Should you offer free shipping on Etsy?
Most advice says "build shipping into the price". That is only better when the extra revenue covers the extra fee — and the fee applies to shipping as well. Here is the arithmetic, both ways.
A rough answer: building shipping into the price adds the 6.5% and payment fee on the shipping amount too, so you keep less of it — but you may sell more. The calculator shows the money; the demand effect you test yourself.
Currency-agnostic: enter everything in the same currency. Rates are published starting points — replace them with yours.
Why "free shipping" is never free
When you charge $24.99 plus $6 shipping, the fees are charged on $30.99 and on $30.99 you also collect. When you price at $30.99 with free shipping, the buyer pays the same, the fee is the same, and you get one benefit: the price they see is the price they pay. The cost you are trying to cover — the $8.20 label — is unchanged in both cases.
What actually changes
| Effect | Direction |
|---|---|
| Fee base includes shipping | Same either way, if the total the buyer pays is the same |
| Conversion | Usually up with free shipping, and that is the real argument for it |
| Perceived price | Higher headline price, no surprise at checkout |
| Shipping that costs more than you charge | You are losing money on every order — visible only when the label cost is entered honestly |
The test worth running
Pick one listing, price it both ways for two weeks each, and compare orders and profit, not revenue. Per-order profit is what tells you whether the extra orders paid for the shipping you absorbed.
Margin Guard takes your Etsy orders export, adds up fees, shipping, cost of goods and ads, and ranks every item by profit. Free up to 200 orders, no signup.
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