How tips work on Etsy
Etsy added a buyer-side tipping option in late 2023 — at checkout, buyers can optionally add a tip on top of the item price and shipping. The tip is added to the order total before fees are calculated, which means Etsy's standard fee stack applies to the tipped amount.
A buyer who adds a $5 tip on a $30 order isn't sending you $5 extra. They're sending Etsy a $35 transaction, and you receive the $5 minus the 6.5% transaction fee ($0.33), the 3% payment processing ($0.15), and Off-Site Ads if attributed ($0.75 at 15%). Net to you: $3.77, not $5.
Why this matters for pricing
Sellers who promote 'tip jar' messaging in their listings should know that tips aren't fee-free pass-throughs. The seller economics on a tip are slightly worse than on item revenue because the flat per-transaction fees ($0.20 listing, $0.25 processing) are already amortized across the order — but the percentage fees do apply.
On Off-Site Ads-attributed orders, the math gets worse: a buyer adding a $20 tip thinking they're being generous is sending you $14.20 net after the 6.5% + 3% + 15% deductions apply. The gesture survives; the dollars don't fully.