How to price handmade items: formula and worked example

Short answer: price a handmade item by adding up materials, labour at an hourly rate, and a share of your overhead, to get your cost. Then multiply that cost to get a wholesale price, and multiply again for retail. The template and worked example below walk through real numbers.

The standard formula

Most handmade sellers price in two steps.

Step 1: find your cost.

Cost = Materials + (Hours worked x your hourly rate) + Overhead per item

• Materials: everything that goes into the item, down to thread, glue or a backing card.
• Labour: your time, valued at an hourly rate you decide, not zero. If you wouldn't make the item for less than minimum wage doing something else, don't price it that way here either.
• Overhead per item: a share of costs that aren't tied to one item, like your workspace, tools, packaging, and software, divided across how many items you expect to sell.

Step 2: turn cost into a price.

Wholesale price = Cost x 2
Retail price = Wholesale price x 2 (so, Cost x 4)

This "times 2, times 2" rule is a common starting point handmade sellers use. It isn't a law, and you can adjust the multipliers for your market, but it's a reasonable place to start if you've never priced before.

Worked example

Say you make a ceramic mug.

That retail price might look high for a mug. Doing the maths shows whether your hourly rate, batch size or materials need to change. It beats guessing a price and hoping the hours work out. If $148 is too high for your market, the honest fix is to make items faster, in bigger batches, or with cheaper materials. Lowering the price without changing those things just means a lower hourly rate for you.

Copy-paste costing template

Marketplace fees eat into your price

If you sell through a marketplace instead of just your own site, the marketplace takes a cut, through listing fees, a transaction fee on each sale, and a payment processing fee. These add up and should come out of your price, planned for in advance. Check your marketplace's own fee page for exact current numbers, since fees change and differ by country, for example Etsy's fee page for Etsy sellers. If you sell on Etsy, our Etsy fees calculator works out the exact cut on a sale so you can build it into your price.

Once you've priced an item, check whether you're actually making money on it after every real cost, including fees and your time, not only materials. See how to calculate profit margin for the full breakdown, including a calculator.

Frequently asked questions

Should I pay myself minimum wage or more for my time?

That's your call, but pricing your time at $0, or below what you'd earn elsewhere, means the business is quietly losing money even when sales look fine. Pick a real hourly rate before you do the maths.

Why multiply cost by 4 for a retail price, instead of just adding a small margin?

The "cost x 2 for wholesale, x 2 again for retail" rule accounts for the fact that a retail price has to cover materials, your time, overhead and still leave profit, even if you sell only direct to customers and skip wholesale entirely.

What counts as overhead for a handmade item?

Anything that isn't a material in the item itself but still costs you money to run the business: workspace rent, tools, electricity, packaging materials bought in bulk, and software or marketplace subscriptions, divided across the items you make.

Do marketplace fees come out before or after I set my price?

Before. Build the fee into your price so it doesn't quietly eat your profit after the sale. Check your marketplace's current fee page, since rates change.