How to Price Handmade Products for Profit
By Cedar & Ledger
Many makers price by gut feel or by matching the cheapest listing they can find. That often means sales that look good but leave little after supplies, fees and time. A simple cost-based starting price, checked against the market, fixes most of that.
Step 1: Add up materials per item
List every material that goes into one item, including small things like thread, glue, tags, and packaging. If you buy in bulk, divide: a $12 spool that makes 40 items is $0.30 per item.
Step 2: Put a number on your time
Time how long one item takes, start to finish, including prep and cleanup. Multiply by an hourly rate you'd be happy to earn. Even if you pick a modest rate, putting your time in the math makes it visible.
Step 3: Add overhead and fees
Overhead is the cost of being in business: tools, equipment wear, shop subscriptions, photos. Estimate a monthly total and divide by how many items you sell a month. Then check your sales platform's fees (listing, transaction, payment processing) and shipping costs you cover, using the platform's current fee page.
Step 4: Build the price
A common starting formula:
| Line | Example |
|---|---|
| Materials | $4.00 |
| Labor (20 min at $18/hr) | $6.00 |
| Overhead per item | $1.00 |
| Cost | $11.00 |
| Add profit (for example 20–30%) | about $13.50–$14.50 |
Then work out what platform fees take from that price, and raise it if what's left doesn't cover your cost plus profit. Some makers also set a higher retail price so there's room for wholesale or sales; that's a choice, not a rule.
Step 5: Check the market, then adjust
Look at similar items: quality, size, and how they're photographed and described. If you're far above them, look for ways to cut cost or show what makes yours different. If you're far below, you may be underpricing. Prices can change; test one item before changing everything.
Step 6: Track what you actually earn
Pricing is a guess until you see real numbers. Log each sale, its fees, and your expenses each month, and check profit, not just sales. How to work out profit per hour shows how to check whether your time is paying off.
Tools
A notebook or simple sheet works. If you'd like ready-made spreadsheets, the Product Pricing Calculator ($7) turns material costs, labor minutes and packaging into a cost per item and a price at your target margin, and shows fees and profit for the price you pick. Once you're selling, the Side Hustle Income & Expense Tracker ($7) logs sales, fees and expenses and shows profit by month, and the Small Business Bookkeeping Tracker ($12) covers income, expenses and monthly totals.
This is general information, not financial or tax advice. Cedar & Ledger makes plain spreadsheet templates for money and small business: cedarandledger.vercel.app.
Try the free break-even calculator (profit per sale and sales needed) →
Try the free markup vs. margin calculator →
Try the free price increase calculator →
Related template: Product Pricing Calculator. Also see: Side Hustle Income & Expense Tracker
See all Cedar & Ledger templates
Frequently asked questions
What does this guide cover?
A simple way to price handmade items: materials, your time, overhead and fees, a worked example, then a market check and tracking real profit.
What are the steps?
1) Add up materials per item; 2) Put a number on your time; 3) Add overhead and fees; 4) Build the price; 5) Check the market, then adjust; 6) Track what you actually earn.
Do I need a template to do this?
No. A notebook or a sheet you build yourself works fine. Cedar & Ledger also sells spreadsheet templates (I'd earn from a purchase); see the template box at the top of this page.
Is this financial advice?
No. It's general information with example numbers only, not financial, tax, legal or medical advice. Use your own numbers and check anything important with a qualified professional or the official source.