Can You Live off Etsy?

Everyone in my craft group has an Etsy shop, one is even an Etsy co-founder.  Some have been in the Indie craft scene for over a decade.  But everyone is a hobbyist.  At one of our recent meetings, someone asked if you could actually make a living with an Etsy shop.  There are no studies on this, so we all took our best guess: unlikely.

I could not stop thinking about this.  I have an active shop, but I don’t think that the number of sales a shop has necessarily determines your income.  You can have a lot of sales, and still not make any money.  You might be putting way too much time and material into the shop without calculating the required return.  So let’s talk about that.
Let’s start by asking how much money you want to make.  $50,000 before taxes, working 40 hrs a week, would not be an unreasonable figure.  Here in NJ, you can’t raise a family on that, but you can make a single living.  And I want to look at the possibility of making a living, not “contributing to family income.”  (If this figure sounds too high or too low for you, just make a mental adjustment.)

Divided by 50 weeks of working and taking 2 weeks off for vacation, this means that you have to make $500 each week.  How much is that in sales revenue?  I’m going to say $2000.  Here’s how I did the math for this:
Income                                                             $500 / 25%
Materials                                                          $600 / 30%
Fees (Etsy, Paypal, Listing Fees)                 $140 / 7%
Equipment, Tools, Packaging, Printing     $200 / 10%
Overhead (Electric, Internet)                       $100 / 5%
Wasted and extra materials                          $100 / 5%
Breakage, botched designs and orders       $100 / 5%
Growing inventory and materials                $200 / 10%         

That’s 97%, with 3% wiggle room.  I am here falsely assuming that you sell ALL the items you list.  I am also assuming that you already have a running Etsy shop with a good number of listings.  This is not a startup calculation.
How many items do you need to sell to make this?  If your average item is $50, then that’s 40 items.

Anecdote: I recently ordered a dress on Etsy for $88.  I am not a taylor, but friends estimated it took about 3 hrs to make that dress.  Can the seller make 20 dresses in one week?  No because that’s 60 hours just spent dressmaking.  Her dresses are seriously underpriced.
But let’s say it takes you an average of 1 hour to make an item and your average item costs $50.  That means you need to make 40 items in any given week.  Can you do that?  I doubt it.  Why?  Because we’ve only taken account of the time spent making the item.  But that’s hardly all that’s involved.  What else takes time?

1.      Photos (for 40 new listings, that’s 200 pictures minimum).
2.      Writing up 40 listing descriptions.
[Observation: if you make 40 different items, you will kill yourself just taking photos and making listings.]

3.      Other internet time: convos, blogging, promoting …
4.      Packing and shipping (for international orders, trips to the post  Office).
5.      Shopping for supplies.
6.      Bookkeeping, working out pricing for custom orders etc.
Would it be fair to say that items 1-6 will fill up to half your week already?  Then you can make only 20 items and your math is way off.  You need be faster or you need to double your prices. 

Somebody said this to me once: if you want to make money selling crafts, remember that you will spend up to 60% of your time selling, and 40% of your time making stuff.  Seems right, doesn’t it?
If these observations have you pondering, or worse, have you worried, do this: next week, keep a log of all your time spent, sorted by the categories above.  Better, do it for a month because no two weeks are the same.  If the math doesn’t add up for you, you need to rethink your shop.