How to price handmade products without forgetting your time
A repeatable pricing process for makers and independent sellers.
Build a cost record for one item
List the materials actually consumed, including waste. If a $24 pack makes eight usable items, the material cost is $3 per item. Include labels, boxes and protective packaging. Keep receipts so you can update costs when suppliers change prices.
Pay for the time you spend
Multiply production time in hours by your chosen hourly labor rate. Twenty minutes at $18 per hour costs $6. Batch work can lower time per unit, but customer service, preparation and packing also take time. Use realistic measured averages.
Use net shipping cost
If postage and packaging cost $7 and the customer separately pays $4 for shipping, your net shipping expense is $3. This simplified calculator assumes percentage fees apply to the item price. If your provider charges fees on shipping or taxes, add those extra fee dollars to fixed fees.
Work through an example
At a $45 price, $12 product cost, $5 shipping and packaging, $6 labor, $4 advertising, and fees of 3% plus $0.30, contribution is $16.35 per order. That is a 36.3% contribution margin. These are illustrative inputs, not current marketplace rates.
Round and test
A formula gives a cost-based starting point. Check comparable products, perceived value and what customers actually buy. If your required price is too high for the market, change the offer, costs or production process. Lowering your labor allowance can hide an unsustainable product.
Review after your first orders
Compare estimated and actual packaging, time, advertising and returns. Review prices when supplier costs or marketplace fees change. Add monthly overhead separately to decide how many orders you need to cover the business.
Try it with your own numbers.
The free calculator includes labor, fees, shipping and ad spend.
Open the pricing calculator →Original worked examples by Margin Lab, prepared with AI assistance. Educational estimates; verify your own costs and provider terms.