Can you confidently say that you’re running your Etsy business successfully? Are you working to put a little side money in your pocket or are you planning to grow your business until you’re full-time? Whichever route you plan to take for your shop, you need to make sure you keep an eye on these Etsy business stats in order to stay afloat.
When it comes to running your own Etsy business, starting is only half the battle. Sure, someone close to you probably mentioned that your creative hobby would make a great business opportunity on Etsy. So you’ve gone through the painstaking process of starting your Etsy business from the ground up… now it’s time to keep it running!
Between scaling up to compete with other Etsy shops, hiring and managing shop assistants (if you’re fortunate enough to need help), and trying to keep your creative spirit alive, running a small Etsy business is hard work.
Multiple hats of an Etsy seller
You know as well as the next Etsy seller that part of what makes it so hard is the fact that you need to wear multiple hats.
Think about it. You’re an artist, a creative director, a marketer, an accountant, a copywriter, a photographer, an influencer, customer service, and everything else in between.
Well today, we’re chatting about another hat that you’ll inevitably wear in your Etsy business: data analyst.
That’s becuase if you want to run your business to the best of its ability, you need to know these Etsy business stats and know them well.
Year To Date Orders: Etsy Business Stats That Matter
The number of orders you’ve received between January 1 and today is a vital metric to your businesses.
Year to date (YTD) simply means from the first day of the year until now. So at any given point within the year, you can pull your YTD orders to know exactly how many orders you’ve fulfilled since the beginning of the year.
Pro tip: Depending on your business, you may be operating on a calendar year or fiscal year (FY). A calendar year is simple, it starts on January 1 and ends on December 31. But a fiscal year can be any 12 consecutive months throughout the year, not necessarily starting in January. Whichever you choose to operate your business has different tax implications and requirements for maintaining your financial records.
Being able to pull your YTD orders throughout the year can give you a snapshot of your Etsy business’ success at any given time. This will help you compare orders from this year to last year, without waiting until the end of the year to do it.
While YTD orders is a significant number to know, it’s not a precise measurement of your brand’s integrity, health, or success. So don’t go comparing your number of sales to that of your competitor. You’re not them, and they’re not you – don’t rob yourself of happiness by comparing yourself to others!
Cost of Goods Sold: Etsy Business Stats That Matter
One of the most important Etsy business stats you need to know for shop is your cost of goods sold. You need to know this for every item you sell in your shop. Every. Single. Item.
What is Cost of Goods Sold?
Your cost of goods sold is just what it sounds like: it’s the amount of money it costs you once an item is sold in your Etsy shop. It’s an important figure to know becuase it adds up all the little fees and costs that you might not think of day to day.
We’re talking Etsy’s selling fees, processing fees, shipping costs, gift-wrapping costs, and so on. All of these expenses chip away at your bottom line, and you’ll need to know them before you can calculate your gross profit.
How do you find your cost of goods sold?
To find your cost of goods sold, you add together all of Etsy’s selling fees, shipping fees, processing fees, and the actual amount it costs for you to produce your product. This is everything it costs you to create your item for sale.
You can try to remember all of Etsy’s fees on your own, type or write them all out then crunch the numbers with your phone… but we’ve created a tool that will make this a little easier for you. Use our free Etsy Fee Calculator to punch in a few of your product prices, and it’ll calculate your Cost of Goods Sold so you don’t have to!
Gross Profit: Etsy Business Stats That Matter
Keeping track of your gross profit throughout the year is absolutely essential!
What is Gross Profit?
Your gross profit tells you how much money your business makes from the sale of an item. This amount is going directly into your pocket, even though you’ll have to pay taxes on it later.
We’re always shocked to hear that Etsy sellers don’t know how much money they make per individual sale. And we talk with a lot of Etsy sellers!
How do you find your Gross Profit?
To calculate your gross profit for your Etsy business, take your total revenue and subtract your cost of goods sold.
When you first calculate it, it can be quite thrilling to see how much money has gone through your hands!
Net Profit: Etsy Business Stats That Matter
Once you learn your gross profit from your Etsy business stats, it’s time to figure our your net profit.
What is Net Profit?
After everything is said and done, your net profit is the money you’ve made to put food on your table. Everybody else (Etsy, IRS, the mailman, your landlord, etc.) has received their percentage of your earnings, and now this is yours to keep.
Your net profit is what proves the success of your business. Are you losing money or making money?
How do you find your net profit?
To find your net profit, simply take your gross profit and subtract your operating costs, taxes, insurance, and any other business expense that isn’t included in your cost of goods sold.
You don’t want to add your cost of goods sold into this calculation, becuase you’re already accounting for this in your gross profit.
Once you know your net profit, you can start to tweak everything else mentioned above to increase your profit margin.
What’s your Profit Margin?
Your profit margin is the amount that you pocket after everything – after fees, production expenses, and shipping. It’s an important metric to know, as the profit is ultimately the reason why we’re selling.
This Etsy business metric also helps you understand how much you can afford to reinvest into the company – be that in creating more products or increasing your marketing spend.
Two of the easiest ways to increase your profit margin on Etsy is by spending less on creating each individual product or by raising your prices.
Year to Date Expenses
Your expenses for the year give you a great insight into how much it costs you to operate. Obviously, keeping your expenses as low as possible is essential. Low expenses mean that you can price your products more competitively and potentially sell more products thanks to that competitive pricing.
It goes without saying that keeping your expenses too low can lead to problems and ultimately unhappy customers.
However, the main point is this: Knowing how much it costs your business to operate and do its thing helps you stay in control should any financial problems arise.
Shipping Expenses: Etsy Business Stats That Matter
Do you offer free shipping?
Thanks to Amazon Prime, it’s now something that a lot of us expect. But here’s a tricky question: whether you offer free shipping or not, do you know how much it actually costs you?
Knowing how much free shipping costs your business is arguably the first step in offering free shipping. If you don’t offer free shipping, the amount you’ve charged for shipping for the year can help you analyze if you can afford to provide it.
Knowing your shipping expenses also helps you find a better delivery service. But note that “better” doesn’t always mean cheaper. Cheaper shipping can often lead to more refunds and lost items, and ultimately more unhappy customers.
Using this data
There’s no need to memorize the numbers, but having them on paper or in a spreadsheet and constantly updating them can help you set tangible goals to make your company more profitable.
Gather these Etsy business stats in your shop for a few months and then start comparing it month to month and year to year.
What’s really valuable is comparing the data from the same period last year (if you have access to that data). It can help you show how you’ve grown in the last year and how your business has evolved and developed. Have your profit margins increased or decreased in the previous year? What’s the relationship between your profit margins and your expenses?
The answers to all these questions help put you in the driver’s seat of your business. It pays to spend the time figuring these business statistics out and collecting the data over the long term.
But this data tells you about more than just your business. For example, if your average order value is down compared to this time last year, that may be because competitors have moved into your market. This is a sign that it may be time to improve your SEO to rank higher, launch more products or re-address your pricing structure.
Comparing this data year over year and month over month gives you both a micro and macro view of your business’s performance.
From here, you can make more informed decisions about what to do with your business, rather than blindly trusting your gut.
Over to you
Every year, you can improve upon your business when you get to know and analyze your Etsy business stats.
The information that we’ve listed in this article can help you take giant steps in figuring out the weak points of your business operations. Now is this time to figure this out and fix it for the new year! This will, no doubt, set your 2022 up to get started on the right foot!
What did you find most surprising about your Etsy business stats this year? Did the cost of your materials rise, thus, decreasing your profit margin? What did you do to pivot, if anything? Let us know in the comments below!