5 tips for pricing your handmade products

A few years ago I decided that what I would really like to do is turn my hobby, my skill with fabric and a sewing machine, into a way of earning a regular income.  I set up a shop on Folksy, I made lots of stock and attended craft fairs. I made sales. Quite a few sales. But I never seemed to actually get anywhere...


The main problem was in the pricing. I had fallen into the trap of pricing my beautiful, one of a kind, handmade lovelies waaaaaay too low. I realised that rather than pricing my products according to the amount of work involved and the materials used, I was comparing them to other similar products. I was trying to be 'competitive' but I was failing at actually getting paid what my work was worth...

SO... as this is my make or break year I knew I had to re-evaluate my pricing. If I am to have a hope of actually earning a living doing this thing that I love so much then I am going to have to learn to price my products properly!!

And if last week's #craftblogclub chat on Twitter (#craftblogclub is hosted by the very lovely @LivePeachy every Tuesday night 7-8.30pm) its a problem faced by many start up craft businesses...

So here are my 5 tips for pricing your handmade products

1.   Set an hourly rate and stick to it!

Think about what you are willing to work for.  Minimum wage in the UK is currently £6.31 so there's your starting point. 
Maybe you are happy to work for less than that - after all, if you work from home there are no commuting costs, lunch is much cheaper, you can work the hours you chose and there aren't many jobs you can do in your pj's if you feel like it.
At the same time though, don't forget you have a skill, one that many other people don't have!  Don't undervalue yourself. 
Whatever you decide make sure you stick to it! When you price your product using the formula below don't balk because it looks a little high and reduce it a bit. Stick to your guns.

2.   Get the best price you can for your materials

Many small business crafters use the same suppliers they have used for years - paying full retail prices for their materials. This is fine for 'hobby crafters' and those who dabble making lots of different things but if you have found a design idea that really works, that people love and that sells well it really pays to buy in bulk and save some money.  
If you want to continue supporting your preferred supplier why not contact them and see if they will do a deal if you order larger amounts? If you normally buy fabric in fat quarters you may be able to get a discount on an order for several metres.

3.  Be aware of your OTHER costs

Listing fees, sales fees, PayPal fees - these all add up. Remember to take them into account when working out your final price.
Listing and sales fees vary from site to site but lets say you want to list an item for sale on Folksy. Unless you have a FolksyPlus account you will pay 18p per item (15p +VAT) and, when the item sells you will pay 6% + VAT as a sales fee.
So if you list an item and it sells for £10 it will have cost you 18p listing fee + 72p sales fee = 90p
(Folksy do not include your postage charge in their sales fee percentage, thankfully)
Now assume you had a postage charge of £3.00 - that means the total amount processed through Paypal will be £13.00. Paypal's standard processing charge is 3.4% + 20p per transaction so they will take their fee of  44p + 20p = 64p
Now the total fees you have paid are £1.54
Then you need to factor in postage costs - 2nd class small parcel rate is currently £2.65 - and your packaging costs - tissue paper, envelopes etc etc - you are probably looking at another 20p - 30p.
So your item which sells for £10 + £3 P&P has cost you a total of  £4.50 already...  the remaining amount needs to cover, at the very least, your materials and your wage. 
If you are serious about this being your livelihood then you also need to be making something on top of that - you need to be making a profit!

If you are self hosted, selling from your own website, don't forget you need to think about your monthly/yearly website costs too!

4.   The Formula

Now you have your basic costs you need to set your price. There are many different ways of working out the ideal price and a lot depends on which way you want to take your business. If you are happy retailing directly through your own shop/website or through a hosted site like Folksy or Etsy then this formula should work reasonably well for you. There is also room for supplying local shops at a trade price or sale-or-return on commission.

(Materials + hourly rate) + 20% = 'wholesale price'   (the 20% to cover those extra costs. This is the absolute minimum price you could sell your goods at and have all costs covered)

Wholesale price x 2 = retail price   (this is the price you should be retailing your goods at)

One of my basic birds costs me approx 30p in materials and takes 20 mins to make
  30p  + £2.10 ( 20mins at minimum wage ) = £2.40   
add 20% (48p)  
so my wholesale price should be £2.88.
retail price = wholesale price x 2  or  £5.76

My birds are currently retailing at £4.99 so, as you can see I am still slightly undercharging - this is mainly because I have set my hourly rate a bit lower than minimum wage. This is something I NEED to address if I want a sustainable business that earns me a reasonable income and will be adjusting soon *

This is just the way I have made pricing work for me. It's not perfect and I am sure there are many designer/makers out there who would scream at me for suggesting that it is ok to set your hourly rate at minimum wage, or less, if you chose.

Which brings me neatly on to...

5.  Don't be afraid of 'high' prices!

So you've worked out your price using 'The Formula' but it just seems waaaay to high!

'No-one is going to pay that for it' you wail...

Stop! Now it's perfectly possible that you think YOU would never pay that for it but then you have all the skills and materials to make one for yourself, you don't need to buy one.  But think about all the people out there who don't know how to knit/sew/bead.
Customers of 'handmade' goods are generally very discerning and whilst you may get people muttering about how expensive your products are at the school fete or local village hall craft fair (we'll talk about those another time...) online shoppers are much more savvy - they are looking for beautifully made, unique designs. And they ARE prepared to pay for them.

So why not try that higher price first? What have you got to lose? If it really doesn't sell you have room to reduce the price in a sale or with a special offer code. Also if it doesn't sell at the price it deserves to sell for in terms of costs then you will know that you need to either reduce your costs or try something different...

And if it does sell - CONGRATULATIONS! You are on the right track to running a viable 'handmade' business!

So there you have it.

My top 5 tips for pricing your handmade products.

I hope you find them helpful.

Here are some links to other great articles on pricing your handmade goods. Research is the key to setting up any successful business. You have to decide what is best for you, in your circumstances, taking your personal goals into account.

Anthea xx

* you may be interested to know that if I did up my hourly rate to minimum wage, in the bird example above, taking into account Folksy fees, Paypal fees and postage costs I would make 98p more than I do now.  Every little counts...


  1. A good well rounded out article. Most accountants will suggest a £7 hourly rate to allow for tax and NICs. This gives you roughly £1100 a year to play with in case you have to pay tax. If you don't, you've got that money in your kitty to play with for next year or spend on a lovely holiday...

    1. And that assumes that you sell enough each week to earn a basic weekly living wage. That is the goal but I am under no illusions that it is going to be a hard slog to get there! That holiday will be needed!!

  2. It's so difficult isn't it? I can understand the desire to remain competitive, but you can't work for free. I'd say that you should really be earning more than minimum wage for skilled work, but as you say there are benefits to working from home. It's something I struggle with when I writing freelance.

    1. I agree that we should be earning more than minimum wage for our skills - thankfully more people are becoming aware of the quality 'handmade' market and lifestyle magazines and blogs are helping the trend grow.
      Onwards and upwards!

  3. Very useful guide, I hate to say it but I'm quite glad I'm not trying to sell handmade products. It seems like there is so much competition and so little profit to be made, it's a hard industry to be in but at the same time fulfilling because you get to do something you love. Like you say you have to weigh up whether it's worth earning less than minimum wage to do what you love from the comfort of your own home.

    I would earn more per hour going back to an office job than I do running The Sewing Directory but I love it in a way I have never loved any job before so it's worth all the hard work for little money. :-)

    1. I love what I do and would find fitting back into the 9-5 office life very difficult. Focus, drive and confidence in my creations all help, as do lovely comments and returning customers.
      Your site helps so many people get the most out of their skills and source beautiful materials I'm not surprised you love it!
      And I truly believe that happiness is a priceless commodity ;-)

  4. A very thoughtful and useful article. I think a lot of artists/crafters also sell patterns, cards, prints of their work, etc, which can help to boost income by being an item that can be sold countless times with only one initial input of time and effort - something I need to think of, too!

    1. That is an excellent idea! I am thinking of starting a line of kits - a little more work than just selling a pattern but a lot less than actually putting the item together myself!! The will be one of my new lines for 2014...
      But I will definitely put some thought into the pdf pattern idea too. Thanks for your comment :-)

  5. Just found your site via Google+ useful article I am revamping my shop & changing where I sell. Considering full site design with shop included. I have to check out Folksy.Yes, under pricing doesn't help you stay in business even if you are a small biz owner. There are many costs involved as mentioned hidden to buyer but we need to manage. Following so I can visit again. Theresa @DearCreatives

    1. I have tried selling through my own website and the Folksy platform and both have their pro's and con's. Good luck with your revamp, Theresa! Do please keep in touch so we can all see your new 'shop' when up and running! x