Etsy made some changes last week, where they announced they’ll be increasing their fees. For many of us, this was a wake up call. We have to sit back and ask ourselves how well we really know our numbers. Sure we might know our gross revenue or monthly sales volume – but do you know your profit margin?
In this post, I will be focusing on how to find the most PROFITABLE platform for your business. We’ll be walking through the numbers and finding which platform gives you the best margin based on the number of sales and average selling price for your shop.
Understanding Your Profit Margin
It’s time to dig in, do your research, and find the BEST platform for your business. In my free Profit Comparison Tool, you can see ALL the details on your profit margins. Just plug in your monthly sales volume and average selling price (the average price for one of your sales) and you’re ready to roll. Whether you sell digital or physical products, this tool will help you determine which platform is most profitable for you: Etsy, Shopify, Squarespace, or Ravelry.
In the tool, I’ve broken down every fee for every platform. Listing fees, transaction fees, processing fees – all of it. Keep in mind, all the data in this tool is based on US numbers, so if you’re outside of the US you’ll need to adjust the rates for your country.
Profit Margin for Pattern Sales
In this example, you’ll see the profit margin for pattern sales with an average selling price of $5.00 each:
Etsy is a steady profit margin of 83%, no matter how large your sales volume is. Ravelry is also a steady profit margin of 91% and an even higher percentage if you set up micropayments in Paypal (94% profit margin if you’re using this feature).
On the other hand, you can see that as you have more sales on Shopify, Etsy Pattern, and Squarespace, your profit margin increases. At 100 sales per month, Shopify Basic and Squarespace are both at an 85% profit margin.
At around 25 sales, Etsy Pattern becomes more profitable than Etsy. At about 75 sales, Shopify Basic and Squarespace become more profitable than Etsy (but still not as good as Etsy pattern).
No matter how many sales you have, Ravelry’s profit margin is by far the best for selling $5.00 digital products. Even at 500 sales, other platforms don’t come close to the profit margin of Ravelry.
Profit Margin for Physical Products
Now, let’s look at a profit margin for physical products. (Note that Ravelry doesn’t really apply in this example because it’s only for digital patterns). We’ll use $50.00 as the average selling price here:
The first thing you’ll notice is that the higher average selling price really evens out the playing field here. We see a large increase in profit margins around 25 sales per month. That means that at this higher average selling price, you can reach a higher profit margin with less sales.
Etsy Pattern is just barely winning in this example, with a 96% profit margin for anything above 50 sales per month. Right behind is Shopify Basic, with 95% profit margin at 50 sales per month and maxing out at 96% at 100 sales per month and above.
Winner: Etsy Pattern & Shopify Basic
Both of these platforms are great long-term options when you look at profit margins.
Choosing a Platform
Remember, every platform has different features and benefits, they also have different downfalls. The most important thing is to do your own research and find what’s right for YOU.
Being in Control
There’s a lot of other things to consider here other than just your profits. Remember, you’re always at the mercy of someone else. You’ll never have 100% control over your online shop, though with some platforms you will have more control than others. At the end of the day, any platform can change their prices or policies at any time.
Marketplace vs. Standalone Website
Etsy and Ravelry are a marketplace. Customers are already there and all you have to do is set up shop. On the other hand, Shopify and Squarespace are standalone websites, where you are driving all of the traffic to your shop.
Taking the Next Step
Now that we’ve looked at a few of the numbers, it’s time to download the freebie and see for yourself!
Still not sure what to do next? Check out this video where I break down all the numbers and walk you through both the digital and physical product examples:
Which platform will you use for your craft business? Leave a comment with why you love it!