A 20% sale is not a 20% pay cut — it's worse

Twenty percent off sounds survivable. You sell a product for a fifth less, you keep roughly a fifth less profit — that's the intuition almost every seller brings to their first sale.

The intuition is wrong, because a discount doesn't come out of your revenue. It comes out of what's left after Etsy's fees and your costs have taken their share — and that leftover is a much smaller number than the price. On the candle our sample shop sells, a 20% discount doesn't trim the profit by a fifth. It takes 57% of it. Here is the whole thing, fee by fee, on a product you can open in our app and check.

The candle at full price

The Vanilla Soy Candle from our sample shop: priced at $18, with $4.95 shipping charged, so the buyer pays $22.95.

What it costs to make and send one:

• Materials: $4.74
• Packaging: $0.30
• Your time: 12 minutes at $20 an hour = $4.00
• Shipping label: $5.60
• Making costs: $14.64

Etsy's fees at full price:

• Transaction fee: 6.5% × $22.95 = $1.49
• Payment processing: 3% × $22.95 + $0.25 = $0.94
• Listing fee: $0.20
• Total fees: $2.63

Profit: $22.95 − $2.63 − $14.64 = $5.68 (a 24.8% margin)

Healthy. This is the shop's bestseller, and at full price it earns its keep.

The same candle at 20% off

Etsy discounts the item price, not the shipping: $18.00 × 0.80 = $14.40. The buyer now pays $14.40 + $4.95 = $19.35. You have handed the buyer $3.60.

The percentage fees shrink a little, because they're charged on the smaller total:

• Transaction fee: 6.5% × $19.35 = $1.26
• Payment processing: 3% × $19.35 + $0.25 = $0.83
• Listing fee: $0.20 — unchanged. The listing fee doesn't do sales.
• Total fees: $2.29

And the making costs? Still $14.64. The soy wax, the jar, the label and your twelve minutes did not get 20% cheaper because you ran a sale.

Profit: $2.43 (a 12.5% margin)

Where the $3.60 went

• Discount handed to the buyer: −$3.60
• Fees handed back to you, because the total was smaller: about +$0.34 — the percentage fees return 9.5 cents per dollar you discount (6.5% + 3%), and the fixed $0.25 and $0.20 return nothing at all
• Profit lost: about −$3.26

$5.68 became $2.43. A 20% discount cut this product's profit by 57% — nearly three times the headline number. That's the mechanic worth remembering: the discount is measured against your price, but it's paid out of your profit. The thinner the margin you started with, the uglier the ratio gets — which brings us to half price.

At 50% off, the buyer doesn't cover your costs

Half off the candle: price $9.00, buyer pays $9.00 + $4.95 = $13.95.

Look at that $13.95 next to the making costs: $14.64. Before Etsy has taken a single fee, the buyer's payment no longer covers what the candle costs to make and post. Add the fees at the sale price ($1.78) and the order finishes at −$2.46: you pay $2.46 for the privilege of selling a candle.

No stand-still number exists here — you can't sell your way out of a loss by selling more of it. Every extra order is another $2.46.

The stand-still number

Back at 20% off, the candle still makes money — just much less of it. So the deciding question for any sale is: how many sale orders replace one full-price order?

• One full-price order: $5.68 profit
• One sale order at 20% off: $2.43 profit
• $5.68 ÷ $2.43 ≈ 2.3× the orders just to stand still

Orders come whole, so: two sale orders bring $4.86 — still short of one full-price order. You need 3 sale orders to come out ahead of the single full-price sale you gave up. If your 20%-off weekend doesn't come close to tripling this product's normal order count, the sale didn't promote the candle. It just paid you less for making it.

Now discount a product that's already underwater

Our sample shop holds a second lesson, and it's the one that matters more. The Wax Melt Clamshell — 6 pc sells for $6.95 with $3.50 shipping charged. Its making costs are $9.44 — modest materials ($1.57) and packaging ($0.35), eight minutes of your time ($2.67), and a $4.85 shipping label on a seven-dollar item. At full price its fees are $1.44, and it loses $0.43 on every single-item order. Its only comfortable home is as a second item inside a bigger order, where it doesn't carry a $0.25 processing fee and a solo label of its own.

Put it in a 20% sale anyway — shops do, because sale banners usually cover the whole shop:

• Sale price: $5.56; the buyer pays $9.06
• Fees at the sale price: $1.31 (you saved 13 cents)
• Loss: −$1.69 per order

The discount took a product that was 43 cents underwater and pushed it to $1.69 underwater — nearly four times the loss, on every single "successful" sale. A sale cannot fix an underwater product; it can only sell the problem faster. The fixes for the clamshell are a higher price, a cheaper label, or selling it only in bundles — never a percentage off.

One softening factor: Share & Save

If the order arrives through a link you shared yourself under Etsy's Share & Save programme, Etsy returns part of the transaction fee — in TrueCost's Sale check we model it as the transaction fee effectively dropping from 6.5% to 2.5%. On the candle at 20% off, that brings the fees down to $1.51 and the profit back up to $3.20, and the stand-still number drops to 2 orders. It softens the math; it doesn't change its shape. A sale you drove yourself is cheaper than one Etsy sent you — but the discount still comes out of the same thin slice.

When a sale can still make sense

None of this means "never run a sale." It means run one with your eyes open, for a reason that survives the math:

• Clearance. If the stock is already made, its materials are spent either way. Getting most of the money back from a candle that would otherwise sit until next season can be right — judge it against what the shelf could earn instead, not against full-price profit.
• Bigger baskets. The $0.25 processing charge is per order, not per item. A discount that persuades a buyer to add a second item spreads that fixed fee — and it's the one setting where our clamshell's math works at all: as the second item in somebody else's order, not as a discounted solo act.
• A first order you can earn back. If your buyers reliably return at full price, a thin first order can be a fair price for a repeat customer. "Reliably" is doing heavy work in that sentence — check your own repeat-buyer numbers before betting margin on them.

What never makes sense: a shop-wide sale switched on because a competitor switched one on, sweeping products you haven't checked at the discounted price into the same banner as the ones you have.

Check before you announce the sale

Every product card in the TrueCost workspace has a Sale check: type in the discount and it shows the sale price, the fees at that price, your real profit — and the stand-still number, how many extra orders you'd need just to break even with not having run the sale. If the product would lose money at that discount, it says so in red before your buyers ever see the banner. The free calculator on our homepage has the same check for a single product, no sign-up needed.

A sale should be a decision, not a surprise. Now you have the numbers to make it one.

Keep reading

• The ad fee Etsy charges without asking — how Offsite Ads work, and the $100 ceiling that quietly trims the fee on big orders.
• Sold $229.50, banked $203.20 — where the rest of your Etsy money went, reconciled line by line.

Fee rates checked against Etsy's published schedule, October 29, 2026. US rates; always confirm against Etsy's own Fees & Payments Policy.