The reverse pricing formula
For a US sale with free shipping and no Offsite Ads, Etsy takes $0.20 listing, 6.5% transaction, and 3% plus $0.25 processing. On a list price P, total fees are 0.20 plus 0.065P plus 0.03P plus 0.25, which simplifies to 0.45 plus 0.095P. What you keep after fees is P minus that, or 0.905P minus 0.45.
Set that equal to your item cost plus your target profit, and solve for P:
P = (cost + target profit + 0.45) / 0.905
Worked example: $8 cost, $25 target profit
You make a candle that costs $8 in materials and packaging, and you want $25 of profit per sale. Add them: $33 must survive Etsy's fees. Plug into the formula: (8 + 25 + 0.45) / 0.905 = 33.45 / 0.905 = $36.96. List at $36.99.
Check the math: fees on $36.99 are $0.20 listing, $2.40 transaction (6.5%), and $1.36 processing (3% plus $0.25), totaling $3.96. You keep $33.03 after fees, minus the $8 cost, for $25.03 profit. The formula lands within pennies.
The quick margin shortcut
If you do not want the algebra, use the shortcut: multiply your cost-plus-profit by 1.105, then add $0.50. For the candle: ($8 + $25) times 1.105 = $36.47, plus $0.50 = $36.97, effectively the same answer. The shortcut slightly overprices on expensive items and slightly underprices on cheap ones, which is fine for a first draft you will round anyway.
Target profit pricing table
List prices from the formula, US rates, free shipping, no ads, rounded to the nearest cent.
| Item cost | Target profit | List price | Etsy fees | You keep |
|---|---|---|---|---|
| $1.00 | $3.00 | $4.92 | $0.82 | $4.10 |
| $2.00 | $5.00 | $8.23 | $1.24 | $6.99 |
| $5.00 | $10.00 | $17.07 | $2.22 | $14.85 |
| $8.00 | $25.00 | $36.99 | $3.96 | $33.03 |
| $10.00 | $20.00 | $33.65 | $3.65 | $30.00 |
| $25.00 | $50.00 | $83.37 | $8.38 | $74.99 |
Mistakes that eat your profit
Forgetting the transaction fee on shipping. If you charge $5 shipping, the formula's sale total is P plus $5, and fees rise. Either include shipping in P or add it to the cost side and recheck.
Rounding down instead of up. Pricing at $36.96 instead of $36.99 saves the buyer three cents and costs you three cents of profit on every sale. Charm pricing at .99 almost always beats the exact formula output.
Ignoring Offsite Ads. The formula assumes no ads. If an ad drives the sale, Etsy takes another 12 to 15%. Price for your likely ad mix: if half your sales come from Offsite Ads, add roughly half the ad rate to your fee estimate before solving.
Pricing from cost instead of from profit. A 2x markup on cost sounds safe until fees take their cut. A $10 item marked up 2x to $20 keeps about $17.63 after fees; with an $8 cost, that is $9.63 profit, not $10. Start from the profit you want and work backward.