Publication date: June 18, 2024
Reading time: 2 minutes
Trying to make the most out of your profit margins and ad spend on Etsy? Finding prices that are fair for both you and your customers can be a difficult endeavor. So can managing your ad campaign to get the best Return on Investment (ROI). Read on to learn how eRank’s Profit and ROI Calculators simplify these often intimidating tasks.
Profit Calculator
The Profit Calculator helps you determine the estimated cost of creating and selling your items, which, in turn, helps you to predict and assess your profit margin for each item that you sell. Both the Profit Calculator and the ROI Calculator are found in the main menu under TOOLS.
To begin, select your location. Then enter your item’s price, shipping fee, and applicable coupons or discounts in the “How much the customer pays” section.
In the next section, enter your costs involved with creating, shipping, and advertising your item. These costs include your labor cost (how much you pay yourself to make the item), the materials’ cost, the cost of the shipping label, the Etsy Ads fee (if applicable), and the $0.20 USD Etsy listing renewal fee. If you registered your business to remit a VAT fee for each sale, select “Yes” next to “VAT Registered,” and this fee then displays at the bottom of this section.
Under “Fees & Taxes,” select an Offsite Ads fee, if applicable. The item’s listing fee, transaction fee, payment processing fee, and regulatory fee automatically display. Learn more about each of these fees here.
Scroll to the bottom of the page and click “Calculate” to determine the estimated profit of your item.
Not making as much profit off the item as you thought you were? Consider raising your prices, switching to lower-priced materials, or offering fewer discounts to customers.
ROI Calculator
Now that you know how to estimate your listings’ profit margins, use the ROI Calculator to evaluate the performance of your Etsy Ads campaign. This calculator enables you to assess how well your ads are performing in order to help you make the right decisions towards achieving your sales performance goals.
Head to your Etsy dashboard and select “Marketing” in the Shop Manager menu on the left. Then, select “Etsy Ads.” Use the drop-down menu above the graph to choose the timeframe for which you would like to gather data. eRank recommends that you use at least 30 days’ of data in order to observe shopping trends before adjusting your budget and advertised listings.
Enter your ad spend, ad views, ad clicks, orders from ads, and revenue from ads in the appropriate fields in the calculator and click the orange “Calculate” button to calculate your ad performance metrics.
The Performance Metrics section displays your campaign’s Average Cost per Click (CPC), Return on Investment (ROI), Cost per Order, Click Through Rate (CTR), and conversion Rate. Note that there are no specific metrics to achieve for your ad to be considered successful. If you unsatisfied with your campaign’s conversion rate, search your advertised listings for low-performers. Try removing these under-performing listings from your campaign to see if the conversion rate improves.
“Work Smarter” and Save Money
Use these tools to refine your Etsy shop’s ad budget and profit margins. eRank recommends checking your finances at least every 30 days. Keeping track of how much you spend on your business and how much you earn from it allows your to make the necessary adjustments to optimize your spending over time. In other words, “work smarter instead of harder.” With some time and patience, you’ll be able to make the most out of the money your sales have brought you.
RESOURCES
Gross Profit and Net Profit – What’s The Difference? — eRank Blog