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- Who Really Pays for Those Coupons on Etsy?
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Last month, I sold an SVG bundle on Etsy for $3.
But here’s the weird part — the buyer only paid $2.4.
A 20% discount had automatically kicked in. Great for the customer. Not so great for me.
I stared at the order details, confused. Who authorized this discount? Was Etsy running some secret sale I didn’t know about?
Spoiler: yes, they were.
But wait — who actually pays for that 20% off?
If you're an Etsy seller or planning to become one, you need to read this.
Because the truth about who funds those tempting discounts might genuinely shock you. I wish someone had warned me sooner.
Let’s rewind a bit.
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THE REALITY
The Day I Realized I Was Losing Money
Back when I first opened my Etsy shop, I felt a rush every time I got a sale.
I’d run to pack the item, maybe throw in a little thank-you card, and update my spreadsheet. Everything looked good. Profitable, even.
Until I saw the number that broke the illusion: My “Profit” column was red.
Not just once. But often.
And when I dug in, the culprit was always the same.
Discounts. Coupons. Promotions.
Sometimes ones I created.
Other times — ones I never approved.
So I started asking: Where are these discounts coming from? Who decides when they’re active? And most importantly — who’s paying for them?
Let’s break it down.
ETSY SECRET
Etsy’s Secret Sales
Etsy has something called Etsy Offsite Ads and Etsy Sales Events.
At first glance, these sound helpful. They drive traffic to your shop. More eyes, more sales, that is great.
But here’s the fine print most sellers miss:
When Etsy runs site-wide discounts (like holiday or seasonal sales), they encourage you to join by slapping on big red banners. But what they don’t say loud enough?
The discount comes out of your pocket. Not Etsy’s.
If Etsy decides to push a 25% site-wide discount and you opt in — or forget to opt out — you're the one absorbing that discount. Etsy still collects their full fees.
And with Offsite Ads, it gets worse.
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THE OFFICIAL ADS ON ETSY
Offsite Ads: When Etsy Plays Middleman With Your Wallet
If someone clicks your product through an Etsy-funded ad on Google, Pinterest, or elsewhere, and ends up buying within 30 days?
Etsy charges you up to 15% of the total order — on top of all your usual fees.
Oh, and that ad could include a discount that Etsy applied automatically.
Meaning you’re:
Paying Etsy a 15% ad fee,
Giving a 20% discount to the buyer,
Still covering the platform fee,
Still covering transaction + processing fees.
And you’re the one who handmade the damn mug.
This means a $20 sale could leave you with… less than $10.
Ask yourself: How is this sustainable?
(Answer: It’s not.)
PRODUCT #4
But Doesn’t Discounting Help You Sell More?
That’s the story Etsy tells.
And hey — sometimes it's true. Discounts can boost visibility. The algorithm favors discounted listings. It can even land you on Etsy’s homepage carousel.
But here’s what nobody talks about:
More sales don’t always mean more money.
Ask yourself: What’s your profit margin after that discount?
If you’re selling a product with thin margins — like art prints, handmade jewelry, or crochet — you might end up working more for less.
That was me.
At one point, I was fulfilling 40+ orders a week. That felt like success… until I looked at my bank account.
So I did the math.
I was making a few cents per order — while Etsy was profiting from each sale.
That’s when I knew something had to change.
THE BUYER PSYCHOLOGY
The Psychology Trap: Why Discounts Feel So Irresistible
Now let’s get real.
I get why people use discounts.
You see a drop in sales, and the panic kicks in. So you do what every blog post tells you to: run a sale. Offer 15%. Add urgency. Maybe toss in “Free Shipping” for good measure.
And sometimes, it works.
But then you become addicted to that little boost. You train your customers to wait for sales. You stop believing your work is worth the full price.
Ask yourself this: If your handmade product isn’t worth $25… why are you making it at all?
Oof. I had to sit with that question too.
TIPS
What I Do Now (And What I Recommend)
I’ll be honest. I don’t play Etsy’s game anymore.
Here’s what I do instead:
I disabled Offsite Ads. Yes, it means less random traffic. But the profit margin is worth it. (Note: you can disable them if you are making under $10,000 in sales for the year)
I create my own coupon codes — selectively. I offer them to repeat buyers or email subscribers. I control when and why they’re used.
I stopped joining Etsy’s automatic sales. Those “Spring Sale!” popups? No thanks. If I want to run a promotion, it’ll be on my terms.
And most importantly?
I raised my prices.
Yes. I charge more now. Not because I’m greedy. But because I finally realized the value of my time, materials, and creativity.
People still buy.
In fact, I get fewer orders — but make more money.
Imagine that.
Who Actually Pays?
Technically, you pay the discount.
Even if Etsy initiates it.
Even if it’s part of a sale event.
Even if it’s through an ad that Etsy runs.
The buyer gets the benefit. Etsy gets its full cut. And you? You cover the loss.
That’s the hard truth.
And here’s the harder one:
Etsy doesn’t exist to help you make money.
They exist to make money off you.
Once I accepted that, I stopped waiting for the platform to do right by me. I took control — of my pricing, promotions, and brand.
And it changed everything.
What Should You Do?
I’m not here to tell you what to do.
But I will ask you this:
Are you tracking your actual profit after discounts?
Have you opted out of Etsy's automatic events and ads?
Do your prices account for all those hidden fees?
If not, maybe it’s time to check.
Because if you’re offering a discount, it should be a decision — not a surprise.
Note: I have made two free calculators you can use to see how much you are actually paying…
Your creativity deserves better.
You deserve better.
Let me know if you want a follow-up post on how to price your products without undercutting yourself. I made every mistake in the book — and I’ve got receipts.
But first, go open your Etsy dashboard. Look at your last 5 orders.
And ask: Did I really get paid what I’m worth?
If the answer is no — you know what to do next.
Have a wonderful and productive day,
Miroslav from The Design Nexus
TOOLS YOU SHOULD TRY
Even if you sell products other than mugs or t-shirts, it doesn't mean it will cost you more.
There are tools that can help you with the tasks, and most of them have free versions.
Research: Alura
Graphic Designs: Creative Fabrica
Vectorizing: Vectorizer AI
Disclaimer: Within the article, you will find affiliate links. If you decide to purchase through these links, I want to sincerely assure you that I will receive a commission at no extra cost to you.
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