Online Selling Fees: Would Running Your Own Shop Save Money?
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If you sell handmade gifts through a marketplace such as Etsy, the money from each order has to cover more than the materials you’ve used. There’s packaging and postage to pay for, as well as the fees the marketplace takes for handling the sale. When you add those charges up across a month, opening your own shop can start to look appealing.
An independent website could reduce your online selling fees, but you’ll also be paying to run the site and find customers who would otherwise discover you through a marketplace. A lower card-payment charge won’t help much if the website costs more to maintain or you need to buy advertising to generate every order. Before moving, compare what you’d keep from the same level of sales after paying the costs of each option.
What are you paying in marketplace seller fees?
Start with a recent seller statement and add up the charges deducted from your sales, including any separate subscriptions or advertising bills. Etsy’s current fee structure includes a 6.5% transaction fee on the item price and the delivery and gift-wrapping amounts you charge. For sellers with a UK bank account, Etsy Payments processing costs 4% plus 20p per order, on top of that transaction fee, with listing fees, other applicable charges and VAT on fees also needing to be considered.
Amazon’s selling fees depend on the product category and selling plan. Its Individual plan costs 75p per item sold, while Professional costs £25 a month, both excluding VAT and additional selling fees. A separate commission applies to each sale, and using Amazon to store and deliver your stock brings further costs.
Keep the services you receive alongside those figures when comparing them with a website quote. A fee that includes storage and dispatch can’t fairly be compared with hosting alone, because someone will still need to pack and send the orders. Compare the total cost of completing a sale, including your own workload, rather than choosing the lowest percentage.
What does running your own online shop cost?
Your own shop needs a website address, known as a domain name, and hosting, which keeps its pages and shopping software available online. Some services bundle the website tools and hosting into a subscription, while other setups let you choose a separate host. Shopify provides a hosted store service, for example, while WooCommerce’s core software is free but still needs hosting and may need paid extras.
For a shop built with Magento, Hypernode offers managed hosting for online stores, with infrastructure configured for that software. That’s a service to compare once you know what your shop needs, rather than a reason to choose Magento in the first place. Ask what the hosting provider maintains and what you or a developer would still need to handle, including changes to your shop and its extensions.
Budget for the things you’ll actually use, such as a paid design, stock-management tools, backups and help when something stops working. A low introductory hosting price also needs comparing with the renewal price, contract length and any charge for moving the shop later. If a quote excludes VAT, include any VAT you can’t reclaim when working out what the service will cost your business.
Payment processing fees still apply to your own website
When customers pay by card, the business handling that payment normally charges you for the service. Stripe’s standard UK pricing currently includes a rate of 1.5% plus 20p for standard UK cards, although other card types and payment methods can cost more. On a £20 payment at that rate, the charge is 50p, so the fixed 20p part needs including alongside the percentage.
Your website platform may have its own charges too, particularly where the price depends on which payment provider you use. Add those to the processor’s fee before comparing the total with a marketplace. Our guide to choosing a payment service for your business explains more about accepting customer payments.
Would a separate shop save money on £500 of monthly sales?
Suppose you take 25 orders worth £20 each in a month, giving you £500 in sales. For this illustration, assume your marketplace fees total £60, equivalent to 12% of sales, and that you could run a separate website for £30 a month in fixed costs. Those are example budgets, not an Etsy fee calculation or a quote from Hypernode.
If every website order used Stripe’s standard UK-card rate above, processing those 25 payments would cost £12.50. Add the assumed £30 website budget and you’d spend £42.50, leaving £17.50 less in selling costs than the marketplace example. That comparison assumes you can generate the same orders through your own site.
The £17.50 difference could disappear if you needed extra advertising or paid technical help to make those sales. This example leaves out stock, packaging, delivery, returns, setup costs and your time; include them in your own figures wherever the two options differ. Put any VAT you can’t reclaim into the relevant costs too, and keep VAT due on sales separate when calculating profit.
Use an ordinary month’s orders for your first comparison, then repeat it with fewer sales to see whether you could still cover the website bill. A monthly subscription continues even when orders slow down, while some marketplace charges fall with your sales. That can make keeping a marketplace account worthwhile when you’re still testing whether people want to buy your products.
How will customers find your new shop?
A marketplace gives you access to people already searching for products, although having a listing doesn’t guarantee anyone will buy. With your own website, you’ll need a way to bring shoppers to it, whether that’s through search results, social posts, advertising or an audience you’ve already built.
Running both channels can give you time to test a separate shop while keeping an existing source of orders. You’ll need to keep stock figures accurate across both, so the same item doesn’t sell twice, and allow time to answer messages and manage returns. Record where each order came from and what you spent attracting it, so you can see whether the extra website is earning its keep.
Check the marketplace’s rules before directing buyers elsewhere, because permission to operate a separate shop doesn’t automatically let you move a marketplace transaction onto it. Etsy, for example, prohibits moving transactions off its platform.
Having a buyer’s email address also doesn’t automatically mean you can add them to marketing emails; the Information Commissioner’s Office, the UK’s data-protection regulator, explains the consent rules and limited exceptions for customer marketing.
Choose a shop you can afford to run
Ask for a cost breakdown based on your product range, expected orders and the help you’ll need, rather than buying a larger hosting package in the hope that sales will follow. Test the basket and payment process on a phone, and make sure delivery charges are clear before customers pay. Our guide to VAT registration for online sellers is also useful as the business grows, because the shop setup and the tax position need considering separately.
You don’t need to close a working marketplace shop to find out whether another sales channel is worthwhile. Give a small website trial a spending limit and a review date, then compare completed orders, costs and time spent with your existing sales. Expand when the results justify the extra commitment, rather than treating every marketplace fee as money you could automatically keep.
Frequently asked questions
Is it cheaper to sell through your own website?
It can be, but hosting, payment charges, maintenance and marketing all affect the result. Compare the cost of generating and completing the same number of orders, because a website with lower fees may still leave you with fewer sales.
Does free online shop software mean the shop is free to run?
No. Free core software can still require paid hosting, a domain name, extra features and technical support. You’ll normally also pay to process customer payments.
What is managed ecommerce hosting?
It’s hosting where the provider looks after agreed parts of the technical environment that keeps the shop running. The tasks covered vary, so establish who handles software updates, backups, security and problems with the shop itself.
Can I keep a marketplace shop alongside my own website?
Yes, you can operate both, subject to the relevant platform’s terms. Keep stock records in step and check the rules before using marketplace listings or messages to direct buyers to another site.
