Salary
Average Salary: $44,380
Expected Lifetime Earnings: $1,852,776
You're an independent contractor—a.k.a. your own boss. Nobody tells you what to do. That's right—nobody tells you what to wear, where to work, or if that report isn't on their desk by 3:00PM you're fired. Way to stick it to the man.
Nobody pays you a salary, either; you pay yourself one. The average income for an Etsy seller is $44,380, which isn't dire but isn't great, either (source).
It's possible to make a comfortable living selling crafts online—look at Three Bird Nest and their headbands that rake in $65,000 a month (source). That's over half a million dollars a year.
Now, to burst your bubble: While this kind of cash isn't impossible to make off Etsy, it's not likely. The owner of Three Bird Nest, Alicia Shaffer, is a professional marketer. She hires a professional model and professional photographer to give a glossy, professional look to her store's headbands. She also outsources the bulk of production to India and then adds the lace trimmings and buttons by hand here in the U.S. (source).
Most people are following a much more scaled down, do-it-yourself model that makes maybe half what Three Bird Nest takes in every month.
Starting a business—and that's what an Etsy shop is, a business—is expensive. When you first start out, you might not make any sales, but you'll still have to spend money on your materials and supplies to make the art or crafts that you're selling. You could be in the negative numbers if you're not careful, so make sure you've got some savings to draw on when you're getting your shop off the ground.
Once you've figured out your own costs, you need to take Etsy's into account. Nope, an Etsy shop isn't free. The company has to make money, too, you know. Their dogs want gourmet treats, too.
Etsy takes a percentage of your profits (3.5% commission on the price before shipping), as well as charging you a small fee (twenty cents per item you list) to use their site as a business platform. They make money when you make money, so it behooves them to advertise your wares all over the place.
You also will have to pay for the system that collects the money for you. If you use Paypal, you'll owe those folks thirty cents per transaction plus 2.7% of the money charged including shipping. If you use Etsy's Direct Checking, that'll be twenty-five cents per transaction, plus 3% of the money charged including shipping.
What this all boils down to is that you'll have to charge a certain minimum amount per items just to recoup your expenses. By the time you're done paying for materials, labor, shipping, Etsy charges, and Paypal or Direct Checking charges, you'll find it's only worth your while if you charge your customers a premium (source). Etsy offers plenty of guides on how to price items—as well has how to market them—in their Seller's Handbook.
Our final piece of advice is this: Etsy may be the biggest name in the biz, but it's hardly the only one. Online handmade marketplaces are on the rise. Even Amazon is getting into the game with their new site Handmade.