Prompt
How can I calculate and adjust my prices based on the cost of acquiring customers through marketing and advertising efforts on Etsy?
Great question! Pricing your products effectively on Etsy while factoring in the cost of acquiring customers (CAC) is essential for maintaining profitability. Here’s a step-by-step breakdown on how to calculate and adjust your prices based on marketing and advertising costs:
🧮 Step 1: Calculate Your Customer Acquisition Cost (CAC)
CAC = Total Marketing & Advertising Costs / Number of Customers Acquired
Example:
You spend $200 on Etsy Ads and Instagram promotions in a month.
You get 40 sales from those efforts.
👉 CAC = $200 / 40 = $5 per customer
💲 Step 2: Know Your Other Costs
Break down your full cost per product:
Product Cost: Materials, labor, packaging (e.g. $10)
Etsy Fees: Listing ($0.20), transaction (6.5%), and payment processing (typically ~3% + $0.25)
Shipping (if you offer free shipping)
Overhead (optional): Tools, utilities, studio space, etc.
CAC (from Step 1)
Example cost breakdown for a $30 product:
Product Cost: $10
Etsy Fees (assume $30 item):
Listing: $0.20
Transaction: 6.5% of $30 = $1.95
Payment Processing: ~3% + $0.25 = ~$1.15
CAC: $5
Total Costs = $10 + $0.20 + $1.95 + $1.15 + $5 = $18.30
🎯 Step 3: Set Your Price to Include Profit
Use a formula like:
Target Price = Total Cost + Desired Profit Margin
Let’s say you want a 40% profit margin on your $18.30 cost:
Target Price = $18.30 / (1 – 0.40) = $30.50
You might round this to $31 to hit your margin goals.
🔄 Step 4: Monitor and Adjust
CAC can vary from month to month, so:
Track CAC regularly (weekly/monthly)
Adjust prices or ad budgets as needed
Look at Customer Lifetime Value (CLV) too—if customers often come back, you can afford a higher CAC
✅ Bonus Tips
Bundle products to increase order value and dilute CAC
Use Etsy’s conversion data to see how well your listings are doing
Split-test ads and products to improve your ROI
