What you paid for the item

What the customer pays

If you switch this off, postage is treated as "free" (built into your item price above) — but you still pay the real postage cost on the left.

VAT

Switch the second one off for zero-rated items, like most kids' clothing (check gov.uk if you're unsure where an item falls). When it's off, none of the sale price is set aside for VAT, even though you're VAT registered overall. When both are on, 20% VAT is treated as already included in what the customer pays, and it's taken off before working out your profit. Because your VAT number is on your Etsy account, Etsy doesn't charge you VAT on its fees — you account for that under the reverse charge on your VAT return, which nets to zero, so it's not shown as a cost below.

Etsy Offsite Ads

15% if your shop's trailing 12-month revenue is under $10,000, 12% above that. The results below always show your profit both ways, so you can see the difference.