The true cost of selling your handmade products

Pricing your handmade products is really, really hard. Not only do you have to include factors like your overhead and material costs, you also have to set a price point that your customers will buy at. Sometimes the true cost of your products and a popular price point don’t match at all.

So how much should you price your products for? Well, lots of crafters use the pricing formula below (transformed into a pretty picture by me) to determine the price of their products:

the pricing formula

materials + time = cost; cost*2 = wholesale price; wholesale*2 = retail price

Setting Your Costs

For an example, I will use my crochet house slippers (click the link to see the item in question) to create a cost guideline. Each pair of house slippers requires two skeins of coordinating fabrics. Say that I spend $6 per skein on something that is mid-range in price, like Patons yarn or Caron yarn – the material cost comes to $12. I generally pay myself $10/hour to create crochet items, which may be high or low to other crafters, but considering I charge a minimum of $15/hour for my freelancing work, I think it’s pretty meager. It takes me a little less than an hour to make a pair, so say about $8 in labor. The total for my first formula of materials + labor = $20.

So, if I wanted to charge a wholesale price to someone, it would be $40. And if I were to charge a retail price for them, they would cost $80! To me that seems pretty high for a pair of slippers. Not that I personally don’t think they are worth it, but most people would not purchase a pair of slippers for $80. And even though I believe that I could sell my slippers for $40/pair, I don’t – I sell them for just $20, which means that I very rarely, if ever, make a legitimate profit from each pair.

What Did I Learn?

It’s obvious that I am selling myself short, and that I really need to take a look at my pricing structure again if I ever want to actually profit from my crafting. However, I get so many orders at the $20 price point, and I LOVE making things for people, so I haven’t raised them. I work very hard to make great products, and if I am not 100% happy with the finished product I will go back and revise/fix/improve until it’s perfect. The love, integrity, and time that I put into each product is worth something, and I fully believe that $40  is a fair price for that. Some people may not agree, but in the end, wouldn’t you want to sell your products to someone who truly wants them, and will truly cherish them for what they are – labors of love?


As you can see, it is very hard to set your pricing at a point that is fair to both you and what the consumer thinks is a valid price. If you want to actually profit from your crafting, you HAVE to charge what your product is worth. It’s going to be higher than Walmart pricing, and that’s okay, because your items are made by hand and that takes time, effort, materials, and more. If the consumer truly appreciates the products that you are selling, they will buy it, regardless of the price. The biggest factor is demonstrating the value to your customers. Once you do that, people will realize that your products are worth their cost, and you will see more sales!

About tolmema

Hi. I’m Bailey: freelancer, blogger, sewist, proud mama, wife; lover of coffee, nap time, and sunshine.

Posted on January 14, 2012, in Uncategorized and tagged , , , , , , , . Bookmark the permalink. 18 Comments.

  1. Reblogged this on AtomicLuLu and commented:
    Always a very tough subjec to approach when you consider your handmade marketplace. This great thought helps demystify much of what someone should consider when pricing their efforts.

    • Thanks for the link love. It is indeed a very tough subject, but I think it is important that artists price their products according to their value, and that consumers understand the numbers behind handmade stuff so that they can appreciate the item for what it is, not its price tag.

  2. I’ve seen that formula before but don’t know how anybody can actually put it into practise and still sell things! Having said that, I always hope that people who are interested in handmade items will realise the time and effort that has gone into them and will be prepared to pay for that – in the same way that people expect to pay a higher price for designer branded goods.
    I have been wondering lately about how much I am adding to, and not charging for, the cost to myself in terms of packaging. Boxes, jiffy bags, tissue paper, cello bags, ribbons, tape, stickers, business cards – it doesn’t bear thinking about really!

    • Packaging is expensive, especially when it looks nice! I’m sure that the packaging alone adds at least a dollar to the overall cost of your products. While it’s not much in the scheme of thing, a dollar here and a dollar there will result in no profits. :(

      Thanks for stopping by!

  3. I was going to leave a reply explaining why I don’t agree with this formula, but it needed a “stage of it’s own”… You can find my response to your post here:

    Along with a modified formula which might be more useful for crafters to find their break even and profitability points, without pricing themselves out of the market.

    • I really liked your post – you went a lot deeper into the actual costs and specific numbers vs. my pretty light post. The idea was to demonstrate to non-crafters how difficult it is to compete with Walmart pricing and the heavy cost of crafting for profit. Thanks for posting such an informative reply on your blog – I think it’s very important for people to realize the costs of hand-crafting anything, whether it be slippers or bread or horseshoes. :)

  4. Hi, I really loved the way you set out the formula. This might seem like an odd question…. but what font did you use… I just love it. Thanx

    • Hey there! I don’t remember exactly (I can’t find the PNG right now), but I think it’s a mixture of “Valerie’s Hand” and “Waiting for the Sunrise”. I’m so glad that you like it!! Thanks for stopping by! :)

  5. I never come across this formula but was told that I should
    Work out cost of product and multiple that by 2 and then add time to cost = Retail price/ wholesale price I guess would be cheaper if in bulk maybe!

    • I’m not sure that there’s one magical formula that is “right”. In the end there’s so many variables and price points to consider, and the right price for each product is different for everyone. You’re right, though – bulk pricing is always cheaper, but you run the risk of losing quality or profits if you don’t sell enough product to cover the cost of the wholesale materials. In the end I think it’s best to go with whatever you feel comfortable with and what actually makes a profit.

      Thanks for stopping by, I appreciate your insight!

  6. I would believe $40 was a fair price for,your slippers. As a consumer, I expect that I am buying directly from the manufacture ( wholesale) and eliminating the additional markup to,full retail. Thus making your slippers a fabulous bargain!

    • I am incredibly happy to hear that! I think it’s a fair price as well, but I already know how much work goes into a pair. :) Plus, by purchasing from a local crafter, you’re funding them directly, and the money stays within your community.

      Thank you for stopping by!

  7. Thanks so much for this post! I struggle with pricing too, and having this formula helps. I did a quick calculation and realised my pricing is ok as per your formula. Makes me happy!
    Thanks again!

  8. This was so helpful. I paint and collage, plus sell these pictures as prints/cards. It’s always been a challenge how to price things. Thanks.

  9. It may cost you $12 for 2 skeins of yarn, but does it actually take 2 whole skeins to make a pair of slippers? How many pairs can you make with allllll the yarn? That times your total time would be your real cost. Then just divide that by the number of pairs made and you’ll have a real price per each.

    • You do make a good point there. Personally I found that I was unable to make two pairs from two skeins of yarn; I probably could make 3 pairs from four, though, which would be a more accurate price for materials.

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