How to price handmade products: a simple formula that covers fees and pays you
Most makers underprice. They add up materials, glance at what similar items sell for, and pick a number that feels safe. Then marketplace fees, shipping supplies, and the hours they never counted quietly eat the profit.
A pricing formula fixes that. It starts from what the item really costs you, adds a fair wage for your time, covers the fees you will pay when it sells, and leaves a profit on top. This guide walks through it with a worked example.
Step 1: Add up the true cost to make one item
- Materials per unit, including the small stuff: thread, glue, labels, tags, and waste.
- Packaging per unit: boxes, tissue, mailers, stickers, thank-you cards.
- Labor: minutes per item × the hourly rate you want to pay yourself.
- Overhead share: monthly tools, software, and supplies divided by how many items you make in a month.
Unit cost = materials + packaging + labor + overhead share
Our COGS guide goes deeper on getting each piece right.
Step 2: Set a wholesale price
A common rule of thumb for makers is to multiply unit cost by about 2 to get a wholesale price. That markup is your profit and the cushion that lets you sell to shops at all.
Wholesale price ≈ unit cost × 2
Step 3: Set a retail price
Retail is often about 2× wholesale, which also means a shop can carry your item without undercutting you online. Treat both multipliers as starting points and adjust to your market.
Retail price ≈ wholesale price × 2
Step 4: Check the price against fees
When you sell direct on a marketplace or your own store, part of the price goes to transaction, payment processing, and listing fees, and sometimes ads. Subtract them from the retail price and make sure what is left still covers your unit cost with room to spare. Fee rates change, so use the figures from your own seller account; our Etsy fees, Shopify margin, and Amazon FBA fees guides show how to calculate them.
Worked example: a hand-poured candle
Illustrative figures only.
| Line | Per candle |
|---|---|
| Wax, wick, fragrance, jar | $4.20 |
| Label and packaging | $0.90 |
| Labor (10 minutes at $24/hour) | $4.00 |
| Overhead share ($90 a month ÷ 100 candles) | $0.90 |
| Unit cost | $10.00 |
| Wholesale (× 2) | $20.00 |
| Retail (× 2) | $40.00 |
If fees on a $40 sale came to around $4, you would keep about $36 against a $10 cost. That is a healthy margin, and it means a shop paying $20 still leaves you $10 above cost, with your labor already paid.
When the formula price feels too high
- Lower the cost, not your wage. Buy materials in bulk, batch your production, or simplify packaging.
- Raise the perceived value. Better photos, clearer descriptions, gift-ready packaging, and bundles all support a higher price.
- Offer a smaller or simpler version at a lower price point instead of discounting your main product.
- Test. Raise prices on a few listings and watch conversion for a few weeks before deciding.
Common pricing mistakes
- Leaving labor out because "I enjoy making it."
- Forgetting packaging, shipping supplies, and wasted materials.
- Pricing from competitors who may also be losing money.
- Setting a retail price with no room to ever sell wholesale.
- Not rechecking prices when material costs or fees go up.
Once your prices are set, track whether they actually produce profit each month with a simple monthly P&L. Educational content only, not financial or tax advice.
More seller guides
- Etsy fees explained: what Etsy actually takes from each sale
- How to calculate your Shopify profit margin (and what a good one looks like)
- Amazon FBA fees in 2026: what you pay and how to estimate it
- Quarterly estimated taxes for online sellers: a plain-English guide
- How to calculate COGS (cost of goods sold) for your online store
- Reorder point formula for small online shops (with safety stock examples)
- How to track returns and refunds as an online seller (and calculate refund rate)
- How to make a simple monthly profit and loss statement for your online shop
- What to include on an invoice: a checklist for small sellers and makers
- Break-even point for online sellers: formula, example, and how to lower it
- Inventory turnover ratio: how fast your stock actually sells
- Gross vs net profit margin: what each one tells an online seller
- Landed cost: the true cost of a product once it reaches your shelf
- Markup vs margin: why a 50% markup is not a 50% margin
SellerSheetKit is not affiliated with Etsy, Shopify, or Amazon. Fee figures are summarized from official sources on the date above and can change; verify against your seller account. Educational content only — not tax, legal, or accounting advice.