Most makers price by looking at what similar items sell for, then knocking a bit off. It feels safe, but it often means working for far less than minimum wage without noticing. A formula does not replace knowing your market, but it gives you a floor: the lowest price at which the work actually pays you.
This guide walks through the classic handmade pricing formula, works a full example, shows what is left after Etsy's fees, and explains when to adjust it. The handmade pricing calculator runs the same steps with your numbers.
Step 1: work out your real cost
Your cost has three parts:
- Materials: everything that goes into one item, including findings, thread, labels and packaging.
- Labour: the time to make one item multiplied by an hourly wage you would accept from an employer. This is the part most makers leave out.
- Overhead: a share of tools, electricity, software, photography and other costs that are not tied to one item.
Cost = materials + (hours × hourly wage) + overhead
Step 2: apply the multipliers
The widely used rule is to double your cost for the wholesale price and double that for retail:
Wholesale = cost × 2 · Retail = wholesale × 2
The first doubling is your business's profit: it pays for growth, slow months and mistakes. The second is the seller's share. When a shop stocks your work, that half pays for their premises and marketing. When you sell directly, it pays for your own selling costs: platform fees, payment processing, ads, returns and the time you spend on listings and messages.
A worked example: a pair of earrings
| Line | Amount |
|---|---|
| Materials | $6.00 |
| Labour (30 minutes at $18 an hour) | $9.00 |
| Overhead | $1.00 |
| Cost | $16.00 |
| Wholesale (× 2) | $32.00 |
| Retail (× 2) | $64.00 |
With a 2.5 wholesale multiplier instead, wholesale becomes $40 and retail $80.
What is left after Etsy's fees
Sold at $64 on Etsy in the US with no Offsite Ad, the fees are $0.20 listing + 6.5% transaction ($4.16) + 3% + $0.25 processing ($2.17) = $6.53. Take away the $6 of materials and $1 of overhead and $50.47 is left for your time and profit. For 30 minutes of making, that is roughly $100 an hour, which leaves room for the photography, listing, packing and customer messages that the making time does not include.
If the same sale came through an Etsy Offsite Ad at 15%, another $9.60 would go to Etsy. Use the Etsy fee calculator to see both cases for your own price.
When to change the formula
- You only sell direct. You may decide on a lower retail multiplier, but check that fees, postage and ads still fit inside the price. The Etsy pricing calculator works backwards from the profit you want.
- The price looks too high. Do not cut your wage first. Look for faster ways to make the item, materials bought in bulk, or a simpler version at a lower price point.
- Your market pays more. The formula is a floor, not a ceiling. If buyers in your niche happily pay more, charge more.
- Very cheap items. Etsy's fixed fees ($0.20 + $0.25) take a large share of small prices. Bundles and sets often work better than a $5 single item.
Common pricing mistakes
- Leaving out your time. If labour is not in the cost, what looks like profit is really your wage.
- Confusing markup and margin. Doubling the cost is a 100% markup but a 50% margin. Our margin vs markup guide explains the difference.
- Forgetting free shipping. If you offer free shipping, the postage must be inside the price. See how to build postage into your price.
FAQ
What is the formula for pricing handmade items?
Cost = materials + labour + overhead. Wholesale = cost × 2. Retail = wholesale × 2. The multipliers are a common starting point, not a rule.
Should I pay myself an hourly wage in my prices?
Yes. Your time is a real cost. Without it, you cannot hire help, take time off or grow without raising prices later.
Does the retail price already include Etsy's fees?
No. The retail price is what the buyer pays; Etsy's fees come out of it. On a $64 sale in the US, the standard fees are about $6.53.
What if my formula price is higher than similar items?
Check whether your item is genuinely comparable, then look at making time and material costs before lowering your wage. Some makers keep a premium line at the formula price and a simpler line at a lower price.
Last reviewed: November 2026 · By Muhammad Shujah Uddin Qazi · Fees change; always check the platform's official fee page.