How to Price Your Handmade Products Without Underselling Yourself

Underpricing is the most common mistake Etsy sellers make. It feels safer — lower prices mean more sales, right? In practice, it usually means more work for less money, and it attracts buyers who don't value your craft.

Here's a framework for pricing your products properly.

Start with your real costs

Before you can price anything, you need to know what it actually costs to make. Most sellers only count materials, which leaves out a huge chunk of the true cost.

Your cost of goods includes:

• Materials: every component that goes into the product, including packaging, tissue paper, stickers, thank-you cards
• Supplies: tools, equipment depreciation, software subscriptions
• Shipping supplies: boxes, bubble wrap, tape, labels
• Platform fees: Etsy charges a $0.20 listing fee, a 6.5% transaction fee, and a payment processing fee (~3% + $0.25)

A product that costs $8 in materials might actually cost $12-14 once you add everything up.

Pay yourself for your time

This is the part most sellers skip. Your time has value. If you're spending 2 hours making a product, that time needs to be in your price.

Decide on an hourly rate you want to pay yourself. Even a modest $15/hour applied to a product that takes 2 hours adds $30 to your cost base before a single material is counted.

A simple pricing formula:

Materials + (Hours x Hourly Rate) + Overhead = Your Cost
Your Cost x 2 = Wholesale Price
Your Cost x 3 (or more) = Retail Price

The multiplier covers profit, reinvestment into the business, and the fact that not every month will be equally busy. A multiplier of 2-3x on your total cost is standard for handmade goods.

Factor in Etsy's fees

A lot of sellers price for what they want to receive, then are surprised when they see their actual payout. Etsy takes a meaningful cut:

• $0.20 listing fee per item
• 6.5% transaction fee on the total sale price (including shipping)
• ~3% + $0.25 payment processing fee
• Offsite Ads fee: 12-15% on sales from Etsy-driven external traffic (if you're opted in)

On a $40 sale with $5 shipping, Etsy takes roughly $5-7 depending on ads. Budget for that.

A useful trick: price your items so that after all fees you're left with at least 2x your material cost.

Don't undercut the market — read it correctly

New sellers often look at the lowest-priced competitor and aim to match it. This is a race to the bottom and usually means someone else is undervaluing their work too.

Instead, look at the successful listings. Filter by "Top customer reviews" or sort by Relevancy and look at what's actually selling. Those are the real market prices buyers are willing to pay.

If your price is higher than average, that's fine — as long as you can justify it in your photos, description, and branding.

Raising your prices is almost always fine

Sellers are often terrified of raising prices. The reality: most shoppers on Etsy are looking for quality, uniqueness, and a connection with the maker. A 10-15% price increase rarely causes a meaningful drop in sales, especially if your listing quality is good.

If anything, higher prices can increase perceived value. A $9 candle reads as cheap. A $22 candle reads as a gift worth giving.

If you've been selling for a while at the same price, do the math. Have your material costs gone up? Has your skill improved? Are you selling out quickly? All of those are signals to raise your price.

The number you should never go below

Before you set any price, calculate your absolute floor:

(Materials + Packaging + Shipping supplies) + (Time x Hourly rate) + Etsy fees = Floor price

Never list below that number. If the market won't support a price above your floor, the product needs to be cheaper to make, faster to produce, or sold somewhere other than Etsy.

Pricing correctly isn't just good for you — it's good for the handmade market. Every seller who undervalues their work makes it harder for everyone else to charge what their craft is worth.