Sunday, 26 May 2013

How to price your handmade products

It's one of the most common questions asked "How much should I sell this for?" Before I usually help to make that decision I do ask one thing, "How much did it cost to make?"

And that, is the million dollar question!

How you price your product will determine how long you will be in business for. Price too low and you won't be able to sustain replacing your supplies to create, price too high and you might not sell anything at all. Regardless on whether you are selling to provide an income for your family or if its just pocket money for your sanity, everyone should accurately determine what the real production costs of each product line is. If you don't even know what the bottom line is for creating your product then any price you pick is purely just a number plucked from the air.

The choice is yours. You can price your product however you want to, but I urge you to be serious for a moment and do this exercise in it's entirety. You will be asked at some point by family or friends how much money you are making and if you haven't even worked out how much it costs to make your item, how can you even answer that without feeling foolish?

Just about everyone uses the same formula when it comes to working out prices what they all seem to differ on is what to include in costs. At the end of this post you will find a free download for a worksheet, below are each of the "cost" items explained to assist you.


Can you quantify how much time and money was spent developing the product? While I don't expect most people to enter an amount or anything at all here it's important to consider. If you can actually say it cost me $X to develop this product and IF you are only doing a LIMITED PRODUCTION then you can easily pop an amount in here but usually this cost won't be included into your pricing formula, however this number might be "what you have to make in profit" before you are actually making a profit on the product. 


List everything that you need to make the item and the actual cost, if you are using hand me down items from Nanna's stash then work out what it would cost to buy those supplies even if you haven't had to buy them yet yourself. Try to account for everything, if you sew then don't forget your thread, interfacing, trims. If you do paper craft don't forget your adhesives, brads, paints. You get the picture. 

How long does your product take to make? From start to finish? You might have to arrange some time on your own or just tally up time spent till completion. 

Do you hire a photographer? Do you need models? How much time do you spend editing your photos? As best you can try to quantify a cost for this part. Do you photograph one item at a time or wait till you have a few to do? 


business cards, 
swing tags, 
brown paper, 
... you get the idea.


Do you need to replace your tools from time to time? Do you need service them? You might also want to include a general cost for the consumables used on every product like thread or glue. It wouldn't be an exact cost but it will help with replacing down the 


Online shop fees,
Commission on sales,
PayPal fees,
Market fees,


Yes, Profit ... that is if you want to make money. 

Building your profit into this level of the pricing equation will smooth the path for you should you decide to sell wholesale to other retailers. 

Don't forget that this is the first level for the equation so it will be multiplied. 


Missed anything? 
Something that doesn't quite fit into the above? 
Child care? 
It is OK to leave this one blank.

Once you have identified your costs, add them up .... does it shock you?

The formula that is generally accepted in handmade circles is this:

Costs x 2 = WHOLESALE x 2 (up to 2.5) = RETAIL

So how does that compare to what you thought you should charge or are charging? Were you spot on? Were you way off?

Once you have worked out what to charge you might want to conduct some research of your competitors. How does your pricing compare? 

DISCLAIMER ..... Most of you wont use the amount that this exercise delivers, I know that because I see the prices being put on handmade out there and I know it's under priced. But going through this exercise and KNOWING that you are ignoring it is different to being ignorant of it. There will come a time when you get smart about pricing, and usually that is when you have no money for supplies, or when you are ready for that next step for your business.

Of course, this little exercise doesn't factor in your reasons for making and selling handmade. Some of you create just as much for you, as you do your customers and will decide NOT to factor in your time costs, some of you will just want to replace your supplies to make more. Regardless, you should know the true VALUE of your creations so you are making informed decisions about pricing your handmade products.

Coming up in future posts about pricing .... 

Pricing with your head or your heart
Reducing your costs to make more money
How under pricing actually cheapens ALL handmade

Download your pricing template here

31/01/2014 UPDATE :: You can now purchase the Excel version of this template and another great template that helps you work out how much you need to sell to reach your goal in my Etsy Shop here.

01/07/2013 UPDATE :: When you consider how much you "pay" yourself or if you are under pricing consider this .... If you have chosen to work from home so you can care for your children and don't have the expense of full time day care to pay for, you are in fact ahead of the game as you don't have this cost coming out of your earnings.
Another factor you need to consider is all the housework and chores you during the week that allow you to take the weekend off for family time. Working outside the home does not really allow you to be able to do this.
Thank you to Karen for reminding me.


  1. I am told all the time I'm not charging enough for my items, and I agree, I do these calculations frequently, but how likely is it that someone will pay $20 for a greeting card, and that's not even my schtick, that's just to try and get a sale!
    How do you overcome that mentality and how do you price accordingly?

    1. Hollie that really is one of the hardest things.
      If you feel the prices you come to through the equation are really quite prohibitive try these few steps :
      > Identify areas where you can reduce your costs, buying supplies in bulk or from another location might solve this.
      > Streamlining your production is a way to reduce your manufacturing or time to create costs.
      > Double check your figures and estimates in your costs.
      >>>> Now take a look at your product, what is it about your cards that people want that they can't get from a regular Hallmark card from the shops? Use this in your marketing.

      If you still feel the price is too high set yourself a goal of when to have the full price implemented. Do it in increments, small steps that feel far more palatable but still get you in the right direction. Continue for as long as you feel comfortable and/or your sales keep coming.

      You could do a plainer (and therefore cheaper) card to include as a gift with each purchase. I remember buying a pair of ruffled bloomers for my daughter and receiving another plain pair with them. I was very impressed.

      Remember that handmade cards are a gift in themselves, identify what sets you apart and tell your customers why they should buy.

      Let me know how you go.

      > Sam


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