How to Price Handmade Items: A Complete Guide for Craft Sellers

If you've ever stared at something you just made and thought, "What do I even charge for this?"—you're not alone. Pricing handmade items is one of the biggest challenges craft sellers face, and getting it wrong can mean the difference between a thriving business and an expensive hobby.

This guide will walk you through a proven formula for pricing your handmade goods—one that covers your costs, values your time, and leaves room for actual profit.

Why Proper Pricing Matters

Many crafters underprice their work. They calculate material costs, add a small markup, and call it a day. But this approach ignores the hours of skilled labor, the overhead costs of running a business, and the profit needed to grow.

The result? You work hard, sell plenty, and still struggle to make ends meet. Proper pricing fixes that.

The Complete Pricing Formula

Here's the formula that successful craft sellers use:

Let's break down each component.

1. Materials (Direct Costs)

This includes everything that physically goes into your product:

• Raw materialsFabric, yarn, beads, wood, clay, paint—every supply used to create the item.
• PackagingBoxes, tissue paper, tags, stickers, ribbon—everything needed to present and ship the product.
• Shipping suppliesMailers, bubble wrap, tape, labels for orders you ship.
• Finishing touchesButtons, zippers, clasps, hardware—small items that complete the product.

2. Labor (Your Time)

Your time has value. To calculate labor costs:

1. Set an hourly rate. At minimum, pay yourself $15-25 per hour. Skilled artisans can charge $30-50+ depending on expertise.
2. Track your time honestly. Include design, sourcing, production, finishing, photography, and packaging.
3. Multiply hours by rate. If a piece takes 2 hours and your rate is $25/hour, your labor cost is $50.

3. Overhead (Hidden Costs)

Overhead includes all the costs of running your craft business that aren't tied to a specific item:

• Workspace rent or home studio costs
• Equipment and tools (amortized over their lifespan)
• Software subscriptions (Etsy fees, accounting software)
• Marketing and advertising
• Utilities used for production
• Business insurance and licenses

Calculate your monthly overhead, then divide by the number of items you produce to get a per-item overhead cost.

4. Profit Multiplier

After covering costs, you need profit to grow your business. Apply a multiplier of 1.5× to 2.5× to your total costs:

• 1.5×Conservative
• 2.0×Standard
• 2.5×Premium

Higher multipliers work for unique, high-quality, or in-demand items. Lower multipliers may be necessary for competitive markets.

Pricing Example: Handmade Earrings

Let's apply the formula to a pair of handmade beaded earrings:

With a 2× profit multiplier:

This price ensures you're paid for your time, covers all costs, and leaves profit to reinvest in your business.

Checking Your Price Against the Market

After calculating your price, compare it to similar items in your market. If your price is significantly higher, you have options:

• Justify the premiumBetter materials, unique designs, superior craftsmanship, strong branding, or exceptional customer experience.
• Improve efficiencyStreamline your process, batch similar tasks, or buy materials in bulk to reduce per-item costs.
• Target different customersFind buyers who value quality over price—gift buyers, collectors, or customers seeking one-of-a-kind items.
• Adjust the productSimplify designs or use different materials to reduce costs while maintaining quality.

What you should NOT do: price below your costs. That's not a business—that's a charity.

Wholesale vs. Retail Pricing

If you sell both wholesale (to stores) and retail (directly to customers), you need two price points:

• Wholesale PriceTypically 2× your total costs. This is what you charge retailers.
• Retail PriceTypically 2× your wholesale price (or 4× your costs). This is what end customers pay.

This structure ensures you profit at both levels while giving retailers room to mark up for their own margins.

Common Pricing Mistakes to Avoid

• Forgetting your time: Your labor is real work with real value. Never price as if your time is free.
• Ignoring overhead: Tools break, software costs money, and workspaces aren't free. Include these costs.
• Copying competitors: You don't know their cost structure or whether they're even profitable.
• Racing to the bottom: Competing on price alone is a losing game. Compete on value instead.

Your Action Plan

1. List all materials for your top-selling items and calculate exact per-item costs.
2. Track your time for at least one week to understand how long each item really takes.
3. Calculate monthly overhead and divide by items produced.
4. Apply the pricing formula with a 2× multiplier to start.
5. Compare to market and adjust your strategy accordingly.

Pricing isn't a one-time decision. Review your prices regularly, especially when costs change or your skills improve. Your work has value—price it that way.

Learn More About Craft Pricing

Explore our guides to become an expert at pricing your handmade products:

• Craft Pricing Calculator for Artisans & Makers
• What Is a Craft Pricing Calculator? A Complete Guide
• Etsy Pricing Strategies That Actually Work
• How to Track Craft Material Costs Like a Pro
• 7 Pricing Mistakes Crafters Make (And How to Fix Them)