What changes when shipping is free
Free shipping does not make shipping free for you. You still pay the carrier, so the cost moves into the price. The catch is that Etsy’s 6.5% transaction fee and the payment processing percentage apply to the item price plus shipping, so every dollar you add to the price is also charged those percentages. The price therefore has to rise by more than your shipping cost.
The formula behind the number
With fixed costs K (item cost, your shipping cost, the flat processing charge and the listing fee), percentage fees a and a target margin m, the price must satisfy: price = K ÷ (1 − a − m). Offsite Ads, when selected, add their rate to a, and their cap is respected. The calculator solves this exactly and rounds up to the next cent, so the result meets your margin.
A worked example
An item that costs $8.00 and $4.50 to ship, with a US payment account and a 30% target margin, needs a free-shipping price of $21.41. At that price Etsy keeps $2.48 and you net $6.43. Compare that with listing the item at $16.41 and charging $5.00 for shipping: the buyer pays the same total and Etsy takes the same fees.
Choosing between free and paid shipping
- Free shipping is a conversion tool: buyers can filter search results by it, and a single total price is easier to compare.
- Separate shipping is more transparent for heavy or bulky items where cost varies by destination.
- If your shipping cost varies a lot by country, a flat free-shipping price will lose money on far destinations. Use a higher price or charge for international orders.
- Fees are identical for the same buyer total, so choose on what helps the listing sell, not on fees.
Frequently asked questions
Does free shipping save me Etsy fees?
No. Etsy’s percentage fees apply to the item price plus shipping, so folding shipping into the price costs the same in fees as charging it separately for the same buyer total.
How do I set free shipping on Etsy?
Set the shipping price in your listing’s shipping profile to zero for the destinations where you want to offer it. Then list the item at the free-shipping price from this calculator.
What margin should I aim for?
It depends on your costs and how much you spend on ads, but a margin that only covers materials leaves nothing for your time. Try several targets and see what price each needs, then check it against comparable listings.
What if my shipping cost changes by destination?
Use a representative or average shipping cost, or the highest one if you want to be safe everywhere. For very uneven costs, offer free shipping domestically and charge abroad.
Is the Offsite Ads fee included?
Only if you select it. When you do, the price is raised so that the margin holds even on an order that came through Offsite Ads.