How to Make a Full-Time Income on Etsy: Step-by-Step Guide

Etsy was founded in an apartment in 2005. Today it boasts 1.6 million active sellers, 24 million active buyers, and it turned over $2 billion in gross merchandise sales in 2015, helping individuals sell creative goods and buy unique items as part of a global community of like-minded doers.

Etsy is different from many online marketplace companies in that it combines its social, environmental, and business goals as one; it prides itself on helping small businesses flourish. According to Etsy, 76% of U.S. sellers now consider their shop to be a business and one-third of sellers consider it their sole occupation. Below, we explain how a career selling on Etsy is possible, including step-by-step information about how you can do this.

Top Etsy Sellers For Inspiration

Some things that can be helpful to consider when you’re working to create your own Etsy shop are the stories of other successful sellers and shops. We have information about some of these sellers, including details about products and earnings below.

Berkely Illustration opened in November 2007. It specializes in hand-drawn animal portraits and has amassed more than 53,000 sales. The average print costs about $18. The following for this shop has taken off so much that the sellers published a book — a hardcover copy of “Social Animals: A Berkley Bestiary Book” is available, signed or unsigned, for $18.95 on Etsy. The company’s lifetime revenue is over $1 million.

Layered And Long specializes in gold bar necklaces and personalized jewelry. Active since January 2012, it has over 126,000 sales, with prices typically around $30. The owner describes her decision to sell on Etsy as “one of the best decisions [she’s] ever made” and has even turned it into a family operation. Many of the pieces sold are personalized, making them completely unique and exclusive. The company’s lifetime revenue is over $4 million.

Powder Blue Bijoux sells bridal accessories, including headbands, tiaras, fascinators, veils, handbags, and more. Since 2009, it has collected more than 11,000 sales. But, with each item being painstakingly made from the finest materials and retailing at around $60, the owner’s revenue ranks highly. The shop’s lifetime revenue is over $700,000.

Rocky Top Soap, founded in 2010, now has over 21,000 sales of its all-natural soaps, lip balms, and oils. The creator says his influence comes from gardeners and herbalists, and he thinks of life as a creative collaboration with nature. His rustic $7 soaps are handmade in Maine — part of a team effort with his partner. The shop’s lifetime revenue is over $150,000.

Frostbeard has been creating uniquely crafted soy candles from its base in Minneapolis since 2008. Sales have topped 66,000, following the success of the original “Oxford Library” scented candle. Especially for book lovers, Frostbeard’s $18 candles are inspired by stories and their characters. The shop’s lifetime revenue is well over $1 million.

Categories

Etsy has numerous categories filled with vintage, handmade, and craft items from across the globe. You can choose to sell something that fits well within one of these categories, or you can sell something completely novel. Some of the most popular shop categories — with variations and niche sub-categories within each — include:

Accessories / Clothing / Bags / Shoes

  • Women’s, men’s, boy’s, and girl’s clothing and shoes
  • Rings, bracelets, watches, necklaces, brooches, body jewelry
  • Bags, wallets, and luggage
  • Baby accessories
  • Hair accessories
  • Suit and tie accessories
  • Hats and caps
  • Gloves and mittens
  • Sunglasses and eyewear
  • Keychains, lanyards, patches, and pins

Bath and Beauty

  • Bath accessories
  • Essential oils
  • Fragrances
  • Hair care
  • Makeup, cosmetics, soaps, and skincare

Craft Supplies

  • Recipes
  • Patterns and tutorials
  • Scrapbooking materials
  • Fabrics
  • Fibers like wool and cotton
  • Drawing/art supplies
  • Sewing and needlecraft equipment

Electronics

  • Cameras
  • Car parts and accessories
  • DIY kits
  • Gadgets
  • Audio and computing
  • Cables and cords
  • Batteries and charging

Home and Living

  • Bathroom / bedroom / kitchen / living room
  • Soft and hard furnishings
  • Decor including illustrations and prints
  • Lighting
  • Storage
  • Outdoor and garden
  • Food and drink

Pet Supplies

  • Collars and leashes
  • Bedding and housing
  • Feeding, health, and wellness
  • Toys and training

Weddings

  • Gifts and decor
  • Invitations and paper
  • Clothing, shoes, jewelry, and accessories

Besides these, there are even smaller categories for books, movies, music, paper and paper supplies, toys, and games.

Creating an Etsy Shop

If you have a hobby or skill, selling on Etsy is often just about monetizing what you already do. If your hobby or skill isn’t listed above, you can even create a shop to sell something new and unique. There’s technically nothing to stop you from becoming a top seller in your category by offering your product in a way that no one else can.

Decide What to Sell

The first and most important step in the Etsy selling process is to come up with the right product to sell.

You can search Etsy and filter by popular items and see what’s in demand. Perhaps you can make something similar, but better. Perhaps you can personalize it, create a new theme, or commit to using only local materials. You can also look for gaps in the market — products do well when they solve a problem, even if it’s a problem your potential customers don’t yet realize they’re having.

Once you have your idea and your product, all you need to do is set up your shop. Below, we detail the steps required to start and manage your own Etsy shop so you can start selling.

Register and Choose a Name

The process of registering an Etsy shop starts with choosing a name. You will need to provide some contact details to sign up, then you get to choose your shop’s name. The site provides a naming tool that you can use to check availability.

Etsy also offers a helpful guide for naming your shop, written by a real seller in the Etsy Seller Handbook. It’s well worth reading for some useful tips, but to summarize, you should:

  • Be original and reflect your business with its name
  • Think about longevity — will the name stand the test of time?
  • Google the name, and check for availability on Facebook, Twitter, Instagram, and other social media
  • Spell correctly and keep it consistent

Stock Your Shop

Knowing how to make money on Etsy is worthless without action. There are a few specific things you will need to do to set up your shop.

Add Pictures

Take shots from several angles to give an accurate representation of size, shape, color, and what the product actually is. A phone camera can work just fine, but always try to use natural light. You can reorder the images you upload and adjust the thumbnail if it’s not quite right. This is probably the first thing potential buyers will see, so it is incredibly important for driving sales.

Create Listing Details

A series of drop-down lists will help you choose the correct categories and provide the right information. You’ll also have to provide a price — remember that Etsy income is taxed as ordinary income (more on this later).

Write Product Descriptions

Your product description(s) should be informative and thorough. Explain what the product is, what it does, who it’s intended for, and any other useful information. Be honest and helpful. You should write clearly in a way you would expect to read if you were buying the item — visualize yourself as the buyer to get in the right mindset.

Set Shipping Information

Etsy gives sellers some freedom in choosing which courier(s) to use. Be sure to do your research. Check the rates for couriers like USPS and FedEx to make sure you don’t undercharge customers. The price of your items will need to cover the cost of shipping them, but high shipping prices can deter potential buyers — you may need to do some work to find the right balance.

Choose Search Terms

You can choose up to 13 search terms for both general tags and materials. You should use them all. Try to tag phrases together, and if you have similar items for sale, try to tag them differently to reach more buyers.

Set up Payment and Billing

Once your listings are established, you’ll need to enter your personal details and bank information. The easiest and most direct method for payment from customers is to use your bank account, but you can also set up payment via PayPal, postal mail (check or money order), or another method, such as meeting in person and paying cash.

You can pay your Etsy bills by credit card, PayPal, or your shop account balance. You can set up automatic billing, or pay them as they accumulate. There is also no minimum payment.

Manage Your Account

Your shop is now set up and open for business. You can view your account stats in the account dashboard — you can see what is selling well, what is underperforming, and you can get feedback about your products.

Etsy also lets you monitor things like traffic sources, top keywords, and hourly activity. There is even a traffic map that shows what countries people are browsing from — this is all free as standard with an Etsy shop. It can be very useful to help you tweak your listings and maximize your selling potential. For extra support and encouragement, Etsy has plenty of helpful articles and tips covering topics from photography to legal requirements.

Promote Your Shop

While it is possible to be successful selling on Etsy without branching out to market on other platforms, a good way to spread the word about the shop and your products is to take advantage of the various social media platforms available to you. You can use your personal account or create an account for your shop, and you can promote your products on platforms like Instagram, Facebook, Twitter, Pinterest, etc. This is also a great way to share the pictures you’ve taken of your products, and you can include links directly to your Etsy shop.

Be Persistent and Consistent

While anyone can create an Etsy shop and start selling, there are a few factors that contribute to the difference between those who use Etsy as a way to monetize their hobby and those who earn a full-time income selling on the site. As mentioned above, one major factor is having the right product to sell. However, even with a great product, being successful on Etsy will require persistence, especially in the beginning, and consistency. Unless your brand already exists and you are simply switching your selling platform to Etsy, it is likely that you will be starting from scratch in terms of a customer base. A mistake many sellers make is giving up in the early days of their shop when they don’t see significant growth. However, if you have a great product that fills a need, you use sound business practices, and you provide good customer service, it may take some time, but there is no reason why your shop shouldn’t see growth.

Keep in mind that as your shop grows, you’ll need to make sure you can keep a steady inventory and ship orders on time. At some point, you may need to expand and bring on additional help to meet customers’ demands.

It is important to maintain the quality and consistency of your products even if you are producing them in larger quantities — this is a great way to build customer loyalty and gather positive reviews for your shop.

Fees and Taxes

Having a shop on Etsy is free. There are no membership fees or other expenses to simply open a shop, but you will incur the following costs as default:

  • Listing an item: $0.20 each (You can earn 40 free listings by referring a friend who successfully opens a shop.)
    • Note: Each listing lasts four months, or until the item sells
  • Automatic relisting (optional): $0.20 each
  • Selling fee: 5% of the overall selling price (including shipping)
  • Etsy Payments fees: If you use this service, there is a 3% fee plus an additional $0.25 per item sold

Optional extras, which incur varying fees, include a multi-quantity fee for when more than one item is sold, promoted listings, shipping labels, and a deposit currency conversion if you list items in another currency to that of your main bank account.

Income from your Etsy shop is considered self-employment income and you will have to fill out a Schedule C form from the IRS, regardless of whether you are a sole proprietor or not. Many people prefer to run their online shops as a sole proprietorship. This is not a legal entity, but simply a person who owns the business and is personally responsible for its legal costs (and entitled to the profits). It takes no legal action to form a sole proprietorship and you can hire employees and contractors. If you are subject to self-employment tax, you will also have to fill out a Schedule SE.

Alternatives

If you prefer not to sell your products on Etsy, or if you think there is a better market for you elsewhere, there are several similar marketplace websites that you can look into to see if one of them is better suited to fit your needs. A few of these alternatives include:

Big Cartel: The Gold account is free, and you can sell up to five products. Paid plans range from $9.99 per month to $29.99 per month, allowing up to 300 products in your shop.

ArtFire: The free account charges 9% final commission with up to 24 active listings. You can upgrade to the WebStore account for just 3% commission on sales, 1,000 free listings, and ad-free shop pages.

Storenvy: Profits from its screen printing parent site Threadbird allow Storenvy to provide 100% free listings and free membership for store owners, though extras do come with a fee. The site promotes products purchased and recommended by its users — this makes it a “social shopping” platform.

Zibbet: Etsy allows manufacturers to contribute to the production process of items sold on its site. Zibbet, however, allows only handmade items — an ethos that may delight many would-be shop owners. You can list and sell with no fees from $4 a month, and if you have items on Etsy, you can copy across your listings.

With attractive websites and low prices, it’s easy to forget that you don’t even have to use any online marketplace. You can simply set up your own website and sell directly from there, cutting out the middleman. But, be sure to keep in mind the costs and maintenance that come with running a website.

In Summary

If you have a product to sell and you want to take it to the next level, there is a community out there waiting for you to open your shop and start selling. You don’t need to be a marketing expert or know how to code. You simply need to have a product to sell, then you can set up your Etsy account and start listing items in your shop. There is a wealth of support material available, most of which is written by actual Etsy sellers. Etsy will charge fees and taxes on your sales, but with persistence and smart business practices, you can begin to earn a living by selling on Etsy.

If selling products online isn’t for you, you may want to check out our article with the list of other jobs you can work from home.

11 comments

  • I’m in the planning stages to start an Etsy shop. I have a few products in mind that I’ed rather not mention but I am finding them a challenge to list because of their unique nature.
    Is there a way for me to see how much traffic key word search get so I know which words are best to use. Better yet, does Etsy offer live counseling to startups? I could really use some help to get off to a fast start. I am hoping to make this my sole source of income.
    Thanks so much. Jennifer

  • I was reading the selling contract and the way I was reading it, if you don’t hand make every single piece that make a piece of jewelry, it’s not considered homemade. Please tell me I’m misunderstanding this.

    • Hillary M. Miller says:
      First Quarter Finance logostaff

      Hi Misty,

      According to Etsy’s House Rules, “All handmade items are made or designed by you. … In short, you may not resell items that you were not involved in designing or making.” I would take the “or designed” part of the statement to mean that you may purchase the individual elements for making jewelry (beads, settings, clasps, etc.) as long as you yourself are putting these elements together in an original design and using your own photographs to depict them. The handmade jewelry listings on Etsy show a variety of handmade and store-bought elements combined into an original design. I hope this helps clarify Etsy’s rules on the matter!

      • That’s what I was thinking. It was just how they worded it made me question it. Thank you.

  • Justin veach says:

    This is my dream the things that i build are my passion my hobbie is my love. Please walk me thru the creating my own shop part ty

  • I started a Etsy shop about two months ago. I’ve not seen on “view” of my shop. I’m not sure what I may have missed or maybe my tags aren’t sufficient? Can someone please check out my shop Essie Mae’s Essentials and help me understand what I need to do to drive traffic to my shop?

    • Hillary M. Miller says:
      First Quarter Finance logostaff

      Hi May,

      It’s hard to say exactly what the problem is without digging into some analytics — but this is a very, very common problem for new Etsy stores. One thing I noticed was that you only have one listing, with different options for size and scents within that listing. You might consider creating different listings for each scent, because a bigger inventory will help boost your rankings in the search results. I hope this helps, and best of luck with your store!

  • divya lakshmi says:

    Hi i started my etsy shop one month ago,ppl are admiring my stuff but not buying.I don’t know the reason.Can you guys just take a look at my shop and help me to figure out what exactly wrong.Please reply.My shop name is Hastha Katha. we do handmade clothing for women inspired by Indian folk art.

    • William Lipovsky says:
      First Quarter Finance logostaff

      Hi Divya,

      What is your conversion rate? That’s the number reveals everything. Conversion rates shock most people at first. 3% sounds horrible but it’s actually good. It depends on your exact definition of a conversion rate but typically that means 100 people view a product and 3 people buy. So maybe you’re not doing as poor as you think you are – you just need to boost traffic.

      Something I noticed though was that there are many grammatical errors throughout. Consider having a native-English speaking proofreader tidy up the text. This will make customers feel more confident they will receive quality customer service after they buy. Communication with buyers – especially on Etsy – is essential. They need to trust they will not only receive a good product – but good service as well.

      Note to other readers: Other comments by Etsy conversion rate experts are welcome.