This is a pretty good question. If you sell handcrafted hard maple tables that go for $5k, it only takes two orders and you're suddenly coerced into a program.

However, if that program leads to one sale more it only cost $500 - that's a pretty good ROI. The problem will be if Etsy is transparent and can demonstrate the incremental value of this service, and that it's just not cannibalizing existing sales.

Not if you don’t have time to make another table...

Just because the margin of sale price over COGS is high doesn’t mean that — after factoring in the cost of labor — it’s a high-margin endeavor.

Edit: typo fixed

I've sold hundreds of millions of merchandise over the last decade. Think I understand just fine, thanks.

> doesn’t mean you would want to “buy” another sale for $500.

Of course you do, this is why it's called business. No one is on Etsy because they don't want to make money, and most people I know have excess labour and are willing to trade that for money.

> after factoring in the cost of labor

This isn't how cash flow works. You cannot get fixated on the margin of a single order, but on the blended margin across all orders.

Let's take handmade jewelry for an example, because I happen to know that somewhat. Unless you want to do luxury goods, you're talking mostly beading & wire wrapping. There's a very clear ceiling on the price by mass-manufactured goods from mostly Mexico.

People still want to buy handmade in the US, because they can talk to the seller, because they can influence the design somewhat, because it has a feelgood factor. That gives you room to charge a small premium. That premium, however, is limited. Demand for jewelry is fairly price sensitive, especially given that there's a fallback good that's almost as nice at a lower price.

And so there is both an upper limit to the price you can charge, and an upper limit to what you can produce. (You could manufacture, but it's fairly easy to tell, and so you lose the "handcrafted" clientele)

Yes, in a rational market, you'd fold up and move to higher margins. We know for a while now that markets aren't rational. And the craft market especially is deeply suffused with all kinds of emotions. So, no, that's not going to happen either, because people like making stuff with their hands, and this particular market allows them to finance that.

Maybe save the glib advice next time and ask some questions first?

For eg custom keycaps - what should they cost? i've seen anything from 60USD for brass moulded ones to 200USD for resin ones with miniature landscapes in them(that sell out literally within 1 minute of listing)

And even if price optimization is what's good for what ails everyone and we just didn't know we all need to pay 12% more, the result of this lesson underwrites Etsy while complicating everyone else's life. Um, thanks?

[1] Just one of many points one can make here - a large number of crafty folks are very much not profit-maximizers. I know this is true for me (I don't sell on Etsy) - running my hobby like a business would be stupid, because not only will my day job will always pay better, but more importantly, chasing fashions, accounting and caring about competition would suck all the fun out of it.

Every other marketplace charges 10-15% - Etsy has been a bargain for years. Even eBay will cost a seller more than Etsy, and no one's complaining about that.