How to Price Handmade Products (Without Undercharging)
13 March 2026 · Huskai · 6 min read
Why Most Handmade Sellers Underprice Their Work
Here's something almost every handmade seller does at the start: you add up the cost of your materials, stick a bit on top, and call that your price. It feels fair. It feels reasonable. And it's almost certainly losing you money.
The problem isn't that you're bad at maths. The problem is that materials are only one part of what a product actually costs to make. When you price based on materials alone, you're giving away your time, your skill, and your overhead for free.
If you've ever looked at your bank balance after a busy month of sales and thought "where did all that money go?" — this is why. You're selling, but you're not profiting.
This guide walks you through how to price handmade products properly, so you actually get paid for your work.
The True Cost of a Handmade Product
Every product you make has four types of cost. Most sellers only think about the first one.
1. Materials
This is the obvious one — the wax, the fabric, the clay, the beads, the ingredients. Whatever goes into the finished product. Include everything, even the small things you tend to forget: labels, tags, glue, thread, decorative elements.
Tip: Buy materials in bulk? Work out the cost per unit, not the cost per bag. If you buy 1kg of soy wax for £12 and each candle uses 200g, your wax cost per candle is £2.40, not £12.
2. Labour
Your time. This is the one most handmade sellers skip entirely, and it's the single biggest reason people underprice. If it takes you 45 minutes to make a product, that's 45 minutes of skilled work that has a value. We'll come back to how to set your hourly rate in a moment.
3. Packaging
Boxes, tissue paper, stickers, thank-you cards, bubble wrap, mailers, ribbon. It adds up faster than you'd think. A branded kraft box, tissue paper, and a sticker might cost £1.50–£2.00 per order. That's real money when you're selling at £15–£25.
4. Overhead
Everything else that keeps your business running but doesn't go directly into a single product:
- Website or platform fees
- Electricity (ovens, heat guns, lighting for photos)
- Tools and equipment (amortised over their lifespan)
- Insurance
- Marketing costs (social media ads, craft fair fees)
- Software (accounting, design tools, email marketing)
- Workspace costs (even if it's a room in your house)
To work out overhead per product, estimate your total monthly overhead costs and divide by the number of products you make in a month. If your overhead is £200/month and you make 100 products, that's £2 per product.
How to Calculate Your Hourly Rate
This is where a lot of sellers get stuck. "What's my time worth?" The answer is: more than you think.
As a starting point, the UK National Living Wage is £12.21 per hour (from April 2025, for workers aged 21 and over). That's the legal minimum an employer would have to pay someone to do this work. Your rate should be at least that.
But here's the thing — you're not just a production worker. You're also the designer, the photographer, the marketing team, the customer service department, and the business owner. A skilled craftsperson's time is worth more than minimum wage.
A good rule of thumb: start at £15–£20 per hour if you're just getting going. As your skills and reputation grow, increase it. Experienced makers often charge £25–£40 per hour for their production time.
Be honest about how long things actually take, too. Time yourself making a product from start to finish — including drying time you're actively managing, clean-up, and quality checks. Most people underestimate by 20–30%.
The Pricing Formula
Once you know your four costs, the formula is straightforward:
Price = (Materials + Labour + Packaging + Overhead) ÷ (1 − Desired Profit Margin)
The profit margin is the percentage of the final price that's pure profit — money left over after all costs are covered. A healthy margin for handmade products is typically 30–50%.
Why divide instead of just adding a percentage on top? Because the margin is a percentage of the selling price, not the cost. If your costs are £10 and you want a 40% margin, you don't add £4 (that gives you 28.6% margin on the selling price). You divide: £10 ÷ 0.6 = £16.67.
Worked Example: A Handmade Soy Candle
Let's price a hand-poured soy candle in a 220ml glass jar with a branded label and box. It takes 25 minutes of active work (pouring, trimming, labelling, quality checking). We'll use an hourly rate of £15 and aim for a 40% profit margin.
| Cost Component | Item | Cost |
|---|---|---|
| Materials | Soy wax (200g at £12/kg) | £2.40 |
| Fragrance oil (20ml at £8/100ml) | £1.60 | |
| Cotton wick | £0.15 | |
| Glass jar with lid | £1.80 | |
| Packaging | Branded label | £0.30 |
| Kraft box + tissue paper | £1.20 | |
| Labour | 25 minutes at £15/hr | £6.25 |
| Overhead | £150/month ÷ 120 candles | £1.25 |
| Total Cost | £14.95 | |
| Selling Price (40% margin) | £24.92 | |
So: £14.95 ÷ (1 − 0.40) = £14.95 ÷ 0.60 = £24.92. Round that to £24.95 or £25.00 and you've got a price that actually pays you for your work.
Without the labour and overhead? You'd price it at maybe £8–£10 and wonder why you're not making any money. Sound familiar?
Common Pricing Mistakes
Not paying yourself
This is the big one. If you're not including your time as a cost, you're running a charity, not a business. Your skill took time to develop. Your labour has value. Pay yourself.
Forgetting overhead
Platform fees, electricity, insurance, that £40/month Canva subscription — it all counts. If you're not accounting for it in your pricing, it's coming straight out of your profit.
Racing to the bottom
Looking at what other sellers charge and trying to undercut them is a trap. You don't know their costs, their margins, or whether they're actually profitable. Someone selling candles at £8 might be losing money on every sale and just hasn't realised yet. Compete on quality, branding, and customer experience — not on who can charge the least.
Pricing differently for different channels
If you sell at craft fairs and online, it's tempting to price lower online "because there's more competition." Don't. Your costs are your costs. If anything, online sales have additional costs (platform fees, postage, packaging for shipping) that market stalls don't.
Not revisiting your prices
Material costs go up. Your skills improve. Your time becomes more valuable. If you set your prices two years ago and haven't touched them since, you're almost certainly undercharging now. Review your pricing at least every six months.
Platform Fees Eat Into Your Margin
Here's something that doesn't get talked about enough: the platform you sell on can take a serious chunk of the margin you've carefully calculated.
Let's take that £25 candle and see what you actually keep:
| Platform | Fees on a £25 Sale | You Keep |
|---|---|---|
| Etsy | £0.16 listing + £1.63 transaction (6.5%) + £0.55 payment processing (2% + 20p) + optional ads (up to 15%) = £2.34–£6.09 | £18.91–£22.66 |
| Shopify Basic | £0.50 + 25p payment processing (2% + 25p) + app costs (~£0.50 allocated per sale) = ~£1.25 | ~£23.75 |
| Haul | Stripe only: 1.5% + 20p = £0.58 | £24.42 |
On Etsy, you could be giving up 9–24% of your sale price in fees before you've even accounted for your costs. That 40% profit margin you calculated? It's now 16–31% after Etsy takes their cut. If you're selling hundreds of products a month, the difference between £0.58 and £2.34+ per sale adds up fast.
This isn't about bashing any platform — Etsy's marketplace traffic has genuine value, and Shopify is a solid tool. But you need to factor these fees into your pricing, or they'll quietly erode the profit you worked so hard to build in.
Work Out Your Numbers
We've built a couple of free tools to help you get your pricing right:
- Profit Calculator — plug in your costs and desired margin, and see exactly what you need to charge. Works for any handmade product.
- Etsy Fee Calculator — see exactly how much Etsy takes from each sale, including listing fees, transaction fees, payment processing, and offsite ads.
Pricing isn't something you figure out once and forget about. But getting the formula right — and being honest about all your costs — is the difference between a hobby that drains your bank account and a business that actually pays you what you're worth.