Putting a price tag on handmade items that took time, creativity, energy (and LOVE!) to create can be one of the hardest things in the world to do when you’re just starting out. Many of us begin by making gifts for friends and family, then all of the sudden, BAM! The question pops up in the comments or slides into your DM’s: “how much do you charge for those?”. Your mind may go completely blank and all of the sudden you find yourself tryin to remember how much the materials even cost for you to make the item in question! You may just ignore the question (not recommended), give them a random number hoping they aren’t appalled by it (also not recommended), or you may even ask THEM what they can pay for for (ALSO not recommended)! So, what DO I recommend? First off, don’t throw numbers around or play the guessing game–take the time to research your costs before deciding on a final price. Also, if you don’t have time to drop everything and do the research each time a comment comes rolling in, let the person asking know that you will send them a message with more details! Better yet, use this as a chance to get more email addresses stored (you’ll thank me later I promise!) by asking inquiring customers to send you their email address so that you can send them an update when you have more info for them!

Look, I’m not here to tell you that if you don’t “get it right” in the beginning you’re dooming yourself for failure. I truly believe that there’s no one size fits all solution for pricing handmade goods and that it can take trial and error (along with growing pains) to get it right, and even then, it will continue to be adapted and adjusted as your business grows! I just want to give you a few key ideas to get you started!

Do Your Research

This is a MUST when you are first starting out. Research similar products and listings on Etsy and other online stores, and check out your competitors on social media. Find established sellers in your niche.

  • What do they charge for their items?
  • Are they of the same quality as yours?

Write down the price ranges and how each item is different or similar to yours. Be sure to check how many sales these stores and businesses have made (Etsy makes this easy) along with reviews from customers. What are their strengths and potential weaknesses and how do you compare?

This is one of those times that playing the comparison game is okay and quite helpful! Don’t get upset if other stores seem to have a larger following, more sales and better photos (you will get there!) – the grass is not greener on the other side, it is greener where you water it! The fact that you are here reading this blog post tells me you’re doing the work you need to do to keep your business moving in the right direction!

Once you’ve gotten a sense of the range of pricing that’s out there, you can start to put in the work for pricing your own products. Maybe you found that you’re using higher quality materials than your competition, or that there’s something truly unique about your products compared to what you found in your research. This may have already given you a confidence boost to allow you feel comfortable charging a bit more than you may have initially considered.

Maybe you found that you’re facing steep competition, and are in a pretty saturated market. NOT TO WORRY! People don’t just buy products these days, they buy from PEOPLE! This is where social media come in. Focus on connecting with your supporters, followers, and greater audience–when people know, like and trust you, they are more willing to buy what you’re selling because they want to support YOU! Oh yeah, and have SEEN the breakfast cereal isle in the grocery store?? There’s room for all of us!!

MYTH: You Can’t Raise Your Prices Later

One of the biggest myths I have found when it comes to this topic is that you “can’t raise your prices so be sure to start out high enough”. I believe this is 100% FALSE (from personal experience, I might add). I started selling my scarves for $25 to friends and family–those same scarves cost $60 now and they still sell! Charging enough to cover my costs and give me a small net profit was the best way (for me) to grow my client network and then begin slowly raising my prices as I needed to in order to keep up with demand. You can ALWAYS increase your prices as you establish a customer base. If you focus on your connection and relationship with these clients, they will understand and continue to want to support you!

Don’t sell yourself short. Work to figure out what makes YOU, your BRAND and your PRODUCTS unique, special, valuable, etc. There will always be competitors offering cheaper products than yours but cheaper isn’t always better and you should always take the time to explain why your products offer more value or a higher quality than your competitors, both in your product listings and when marketing your items on social media and elsewhere.

Consider Cost of Supplies

In the world of makers, artists and crafters, there’s no getting around the fact that it takes money to make money. When you’re first staring out it may be harder to get people to pay upfront for something they haven’t seen completed. Even if you have a final product that you use as an example, you still had to purchase the materials to make that sample ite! How much you’re spending on supplies directly affects your ability to sell your product at a fair price AND make a profit. One thing I’ve learned over the years is to take a little extra time to make sure you never pay retail price for your materials. Do your best to find coupons, watch sales ads like a hawk, or source your materials wholesale when possible–this gets easier as you grow and find out which of your items sell really well and which materials you can afford to buy in bulk!

Example: I sell LOTS of coffee cat cozies. Anytime I find my most popular yarn colors on sale I will either buy the store out of those colors or come pretty darn close to it! I know I won’t use the yarn right away but it will DEFINITELY get used and I end up saving LOTS of money in the long run!

You should always have a record of what you pay for your materials and supplies. It is even more helpful to track at the per unit level. This means tracking what it cost you per bead, per piece of paper, per foot or yard of yarn, etc., rather than just the entire string of beads, ream of paper, skien of yarn, etc. You’ll most likely need to do some dividing to get these per unit costs but no worries it’s simple! For example, if you bought 100 beads, you should take the price and divide it by 100 to get the price per bead. Same thing goes for yarn or fabric, you’d need to calculate the price per square inch, foot or yard. This will help you determine how much a product you made with 1 bead or 1 yard of fabric cost you. Getting your supplies down to the unit helps more accurately calculate exactly how much one finished item cost you to make!

Consider Your Time

Each hour you spend working on your craft is an hour you should be paid, right? This can be the most challenging factor in pricing your handmade products — it definitely was for me!

So, how much is your time worth? Ask yourself a few questions: Is your working time purely working? Or are you multitasking? Do you watch TV while you make your products? This can make it difficult to set a fair hourly rate. My advice is to set aside some time to make each of your products without distractions–or as close to it as you can get! This will allow you to more accurately calculate the time it takes you to make each of your products. When I took the time to do this, years ago, I found I could easily make a pom pom hat in 1-2 hours and a scarf in 2. This has changed with the onset of my arthritis, which is another reason my pricing had to increase, I could no longer keep up with the demand and had to put more value on my time!

Labor cost should equal Time x Wage, so if you’re paying yourself $10 an hour and it took you half an hour to make it, pay yourself $5 for that product.

Account for Fees

When you’re selling items through Etsy it is important to consider the fees and the easiest way to work these in the initial base formula is:

If you sell on Etsy, Paypal, Square, or other online service you will need to account for their fees. Take time to research the specific fees for each platform. I mainly use Etsy and Square.

Sample Etsy Listing for a coffee cat:

  • Product listed for $20 – (Final Purchase Fee (5% = $1) + Listing Fee (.20)) = $17
  • I offer free shipping and my shipping costs are usually around $4.5 so $17-$4.5 = $12.5

*If you charge the seller for shipping, Etsy will take 5% of that shipping payment so be aware of that.

The big takeaway here is to be aware of the additional fees incurred when using whatever selling platform you decide to use! Do the research up front to make sure you make adjustments to your pricing as needed!

Basic Formulas

There are SO many formulas floating around on the World Wide Web telling you how to best price your products. I have used a few of these over the years but my items have never all followed the same rules when it comes to pricing. It depends on so many factors for me, and since I don’t do this full time, I have some wiggle room to play when it comes to my prices. Keep in mind–there is no magic pill, one size fits all, perfect formula that you SHOULD be using! It’s all about what works for you and what allows you to continue to love what you do and still make a profit and grow. My advice? Calculate your pricing based on a few of these formulas before making a decision and remember that the decision is not set in stone! It is YOUR business and you have the ability to be flexible and adaptable as you continue to grow!

  • Cost of Supplies + $10 per Hour of Time Spent = Price A.
  • Cost of Supplies x 3 = Price B.
  • Price A + Price B divided by 2 = Price C.
  • Price C x Markup (between 2.0 – 2.5 or more) = Price D (important one to consider if you are selling in stores that take 50% commission or similar)

Additional costs to keep in mind when pricing your Items Include:

  • Profit Markup: This should be some number greater than 1 (2-2.5 is shown above but you can use a larger number like 3 or 4 to give you more wiggle room). This multiplier ensures you’re not just covering costs, but also making a profit. It gives you that cushion to know you will be able to re-invest in your business! It also opens the door to offering wholesale rates and discounts without losing money.
  • Overhead Rate: Basically, overhead is all the other expenses you have that go into your product, but you can’t get the exact amount per product (the cost of the thread you used in your apron, the ink you used to write the calligraphy, etc.), PLUS all the other business expenses you pay that don’t directly go into a product, but keep your business running (think website domain, advertising costs/fees, new crafting tools, props for shows and photography, editing software, craft show fees, etc.).


Supplies – This would be the cost of my yarn which usually runs me $7 a skien. I need at least 2 skiens to finish a scarf so the cost would be $14 to make the scarf.

Labor – These scarves take me, on average, 2 hours to make, and I allow myself $10 an hour. So 2 hours x $10 = $20 in labor for this scarf.

  • Price A: Supplies ($14) + hourly rate (2 x $10 = $20) = $34
  • Price B: Supplies ($14) x 3 = $42
  • Price C: [Price A ($34) + Price B ($42)] / 2 = $38
  • Price D: Price C x (mark up of 2) = $76

**I currently charge $60 for my scarves so you can see I didn’t really follow any of these specific formulas but they have helped me along the way to make adjustments and ensure I am able to offer discounts and sales when I would like or sell my items in shops that take a percentage of the sales and still profit.

I hope you find this article helpful! I realize it is not an EXACT guide but that’s not really how I run my business and I feel that we all need to be reminded that there is no one right way to do things for your business, it is more about being aware of your specific circumstances, being smart and detailed about your costs and make decisions that work for you!

Want to chat more about marketing & get your hands on more free resources & education and join a community of creative people like you?? Be sure to join my Facebook group: Marketing for Creatives & Makers where I’ve shared links to lots of free resources, guides and more!! I can’t wait to connect with you on Facebook!!

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x The Pink Sheep x

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