How to Price Handmade Products (Formula + Example)

Updated November 2026

Most handmade sellers underprice because they forget fees and their own time. A reliable approach is to build up your cost, then divide by what's left after fees and your target margin.

Step 1: Add up the real cost of one item

• Materials (including the bits you don't think about: glue, tags, thread)
• Your time × an hourly rate you'd accept (e.g. 20 minutes at $15/hour = $5)
• Packaging, plus the shipping label if you offer free shipping

Step 2: Apply the formula

Price = total cost ÷ (1 − platform fee % − target margin %), then add any fixed per-order fee to the cost first.

Example: $3 materials + $5 time + $0.50 packaging + $5.50 shipping = $14.00. On Etsy (≈9.5% + $0.45) with a 30% margin: ($14.00 + $0.45) ÷ (1 − 0.095 − 0.30) = $23.88 → charge $23.99.

Step 3: Sanity-check against the market

If similar items sell for much less, look for cheaper materials or faster methods, or position yours as premium with better photos. Don't just cut the margin. If they sell for more, you may be leaving money on the table.

Try it with your own numbers on the pricing calculator.