaction fee applies to the full order total, shipping included, and payment processing (3% + $0.25 in the US) is calculated on it as well. Charge $5 for shipping and roughly $0.33 of that goes to Etsy before your label cost — so a $5 shipping charge on a $4.50 label can actually lose you money.
The two options cost nearly the same in fees, because Etsy charges on the total either way. What differs is perception and search ranking:
| Approach | Fee effect | Best when |
|---|---|---|
| Charge shipping separately | 6.5% + processing on both item and shipping | Heavy or bulky items with real shipping cost |
| Free shipping (built into price) | Same total fee, but a "free shipping" badge | Light items; you want the search-boost and higher conversion |
Etsy's search favors listings that offer free shipping, and buyers convert better when shipping is included. So for light items, rounding the shipping into the price is usually the smarter play — you keep the same profit and gain visibility.
Use the Etsy fee & profit calculator to itemize every fee on a single sale, or the complete fees guide for the full rate list and five ways to cut fees.
Yes. The 6.5% transaction fee applies to the entire order total, including any shipping you charge the buyer.
Often yes for light items. You pay the same total fee, but a free-shipping listing ranks better and converts higher. Roll the shipping into the item price rather than truly absorbing it.
Enter the item price, shipping charged, your item cost, and your real shipping cost. The calculator subtracts all fees — including the fee on shipping — to show your true profit either way.