Pricing Handmade Items – Not Your Typical Guide

Not your typical guide to pricing handmade items. At a loss for how to price your handmade items for your Etsy shop? Check out this post to learn how to calculate prices that make sense for you and your shop. Figure out what all your costs are and how to value your skillset. How to price items for your handmade shop.


Let me be clear. This is NOT your typical pricing guide. I don’t really believe there is a single formula to help you come up with the perfect prices. This post and accompanying worksheet are guides to help you better understand your costs and get a handle on your numbers. Here’s the thing. Pricing handmade items is complicated. But’s it’s not impossible. Let me help!

Not your typical guide to pricing handmade items. At a loss for how to price your handmade items for your Etsy shop? Check out this post to learn how to calculate prices that make sense for you and your shop. Figure out what all your costs are and how to value your skillset. How to price items for your handmade shop.

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This is the first post in the Your Shop, Your Way series. I got so tired of articles and posts that tell you “exactly” how you should run your shop to be profitable. That’s BS in my books. I won’t tell you “exactly” how to do anything! No two shops are exactly the same nor should they be run the same way. You need to learn how to run your shop, your way. All I’m doing is offering a little advice that I hope you’ll find helpful!

But don’t take what I’m saying as gospel. Every shop requires some trial and error. That’s just part of the process. And that’s definitely true for pricing handmade items too.

Pricing handmade items is about striking a magical balance between finding a price that is actually profitable for you and one that’s realistic for your customers.

I will say this though. Do NOT underprice yourself. Underpricing yourself will make your customers question the quality of your work. Show them that you value yourself and that your work is high-quality.

How to Use the Worksheet

This pricing post and worksheet is more of an art than a science. Typical pricing formulas don’t seem to take the nuances of handmade into account. I want you to take EVERYTHING into account!

What you do need for pricing your items though, is a VERY clear understanding of what all your costs are. Those’ll be the base numbers you start with. Then we do a little research, value ourselves appropriately, consider all angles and come up with a reasonable pricing strategy. Art, not science.

You can start by grabbing the workbook for this series here. I’ll be upfront, it’s $7 (cad). But I’m packing as much valuable (& free) information as I can into this series of blog posts. So I created a pretty and helpful workbook to go with it! It includes these printables:
Pricing Worksheet
Tags Worksheet (Goes with Part 2)
Social Media Checklist (Goes with Part 3)
New Product Brainstorming Worksheet (Goes with Part 4)
Materials & Supplies Tracker
Shop To Do List
Stats Review Worksheet (Goes with Part 5)
Product Photos Checklist
& A Holiday Planner

I value my time and my knowledge, that’s why the workbook is not free. There’s a lesson to be learned there! 🙂

Know Your Costs

Number 1 advice I can impart: know your costs! So print your worksheet and let’s start calculating!

This whole process starts by keeping track of every penny you spend on materials, ingredients and supplies plus any associated taxes and shipping costs to get those items to your door.

So start with one of your handmade items.

How much does the item cost to make? Add up every bead and ribbon.

How much does the packaging/marketing materials cost? (Not the shipping materials.) Include business cards, hang tags, plastic sleeves, etc.

Got your number? Is the total amount what you were expecting? Is it high or low?

Using the Materials & Supplies Tracker sheet is a great way to get a snapshot of what you’re spending on supplies. Maybe it’s time to start researching other options? Can you find different suppliers or purchase wholesale? In order to make the most profit, you need to get your costs down as much as possible. Just don’t compromise on quality.

How Much Time?

It’s really important to know how much money your item costs to make and how much time it takes to make.

Make a plan to time how long it takes you to produce 1 of the item in question. If it’s most efficient to make the item in batches, then time yourself and divide by the number of items you made.

How long did it take you? Was it what you expected?

The next best way to increase your profit is to reduce the amount of time you spend making items. Maybe it’s time to research some time-saving tools or strategies?

Value Your Time

Remember that your skill set is unique. And that it took time and hard work to acquire that skill set. Not everyone can do what you do, even if you think it is easy. You need to value yourself appropriately.

(As an aside: shops who are just doing this as a hobby and price themselves ridiculously low are doing us all a disservice. Don’t be like that. Do us all a favour and price yourself appropriately.)

You could calculate your hourly rate a couple of ways.

Consider what wages you might be earning if you were working a more typical 9-5. Do some research. What jobs are you qualified for and what’s the going rate?

Or sit with your personal finances and calculate how much you need to bring in, in order to maintain your desired lifestyle.

What is your hourly rate? Be fair and realistic.

Research the Competition

Here’s where I might deviate from the normal things you hear about pricing handmade items.

You gotta know your competition. Not to copy them, NEVER to copy them. Just to know them.

Head over to Etsy and identify 3-5 shops that are likely hitting the same target market as you. Shops with similar items, either in style or composition. Shops that pop up when you search for the keywords that you’ve targeted in your own listings. Pick shops that have at least 100+ sales.

Take note of their prices. Their shipping prices too.

This is a good way to gauge what customers are willing to spend on items similar to yours. It’s valuable information to have. Even if you decide to ignore it completely.

But if you decide to price yourself significantly higher than the competition, you should have some pretty good reasons that the customer can easily see.

Cost of Shipping

Now you need to know how much your items are going to cost you to ship.

Etsy is doing this thing now where they favour shops that offer free shipping. I believe that offering free shipping will NOT make or break your shop. It’s definitely something to consider, but if it’s not possible for your shop then it’s not possible. Your shop, your way, remember?

You still need to be very clear on what your shipping costs are.

How much do shipping materials cost you? The envelopes and tissue paper and washi tape? Add it all up.

How much will the postage cost you? To ship domestically or internationally?

If you can work these costs into the price of your item, you probably should. But if you make wedding ice sculptures that need to be shipped in a refrigerated truck, that’s probably going to cost the customer extra.

Here’s my 2-cents if you’re interested. Most people who are shopping online expect shipping charges. It won’t shock them to see a cost for shipping. It will just be a bonus if there isn’t one.

I’ve tried a variety of sale tactics in the past to attract shoppers, including free shipping coupons. They don’t work and customers should be given more credit. If they love your item, they will buy it whether there are shipping charges or not. So don’t get too hung up on this.

Etsy Fees

Don’t forget the Etsy fees!

You’ll want to build the Etsy fees (usd) into your pricing strategy:

$0.20 listing fee
+ 5% Selling Fee
+ 3% + $0.25 Payment Processing Fees.
Total = 8% + $0.45

I know it’s frustrating when your profit margin feels so small. But consider that no matter where or how you sell your handmade items, there are fees. Table fees if you sell at a craft fair. Retailer’s cut if you consign. 8% + $.45 is actually pretty good.

Note: Payment processing fees differ by country. Check this list.

Add it All Up

Now that you’ve gathered up as much information as possible, you actually have to come up with a price for your item.

Here’s the other place I deviate a little from other pricing teachers. You DO need to consider your customer.

Sometimes you’ll do all this calculating and just have to throw it all out the window.

It’s all well and good to say an item is worth $xx, but if no one is willing to pay $xx then you’re not going to make any sales. (And maybe you need to re-consider your product line.)

So if your calculations are coming out really high, you NEED to research ways to reduce your costs.

This is where knowing the competition’s pricing comes in handy. Not that you should be afraid of charging more than them, but to help you stay within a certain ballpark to remain competitive.

Pricing Handmade Items

Here’s a very vague rule I follow. I determine a price that I am comfortable with, then I add at least 10%-15%. I list with a price that I’m a little uncomfortable with and see what happens.

I think it’s the nature of makers to undercharge. One of the most helpful pricing exercises I’ve done is to sit with a trusted stockist and have her give me her opinion on my prices. She took all of my items and added a solid 25%-30%. It was eye-opening. But she knew her customers and valued my work more than I did. It was a good lesson to learn.

To Wholesale or Not

Something else to consider is that retailers may find you on Etsy and inquire if you offer wholesale pricing. Or maybe you’ll approach some local businesses yourself. Either way, they are likely to check out your shop and expect an answer based on the pricing they see. Wholesale is typically 50%-60%.

If you’ve priced your items too low, then you may have to say no to some otherwise great opportunities.

I’m a big believer in consigning/wholesaling. It’s a big part of my business. I don’t like to keep all my eggs in one basket. And maintaining a good relationship with stockists can open up other opportunities too. It’s something to consider.

To Sum Up

(lol, see what I did there? A little pricing humour to lighten the mood!)

I know you may have reached the end of this post and are still a little fuzzy on pricing handmade items.

But sit with your numbers for a bit. Or take a break and come back fresh in the morning with a clear head. You’ll sort it out.

Unfortunately there is no perfect formula for pricing your items. Your shop is so different from everyone else’s, you need to come up with your own strategies. But I sincerely hope that my knowledge and advice has been helpful!

Check out Part 2 next, How to Find Tags for your Etsy Items.

Comment with your questions, I’m always happy to help!



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