The transaction fee on shipping
When Etsy says "6.5% transaction fee," the base for that 6.5% is the entire order total — item price, shipping charged to the buyer, and any gift-wrap charge. A $30 item with $5 shipping is a $35 transaction, and the fee is 6.5% × $35 = $2.28, not 6.5% × $30 = $1.95.
This is the single most common surprise for new sellers who price their item competitively and add 'real cost' shipping on top. You're charged on the full gross.
Off-Site Ads on shipping
If an Off-Site Ad attributed the sale, the 12% or 15% Off-Site Ads fee also applies to the gross (item + shipping). On a $30 + $5 order with 15% Off-Site Ads, that's $5.25 in Off-Site Ads alone — and $0.75 of that is the cut Etsy takes on the shipping line.
The fold-shipping-into-price strategy
Many sellers reduce their effective fee exposure by setting item prices that include shipping and offering "free" shipping. Same total to the buyer, but cleaner fee math: only one line is exposed to the percentage fees, and Etsy's algorithm weights free-shipping listings more favorably in search.
Note that the savings aren't on the percentage fees (the gross is the same either way) but on the flat fees: a single $35 order gets one $0.25 processing flat fee, while a $30 + $5 order also gets one $0.25 processing flat fee — so the math is identical here. The strategy mainly helps with multi-quantity orders and Etsy's free-shipping discoverability boost.