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

Crafters, bakers, inventors, artists — just some of the people who’ve ditched the day job and now earn a full-time living by making and selling their passion on online marketplace Etsy. But, what is Etsy, who is it for, and can it really provide you with a full-time income? In this article we talk you through the ins and outs of an Etsy career and tell you all you need to know to start your new vocation.

The Story Behind Etsy

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

Etsy is different from many companies in that they combine their social, environmental, and business goals as one; they are all about helping small businesses flourish. According to Etsy, 76% of U.S. sellers now consider their shop to be a business and one third consider it their sole occupation.

Top Etsy Sellers to Get You Inspired

Paintings, jewelry, candles — just some of the items that have earned their creators six figures since they joined the movement. And, these were ordinary people, just like you, wondering how to get their product out there. Let’s take a look at what some Etsy members have been up to in the last few years…

Berkely Illustration opened in November 2007. They specialize in “modern animal portrait art drawn by hand” and have amassed nearly 53,000 sales of handcrafted art. The average print costs $18. The following for this shop has taken off so much that they published a book recently — a hardback copy of “Social Animals: A Berkley Bestiary Book” is available, signed or unsigned, for $18.95 on Etsy. Lifetime (up to the publication of this article) revenue 2007-2016: $954,000.

Layered And Long specializes in gold bar necklaces and personalized jewelry. Active since January 2012, they have over 126,000 sales, with prices typically around $30. Owner Chrissy describes it as “one of the best decisions [she’s] ever made” and has even turned it into a family operation with help from her son and other friends. Many of the pieces sold are personalized, making them completely unique and exclusive. Lifetime revenue 2012-2016: $3.7 million. They know how to make money on Etsy.

Powder Blue Bijoux sells bridal accessories, including headbands, tiaras, fascinators, veils, handbags, and more. Since 2009 they have collected just over 11,000 sales. But, with each item being painstakingly made from the finest materials and retailing at around $60, owner Alana’s Etsy fortune rates very highly. Her unique creations incorporate the lavishness of lace, crystals, pearls, and feathers to make each bride feel exquisite on her big day. Lifetime revenue 2009-2016: $660,000.

Rocky Top Soap, founded in 2010, now has over 21,000 sales of their all-natural soaps, lip balms, and oils. Creator Tony 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. Lifetime revenue 2010-2016: $147,000.

Frostbeard has been creating uniquely crafted soy candles from their base in Minneapolis since 2008. Sales have topped 66,000, following the success of their original “Oxford Library” scented candle. Especially for book lovers, their candles are inspired by stories and their characters. So, whether you like Gatsby’s Mansion or Sherlock’s Study, there’s something for every bookworm at $18 per candle. Lifetime revenue 2008-2016: $1.1 million.

Suggested Article: 15+ Small Business Ideas for Women: (Where Women Commonly Outperform Men)


Etsy has over 15 categories filled with vintage, handmade, or craft items from across the globe. Not sure if your hobby fits in? Well, let’s examine some of the categories people are currently filling on Etsy. Exactly what a person does after they know how to make money on Etsy can take many variations:

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
  • Make up, 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


  • 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


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

As well as smaller categories for books, movies, and music, paper and paper supplies, and toys and games.

So, you might be thinking you have something that fits into these categories (or the many others not mentioned due to lack of space!).

If you have a hobby or skill, selling on Etsy is often just about monetizing what you already do. Is your skill not on the list? Great — you’ve found a niche already! Is it on the list? No problem — there’s nothing to stop you from becoming the number one seller in that category by offering your product in a way that no one else can.

Search Etsy by popular items and see what’s hot. Can you make it, too? Can you make it better? For example, can you personalize it? Theme it? Commit to using only certain products to make it? Does your hometown have an export or famous tie that you can incorporate to make it feel local and homemade? Anything that makes it stand out from the crowd. Look for gaps in the market too. Found a category that’s a bit thin on the ground? Perhaps you’ve got just the thing it’s lacking. By now you’re probably thinking of your product — if you weren’t already.

Step 1: Register and Choose a Name

Knowing how to make money on Etsy starts with a name. Jot down a few contact details to sign up. Then comes the fun part — naming your shop. Use the naming tool to check availability.

Etsy has a cool guide to naming your shop, written by a real life user. It’s well worth reading through for some useful hints and tips, but to summarize:

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

Step 2: Stock Your Shop

Knowing how to make money on Etsy is worthless without action. First, add pictures. Take several shots from several angles to give an accurate representation of size, shape, color, and what it actually is. A camera phone is fine, but always use natural light. You can re-order images you upload and adjust the thumbnail if it’s not quite right. This is probably the first thing potential buyers will see, so don’t settle for second best!

Now it’s time for 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 Etsy income is taxed as ordinary income, but more on that later.

Next, write an informative description. Explain what it is, what it does, who it’s for, and any other useful information. As ever, be honest and helpful. 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.

Then, set your shipping. Do your research on this — don’t just guess! Check on the USPS website, or whichever courier you choose, or you could end up wildly undercharging people and not covering your costs fully. Equally, overpriced shipping will put buyers off.

Finally, choose some search terms. You can have up to 13 for both general tags and materials. 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.

Step 3: Set up Payment and Billing

Now you 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 set it up via PayPal, mail (check or money order), or another method following purchase (like 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 grow. There is also no minimum payment.

Step 4: Manage Your Account!

And you’re in! Your shop is now set up and you can watch the money roll in. You can view your account stats in the account dashboard — see what you’re doing right, what you should think about changing, and generally feel the love for your stuff. Obviously yours will be much busier than this!

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 — and it’s all free as standard with an Etsy shop. It can be really nifty to help you tweak your listings and hit that sweet selling spot. For extra support and encouragement, Etsy has heaps of helpful articles and tips covering topics from photography to legal requirements.

Fees and Taxes

Having a shop on Etsy is free! There is no membership fee or other expense to simply open a shop, but you will incur the following costs as default:

  • Listing an item – $0.20 each (earn 40 free listings by referring a friend who successfully opens a shop!)
  • Selling fee – 3.5% of the overall selling price
  • My $5 bear, for example, would incur costs of $0.38 + taxes.

Optional extras, which incur varying fees, include automatic relisting ($0.20 each), a multi-quantity fee for when more than one item is sold, promoted listings, shipping labels, a deposit currency conversion if you list items in another currency to that of your main bank account, and direct checkout (3% + $0.25).

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. It 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.


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. Step it up to the WebStore account for just 3% commission on sales, 1,000 free listings, and ad-free shop pages.

Storenvy – profits from screen printing parent site Threadbird allow Storenvy to provide 100% free listings and free membership for store owners, although extras do come with a fee. The site promotes products purchased and recommended by its users — social shopping at its best.

Zibbet – Etsy recently changed its rules to allow manufacturers to contribute to the production process of items sold on its site. Zibbet, however, allows only handmade items — an ethos that will 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 smooth 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, don’t forget the costs and maintenance that come with running a website!

Related Article: The List of Jobs You Can Work from Home

What Are You Waiting For?

Etsy started out for the little guys, but now it’s booming. If you make stuff and want to take it to the next level, there is a community out there waiting for you to open your shop and get trading. You don’t need to be an SEO master or learn how to code, just take your cool product and run with it. Etsy, first and foremost, is a community. Help is there for those who need it, often written by real life sellers who’ve been there and done that — there is no deep end. Many Etsy users have made hundreds of thousands of dollars and you could be on your way to joining them!

Do you have an Etsy shop? Is it your sole income? Are you considering opening an Etsy shop? Has this article inspired you to follow your dream? We would love to hear from you!

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  • 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!

  • 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.