Does the customer’s Etsy shipping charge cover the USPS label cost?

Hi! The buyer’s shipping charge is meant to help cover what you spend to ship, but Etsy doesn’t “apply” that money directly to the USPS label for you—you receive the item price + shipping in your Etsy Payment account, and then when you buy an Etsy/USPS label the label cost is deducted from your account. So in practice you’re paying for the label out of the order funds, and you’ll usually end up a little short if you set shipping to “exact label cost,” because Etsy fees are also charged on the shipping amount you collect (plus you may have packaging costs).

A few key things to know so this makes sense:

• Yes, you keep the shipping fee the buyer paid (it’s part of your order revenue).
• Yes, you still have to “pay” for the label (Etsy charges your payment account for the postage when you purchase the label).
• Etsy’s selling fees apply to the shipping charge too, so if a buyer pays $X for shipping, you won’t net the full $X after fees—meaning you can break even on postage and still lose a bit overall unless you price for it.

How to set shipping so you don’t lose money going forward

1. Decide whether you want to cover “shipping profitably” via shipping price or item price

• If you sell low-priced items, it’s often easier to raise the item price slightly to absorb fees/packaging/postage differences.
• If you prefer shipping to stand on its own, set the shipping price to cover postage + packaging + Etsy fees on shipping + a small buffer.

1. Use a repeatable formula (simple and safe)
   A practical way to set a fixed shipping price is:

• (Typical USPS label cost)
  • (packaging cost: mailer/box, tape, label, etc.)
  • (a small buffer for zone/weight variations, address corrections, etc.)
    Then test a few orders and adjust.

1. If you use calculated shipping, make sure your listing data is accurate
   Calculated shipping can work well, but only if you:

• Enter the packed weight (item + all packaging)
• Use realistic package dimensions
• Choose the shipping service you actually intend to buy

Also note: Etsy has been removing the option to add separate handling/package fees for sellers using calculated shipping, so if you were thinking “I’ll just add a handling fee,” you may need to bake that cost into your item price or your shipping price instead.

If you tell me what you sold (approx size/weight when packaged) and whether you’re using fixed or calculated shipping in your shipping profile, I can suggest a good “don’t-lose-money” shipping setup for your next listings.