Every day, someone asks me “how much should I charge for this?” or “how much is this worth?” and those are such subjective questions, it's really difficult to answer!
Keep in mind this is how *I* do things. There are a million ways to do everything in your business, but this is a great jumping off point if you haven't figured out how to price your handmade goods yet.
Pricing formula for crafts
There are several formulas out there for pricing crafts. One thing many crafters don't realize is that if they want to wholesale their products (even in the future), their prices need to be higher than just their “cost of supplies x3”.
Cost of supplies x 3 seems to be a really popular formula, but that's crazy to me because my supplies for one of my best-selling products only cost me about $4 but I sell it for $34. If I did supplies x 3, it would only be $12. And wouldn't be paid for my time! No thank you!
How to price handmade goods
You may be asking, “how much should I charge for handmade items?” and like I said, there's really no perfect formula for everyone. What someone charges for a painting is going to be far greater than what someone charges for a candle. And what someone charges for a digital painting will probably be less than what is charged for a painting on canvas.
There are so many factors, that when it comes down to pricing, you truly do have to figure it out for your own situation if you want to do it right.
Don't sell yourself short! When figuring out your prices, if you ever want to offer wholesale, be sure to calculate that in. So, that may look something like this:
My supplies are $4, the product takes me about 20 minutes to create, and my hourly rate is $50.
$4 + $16.67 = $20.67, or my wholesale price
Retail price would double my hourly rate, making it $37.34. I charge $3 less than that, to remain competitive.
When I was reading about pricing formulas, this is one of the top results:
For example, you have determined the cost to purchase supplies to make one unit of your product is $4.28 and it takes you a half-hour to complete it, then your formula would look like this:
- $4.28 + $5 = $9.28 (Price A)
- $4.28 x 3 = $12.84 (Price B)
- $9.28 + 12.84 = $22.64
- $22.64 / 2 = $11. 32
Should I charge only $11.32 for my best-selling product? Can you sell a handmade card for $72 because it took you 2 hours and $15 in supplies? Absolutely not. This is why formulas don't always work!
Charging by the hour for crafts
Whether your hourly rate is $25 or $50, or something higher, make sure you factor that in. You deserve to get paid for your time.
Not every craft will lend well to a $50 an hour rate. If you're making something that everyone else is making, like greeting cards using your Cricut, you're probably not going to make nearly the hourly rate that someone using a Glowforge would make.
Why? Because cutting machines are a dime a dozen and you've done nothing to stand out or separate yourself, therefore you're stuck competing with others who do the same.
Elevate your craft so not as many people are doing what you're doing.
Diversifying your craft
One thing I've done to ensure I make my $50 (or more) per hour rate is diversify. I offer products nobody else offers. While people do end up copying, it takes them a little while to perfect it and in the meantime you're making sales.
I've added digital products to my shops because they pay so well in the long run. You create a digital product one time and it can sell hundreds, even thousands of times!
I created a course that walks you through getting started with digital products on Etsy. Even if you've never designed a digital product in your life, you can take this course and have digital products added to your Etsy shop in no time flat.
The joy of digital products is that you list it once and all you have to do is renew it when it sells!
Paying taxes on crafts
You've gotta be realistic with your pricing, but you also need to be sure you're making a good chunk of profit. Why? Because you're going to have to pay taxes and self-employment taxes suck donkey balls.
I'm not a tax advisor so I'm not going to dive deep into this, but I do recommend setting aside at least 25% of your profits for taxes. This is another reason I'm charging $34 for my product instead of $11.32. I like money and the freedoms it affords me. I don't price gouge, but I no longer feel guilty charging higher prices because I know my products are worth it.
Calculating extra costs
There are other costs that go into running a business. Even if they're minimal, they should be calculated. Some expenses that a lot of crafters tend to forget about include blades and mats for your Cricut, wood glue for your Glowforge projects, etc. Even though you don't use a lot of glue, or even though your blade lasts 1,000 cuts, it's still a business expense and should be factored in.
If you aren't sure how many cuts your blade will get, or how much glue or stain you use on each project, guesstimating is fine.
How to afford free shipping
If you're going to offer free shipping, you have to include the cost of shipping supplies as well as the cost of actually shipping the item, and factor that into the price. Do not just offer free shipping and let that eat into your profits.
Etsy loves when sellers offer free shipping, so when we added that to our shop, our sales went up pretty steadily. Even though we charge more than others who sell similar items, we make sure our customer service is on point at all times and we always include a free gift with each purchase.
Yes, each gift is calculated into the cost of supplies… it costs us about $.40 for the gift we send.
A note on gifts: Don't just send something random. Send a gift that pairs well with the item being sent.
Another thing you've gotta get nailed down if you want to do well on Etsy is your Etsy SEO. I covered that in another post so I'm not going to dive into it here, but Etsy SEO is extremely important!
Your money mindset
Pricing is a hot topic and it gets rather emotional in some of the crafting groups. I was told I “had a big head” because I factor in an hourly rate when figuring out my prices.
This woman literally said “wow, crafters sure have gotten big heads!” Ummm. Ma'am. This is a business. Just because I do it for fun doesn't mean I can't make big bucks while I'm at it. And you should, too!
Your mindset when it comes to money is going to play a huuuuge role in how successful you are with your craft business – or any business, really.
If you're struggling with feeling guilty for “taking people's money”, I feel you. I was there for YEARS. In fact, I still struggle with it at times. If you want to get started on the path I took, on the path to helping people while getting paid, on the path to making crafts while also making six figures, start with your mindset.
It is okay for you to make money – yes, even good money – from your craft. Don't let anyone tell you otherwise. I know you're probably wondering how in the heck meditation and manifestation roll into money management, but it does. Trust me, 100%, it does.
Pricing your handmade goods
Once you figure out your pricing for your crafts, you're going to have more confidence. You'll have a set price, and without that wiggle room for people to try and get a “better deal”, you're setting that boundary and getting that paycheck every. single. day.