Can You Afford Free Shipping on Etsy? Here's the Math

Etsy pushes free shipping hard. Sellers who offer it can get a search ranking boost, and buyers love seeing "FREE delivery." But free shipping isn't free for you — you're the one paying the carrier. So the real question is: can you afford to absorb that cost and still make a profit?

Here's the math, when it makes sense, and when it doesn't.

Why Etsy Pushes Free Shipping

Etsy's algorithm favors listings that offer free shipping in relevant search results. That can mean more visibility and more sales. The tradeoff is that you pay the shipping cost instead of the buyer. So your revenue per order is lower (buyer pays item price only), while your costs stay the same or even go up if you're now paying for shipping out of pocket.

To decide whether free shipping is worth it, you need to know: after Etsy's fees and your costs (including the shipping you pay), do you still make an acceptable profit?

The Hidden Cost Breakdown

When you offer free shipping:

1. Buyer pays: item price only (e.g. $32).
2. You receive: that amount minus Etsy's fees (listing, transaction, payment processing).
3. You pay: materials, labor, packaging, and the actual shipping cost (postage, label, etc.).

So "free shipping" really means "shipping cost is deducted from your margin." If shipping costs you $5 and your margin was only $6, you're left with $1 profit — or a loss if shipping is higher than that.

When Free Shipping Makes Sense

Free shipping usually works when:

• Shipping is cheap relative to the item price. A $3 shipping cost on a $45 item is easier to absorb than on a $12 item.
• You can fold shipping into the item price. If you raise the list price by $4 and shipping costs you $3.50, you're still ahead and the buyer sees "free shipping."
• Your margin is high enough that giving up the shipping revenue doesn't push you into the red.

Lightweight, flat items (stickers, digital-ready physical products, small jewelry) often fit this profile. Heavy or large items are trickier.

When Free Shipping Doesn't Make Sense

Skip free shipping (or use it only on select items) when:

• Shipping is a big chunk of the sale. For a $20 item that costs $8 to ship, you'd need a very low cost of goods to make it work.
• You'd have to raise prices so much that you'd lose sales or look out of line with competitors.
• Your margin is already thin. Absorbing shipping could turn a small profit into a loss.

Always run the numbers before turning on free shipping across the board.

Example: Lightweight vs. Heavy Item

Lightweight: $28 necklace, $3.50 to ship

• With buyer-paid shipping ($5): Revenue $33, you pay $3.50 shipping → net $29.50 before other costs. Etsy fees on $33.
• With free shipping: Revenue $28, you pay $3.50 shipping → net $24.50 before other costs. Etsy fees on $28.

If your margin (after materials, labor, fees) was comfortable at $29.50, dropping to $24.50 might still be acceptable — or you might raise the necklace to $32 "with free shipping" so you keep a similar margin.

Heavy: $35 candle, $9 to ship

• With buyer-paid shipping ($10): Revenue $45, you pay $9 shipping → net $36 before other costs.
• With free shipping: Revenue $35, you pay $9 shipping → net $26 before other costs.

That's $10 less per order. You'd need to raise the candle price significantly (e.g. to $44 "with free shipping") to stay even, which might hurt conversion. For heavy items, buyer-paid or partially subsidized shipping is often smarter.

Run Your Own Numbers

Every product is different. Use our free Etsy fee calculator to plug in your item price, your real shipping cost, and $0 for "what buyer pays for shipping" to see your exact profit with free shipping — then compare to charging for shipping so you can decide product by product.