Who this is for
You've listed products on Etsy, but you're second-guessing your prices and shipping setup. Should you offer free shipping? How do you set processing times without overpromising? Is $29.99 really better than $30?
Know your real Etsy profit margin
Factor in materials, labor, packaging, and all fees to see actual profit.
This guide covers the shipping settings that affect your search ranking, the processing time setup that protects your reputation, and the pricing psychology that converts browsers into buyers.
The goal
A shipping and pricing strategy that gets you visibility in search, sets accurate buyer expectations, and leaves you with healthy margins. No guessing, no racing to the bottom.
How shipping affects your Etsy search ranking
Etsy factors shipping into search ranking. Listings with lower shipping costs—or free shipping—get preferential treatment in search results.
Here's how Etsy evaluates shipping:
- Free shipping: Gets priority placement, especially for orders $35+
- Shipping under $6: Maintains visibility for US domestic listings
- Higher shipping costs: May appear lower in search results
This isn't subtle. Etsy explicitly rewards sellers who minimize shipping friction for buyers.
The free shipping guarantee
Etsy's Free Shipping Guarantee gives priority placement in US search results to shops that offer free shipping on orders $35 or more.
How it works
When you enable the guarantee:
- All orders $35+ shipping to the US get free shipping automatically
- Your listings display a "Free shipping" badge
- You get boosted visibility in search for US buyers
The guarantee applies to both domestic and international sellers shipping to US customers.
Setting it up
- Go to Shop Manager → Settings → Shipping Settings
- Click the Free Shipping Guarantee tab
- Select Get Started and follow the prompts
- Choose Set Free Shipping
Once enabled, all new listings priced over $35 automatically get free shipping for US buyers. Listings under $35 aren't affected unless they're part of an order totaling $35+.
Should you offer free shipping?
For most sellers, yes—if you can build the cost into your prices.
Pros:
- Search ranking boost
- Higher conversion rates (buyers prefer all-inclusive pricing)
- Cleaner presentation (no sticker shock at checkout)
Cons:
- You absorb shipping costs (or raise prices to compensate)
- International buyers may still see shipping charges
- Low-priced items become harder to margin correctly
The math: if you sell a $25 item with $5 shipping, you could price it at $30 with free shipping. Same total for the buyer, but better search visibility for you.
Quick Estimate: Etsy Fees
Pricing to include shipping
If you're offering free shipping, you need to build shipping costs into your product prices. Here's how to think about it:
Calculate your true costs
Add up:
- Materials and supplies
- Your labor (pay yourself a reasonable hourly rate)
- Etsy fees: $0.20 listing fee + 6.5% transaction fee + 3% + $0.25 payment processing
- Packaging materials
- Average shipping cost for your products
Example calculation
A handmade ceramic mug:
- Materials: $4
- Labor (1 hour at $20/hr): $20
- Packaging: $2
- Shipping (average): $8
- Subtotal: $34
Etsy fees on a $45 sale:
- Listing: $0.20
- Transaction (6.5%): $2.93
- Payment processing (3% + $0.25): $1.60
- Total fees: $4.73
To net $34 after fees, price at approximately $45 with free shipping.
The margin check
After all costs and fees, what's left? That's your actual profit. If it's too thin, raise your price or find ways to reduce costs. Racing to match the cheapest competitor is a losing strategy on Etsy—you're selling handmade, not commodity goods.
Processing times: what to set
Processing time is how long you need to prepare an order before handing it to a carrier. This is separate from shipping transit time.
Why processing times matter
- Buyer expectations: Shoppers see estimated delivery dates based on your processing time + carrier transit time
- On-time shipping rate: Missing your stated processing time hurts your metrics
- Star Seller eligibility: Requires 95%+ on-time shipping with tracking
How to set realistic times
- Go to Shop Manager → Settings → Processing Profiles
- Create profiles for different product types
- Set processing time in business days (1 day to 10 weeks)
- Assign profiles to your listings
Best practices
Build in buffer. If you typically ship in 2 days, set processing to 3-5 days. This gives you flexibility for unexpected delays without missing deadlines.
Be honest about capacity. If you have a day job and can only pack orders on weekends, your processing time should reflect that. Overpromising leads to stressed-out shipping and unhappy customers.
Use variation-level times. If some variations take longer (custom orders, made-to-order items), set different processing times for each variation.
Pre-make popular items. Ready-to-ship inventory can have shorter processing times, which improves estimated delivery dates and conversion rates.
Processing schedule settings
You can customize when you process orders:
- Select which days you work (weekdays only, or include weekends)
- Mark holidays when you won't be processing
This prevents Etsy from calculating delivery dates that assume you're working seven days a week.
Price psychology that works on Etsy
Pricing isn't just math—it's perception. These psychological principles help your prices feel right to buyers.
Charm pricing (.99 endings)
$29.99 feels meaningfully cheaper than $30, even though it's a penny difference. This works because buyers focus on the leftmost digit first.
When to use it: Lower to mid-range items where price sensitivity is high.
When to skip it: Premium or luxury items where whole numbers feel more sophisticated ($100 vs. $99.99).
Price anchoring
Anchoring shows buyers a higher reference point so your actual price feels like a deal.
On Etsy, this looks like:
- Sale pricing: "Was $40, now $30"
- Showing a higher-priced variation first
- Comparing to retail alternatives in your description
Important: Etsy requires that any "original price" you show was a real, in-use price. You can't inflate a fake original price just to show a discount.
Tiered pricing (good/better/best)
Offering three options—basic, standard, and premium—drives sales toward the middle option. The premium makes the standard look reasonable; the basic makes the standard look like good value.
Example for a print seller:
- 5x7 print: $15
- 8x10 print: $25 (most popular)
- 11x14 print: $40
Most buyers choose the middle option. You've guided them there by providing context.
Bundle pricing
Bundles increase order value while giving buyers perceived savings.
Example:
- Individual greeting card: $5
- Set of 5 cards: $22 (saves $3)
The buyer feels they're getting a deal. You're increasing average order value. Both sides win.
Premium positioning
On Etsy, many buyers expect to pay more for handmade, unique, or artisan products. Pricing too low can actually hurt sales by signaling low quality.
If your product is genuinely well-made, don't be afraid to price accordingly. A $75 handmade ceramic vase communicates "quality" in ways a $25 vase doesn't.
Common pricing and shipping mistakes
Setting shipping too high
Etsy's algorithm deprioritizes listings with expensive shipping. If your shipping is above $6 for US domestic orders, your search visibility may suffer. Consider building some or all of that cost into your product price.
Underpricing to compete
Competing on price against mass-produced imports is a race to the bottom. Your advantage is uniqueness, quality, and the handmade story—not being the cheapest.
Processing times that are too short
Missing your processing window hurts your on-time shipping rate, which affects Star Seller status and can impact search ranking. It's better to underpromise and overdeliver.
Forgetting to account for Etsy fees
Etsy takes roughly 10-12% of your sale price (listing fee + transaction fee + payment processing). If you price based on materials + labor alone, you're giving away your margin.
Ignoring international shipping
If you ship internationally, make sure those rates are set up correctly. Undercharging for international shipping eats into profits; overcharging drives away buyers.
Shipping and pricing checklist
Before publishing, verify:
- Free shipping guarantee enabled (if offering free shipping on $35+ orders)
- Shipping costs built into product prices
- Processing times are realistic with buffer built in
- Processing schedule reflects your actual availability
- All Etsy fees accounted for in pricing
- Prices use appropriate psychology (charm pricing, anchoring, tiers)
- International shipping rates are accurate
- Shipping profiles assigned to all listings
FAQ
Does free shipping really improve search ranking?
Yes. Etsy explicitly states that listings with free shipping or low shipping costs get priority in search, especially for US buyers. The free shipping guarantee on orders $35+ provides the clearest boost.
Should I raise prices to offset free shipping?
Usually, yes. If you currently charge $25 + $5 shipping, pricing at $30 with free shipping gives the same total to buyers while improving your search visibility. Test both approaches and monitor your conversion rate.
What processing time should I set?
Set a time you can reliably meet, with buffer for unexpected delays. If you typically ship in 2 days, set 3-5 days. Consistency matters more than speed—missing deadlines hurts more than slightly longer estimates.
Is charm pricing (.99) always better?
Not always. For handmade and artisan items, round numbers ($30, $50, $100) can feel more premium and intentional. Charm pricing works best for lower-priced, higher-volume items.
How do I know if my prices are too high or too low?
Monitor your conversion rate in Etsy Stats. If you're getting lots of views but few sales, price may be a barrier. If items sell instantly, you might have room to raise prices. Test incrementally and track results.
Can I change shipping settings after listing?
Yes. You can update shipping profiles and processing profiles anytime, and changes apply to all associated listings immediately.
Shipping and pricing work together. Free shipping boosts search visibility; realistic processing times protect your reputation; smart pricing psychology converts browsers into buyers. Get these fundamentals right, and you've removed three major barriers between your products and your customers.
For help with the other parts of your listings, see our guides on titles, tags, descriptions, and photos.
Need optimized listings to match your pricing strategy? ListingForge handles titles, tags, and descriptions automatically.
Know your real Etsy profit margin
Factor in materials, labor, packaging, and all fees to see actual profit.
Get guides like this in your inbox.
Practical seller guides — no fluff, no daily spam.
No spam, unsubscribe anytime.
Sources
- Get Priority Placement in US Search with a Free Shipping Guarantee – Etsy Seller Handbook
- How to Offer Free Shipping – Etsy Help
- We're Updating How Shipping Price Is Factored Into Search – Etsy Seller Handbook
- How to Set Processing Times and Ship-By Dates – Etsy Help
- The Ultimate Guide to Shipping – Etsy Seller Handbook
- Guide to Etsy's Processing Times and Ship-By Dates – Alura
- How to Price Etsy Products: A Guide – eRank
- Mastering Etsy Pricing for Profit – Alura