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How to Make Passive Income through Etsy

Besides blogging, I’ve been putting lots of effort into my Etsy shop. Etsy is a platform that allows crafty people to sell their handmade goods. Many sellers make a full-time living off the site. But what a lot of people don’t realize is Etsy can be a great source of passive income!

People ask – how can Etsy sales be passive income? You have to create, ship, and fulfill orders yourself.

The answer to that question is: digital downloads.

Etsy created a whole new world of opportunities by allowing digital item listings for people to purchase (rather than physical items sent to people’s doors). Aside from rare customer support inquiries, this route of money making is pretty hands off. After each sale, Etsy transfers the funds to your bank account (or whichever payment method you choose). This is SUPER convenient because a lot of online passive income platforms require you to meet a certain money threshold before paying out.

I’ve decided to make a goal of creating 100 listings before end of year. But don’t get me wrong, there is a lot of work up-front. I spent the past 3 days designing listings and have only created 5-7 listings from those 3 days. (I think I spend too much time trying to perfect my work). However, the payoffs are wonderful!

What are the Fees?

  • Listing Fee: The Etsy fees are $0.20 a listing which lasts for 4 months time. This equates to $0.05 per month, or $0.60 a year. 
  • Transaction Fee: For each sale you receive, Etsy takes a 3.5% commission of your listing price.
  • Auto-Renewal Fee: This was something that wasn’t clear to me before but now makes sense. Every time you sell something you have to pay another $0.20 to list the next item. If you have remaining quantities of your listing after your sale, Etsy will charge you. So if you have 999 in stock and sell 1 item, you’re going to have to pay another $0.20 for the remaining 998 in stock. Or, if you have 0 left, you will need to pay the renewal fee of $0.20 to put the listing back up.
  • Update: Payment Processing Fees – There is another fee that Etsy charges if you have Etsy Direct Checkout enabled. This fee is 3% of the sale price and $0.25 per transaction. If it is a PayPal (Business Account) transaction, the fee is 2.9% of the sale price and $0.30 per transaction.

I think these fees are quite affordable for placing your items on this popular marketplace. If you sell one item at $5, you’ve basically covered expenses on that item for at least 7-8 years!

(If you’d like to open your own Etsy shop, you can use my link here which gives you a free 40 listings and provides me with 40 free listings as well.)

What are Examples of Digital Downloads?

Here is a list I’ve compiled of possible digital download examples that you can use to generate passive income:

  • Photography Marketing Boards
  • Blogger Media Kits
  • Resumes
  • Cover Letters
  • Business Cards
  • E-books
  • Patterns (sewing, crochet, knitting, embroidery, etc.)
  • Wedding or Party Invitations
  • Holiday Cards
  • Personalized Stationery
  • Wall Art
  • Photoshop Actions
  • Printable Planners and Calendars
  • Party Decorations
  • Clipart and Illustrations
  • Blog Theme Templates

Essentially you’re making items that people can view on their devices, print out as decoration, or edit as templates.

What Skills Do You Need to Do This?

Based on the options I had listed previously, I would say that the main skill required is graphic design (through Adobe Photoshop or Illustrator). You could also write e-books or planners through Microsoft Word.

Other free or low-cost alternatives include:

Photoshop Creative Cloud

If you don’t have graphic design knowledge or creative passions, this might not be the passive income route for you. However, if you’re interested in learning, it is definitely a doable skill to pick up!

If you’d like to open your own Etsy shop, you can use my link here which gives you a free 40 listings (and provides me with 40 free listings as well).

In my next few posts, I will teach you how to set up your shop, optimize your listings, and market your products. Stay tuned!

Part 2: How to Set Up Your Etsy Shop and First Listing

how to make passive income on etsy


  1. Hi Sharon, thanks for sharing this piece on using Etsy as a means to support a digital nomad lifestyle. I never considered Etsy as a possible source of income until reading your article!

    I recently wrote an article about transitioning to being a digital nomad, and mentioned the more common jobs like online customer support, copywriter and more. You may find the article here:

    After reading your article, think I will go back to my post and give Etsy a mention!

    • digitalnomadquest digitalnomadquest

      No problem! Yeah it is definitely a path that’s not discussed as much but I think it can actually provide a decent amount of income if done right. I am still working on my store 🙂 Love the article and thanks for reading!

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