How to Price Handmade Products (With a Worked Etsy Example)

Published 5 November 2026 · Sources linked inline

Most handmade sellers price by gut feel or by copying competitors. The problem is that marketplace fees are charged on the selling price, not on your costs. So a price that "covers costs" can still lose money after fees. This guide gives you a formula that works backwards from the profit you want.

Step 1: Add up your true cost per item

Include everything that goes into one finished item:

• Materials – the share of each supply you use, at what you currently pay for it (not what you paid two years ago).
• Labour – your time multiplied by an hourly rate you would accept from an employer.
• Packaging – box, tissue, tape, thank-you card.
• Overhead per item – tools, software, and equipment spread across how many items you make.

Step 2: Know which fees scale with the price

On Etsy, for a seller with a US bank account, the main per-order fees are (Etsy Help: fees, payment processing):

• Listing fee: $0.20 per listing (and again each time an item sells and the listing renews).
• Transaction fee: 6.5% of the order total, including shipping and gift wrap.
• Payment processing (US): 3% + $0.25 per order. In the UK it is 4% + £0.20.

Some countries also pay a Regulatory Operating Fee (for example 0.48% in the UK). See our guide to Etsy fees by country.

Step 3: Solve for the price

If C is your total cost, F the fixed fees, f the percentage fees and m the profit margin you want (as a share of the price):

Price = (C + F) ÷ (1 − f − m)

Worked example (US seller)

A candle with:

Fixed fees F = $0.20 listing + $0.25 processing = $0.45. Percentage fees f = 6.5% + 3% = 9.5%. Target margin m = 30%.

Price = (18.00 + 0.45) ÷ (1 − 0.095 − 0.30) = 18.45 ÷ 0.605 = $30.50

Check it: fees = 9.5% × $30.50 + $0.45 = $3.35. Profit = $30.50 − $3.35 − $18.00 = $9.15, which is 30.0% of the price. ✔

If you had simply added 30% on top of cost ($23.40), fees would take about $2.67 and your profit would be about $2.73 – under 12%, before counting any Offsite Ads fee.

This example leaves shipping out to keep the maths simple. Remember Etsy's transaction and processing fees are also charged on the shipping you charge the buyer.

Common pricing mistakes

1. Paying yourself nothing. Labour is a real cost; if you leave it out you cannot afford to grow or hire.
2. Stale material costs. Re-check supplier prices regularly.
3. Forgetting Offsite Ads. If a sale comes through an Etsy Offsite Ad, Etsy charges an extra 15% (12% for shops over $10,000 in the past 12 months), capped at $100 per order (Etsy fees policy). Make sure your margin can absorb it.
4. Discounting below cost. Test a coupon before you run it: a 25% sale on the $30.50 candle (selling at $22.88) cuts profit from $9.15 to about $2.25.