12 top tips for pricing your handmade products – pricing guide

ByWowThankYou

Figuring out how to price your handmade products can be tricky, but it’s one of the most important parts of running a successful business. If your prices are too low, you might not make enough money to cover your costs or pay yourself for your hard work. If your prices are too high, you might scare away customers. The good news is, there are smart ways to set prices that are fair to both you and your buyers.

I’ve been running my own handmade business since 2010, so I know how tricky this subject can be. In this blog post, I’ll guide you through the steps to price your handmade products with confidence. You’ll learn how to add up your costs, think about your time, and look at what other makers are charging. With the right strategy, you can find a price that makes sense for your business and keeps your customers coming back for more.

1. Start with the basics

First of all calculate the actual cost of making your product. This will include all materials (even material wastage if you have any) proportional to one item, overheads (electricity, heating, marketing, insurance, memberships, taxes or other overheads) and your labour.

Product Costing

Material

Raw material, including wastage proportionate to one item

Labour

Hourly rate

National insurance contribution

Health Insurance

Overheads

Admin time (the time it takes to process your orders, go to post office, market your products, social media time etc.)

Professional insurance

Selling Goods Insurance

Professional membership fees

Tools usage and replacement

Capital expenditure (tools, laptop, car etc.)

Lighting

Heating

Marketing

Commissions

Postage

Website or IT cost

Taxes

20%

Profit

10-15% or more

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2. Pricing formula

Pricing is very personal and specific to your niche and target audience, but if you really want to follow a formula, here is the one most commonly used:

(Cost of your work + materials) x 2 = Wholesale Price

(you multiply your initial cost by 2 to include your profit and overheads)

If you want to sell at retail price, you further multiply the figure by 2.

It’s always a good idea to properly calculate your costs, but this is a good way of checking whether you have the right figure at the end.

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3. Tips on working out your labour cost

Ideally you should time how long it takes you to make one item, then work out how many you can physically produce in a week (month, year) and then decide on your hourly rate.

Your expertise and skills should be considered here – if you are just starting out you might consider your hourly rate lower than when you have 5 years or more experience in your field. Whatever you decide, I would strongly advise to start not any lower than the UK minimum wage (plus £1 or £2 extra per hour to cover your national insurance payments).

Not only do you need to pay yourself a living wage, but if you need to employ somebody later on (or even just outsource elements of your production) how are you going to do that if you base your product price on £3 p/h labour cost?

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4. Have your target customer in mind when calculating the prices

If you are used to having a stall at craft or art fairs, I’m sure you have heard this one before: ‘Oh, how pretty….you are so clever…but I could make that myself….where did you get that lovely fabric….’

These type of people are unlikely to buy from you and that’s fine – they are simply not your ideal customers. Craft fairs usually attract ‘crafty’ people (no pun intended, but you know what I mean…), who are there to ‘look’ and ‘get inspiration’.

The good news is that people who purchase online are a completely different type of people. When was the last time you saw a man (on his own) buying a present for his wife at a craft fair? I bet not that often, yet that’s exactly what happens online.

To help you with your pricing, you need to slightly change your idea of the customer buying your handmade products online.

The person who buys your products online is probably:

  • Somebody who needs a present and fast
  • Doesn’t really care about the price as long as the product is right for purpose
  • Might not even realise that the product is handmade, but wants it to be professionally well made
  • Wants something unusual that he or she can’t buy on the high street
  • Can be put off by an additional payment for postage (out of principle, not because he/she couldn’t afford it)

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5. Research your competition

It’s always good idea to check what your competition is doing and what pricing they apply to their products.

It’s less likely that your customer will do the same amount of ‘web research’ before they buy from you as when they are buying a kitchen appliance.

If you were selling a particular brand of toaster, customers are likely to go to a shop with a lower price (as long as everything else adds up – e.g. customer service, free delivery etc.)

With handmade, it doesn’t really work like that. People can’t exactly compare the same product across several websites. Instead, they will be comparing ‘handmade pillow cushions’ and have a figure in their mind -around £25-35. So if your price tag falls into this category, you are more likely to make a sale.

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6. Price your product fairly

You need to be fair to yourself and to your customer.

You need to cover all your cost, pay yourself and make a profit. Unless you are deliberately using one product as a lost leader and making a higher profit on another product.

You are a business and the figures need to add up – if not, you have a very expensive hobby.

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7. Strategic Pricing

Over the years, I’ve also used strategic pricing to help my small handmade business grow. This included things such as using full price £10 , because it looks more ‘handmade’ than £9.99.

Offer free postage to get more sales (but make sure it’s added to the cost of your product, so you don’t lose out).

Offer reduced postage rate (or free) for additional items from your shop to increase multiple purchases.

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8. Focus on postage & Packaging Cost

Why offer free postage?

It’s simple -it converts website visitors into paying customers

People object to postage payment out of principle

Customers are likely to buy from more than one shop (if you sell on a large website platform) if they don’t have to pay 2 or 3 times the postage charge

Do I just absorb the cost of postage?

No, absolutely not…

Within reason you can add the true cost of postage to your overall product price. Check that the price still ‘feels right’ and perhaps adjust prices gradually and monitor the results.

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9. Pricing your shop as a collection

Do you remember the theory about building your products into a collection?

Good!

Well, the thing is that presenting your handmade products as a collection also works well with the following pricing strategy.

Everyone will come to your online shop with a different reason to buy – it might be a little present for their friend, something to treat themselves or a wedding anniversary present. And they have a budget in their head, a figure that they are happy to spend.

They might have £25 to spend on their friend because that’s just a token birthday present, but they know they NEED to spend at least £60 on a wedding anniversary gift. It’s a big one and they need to make sure that the present is of a significant value.

Now, imagine that you sell original paintings and the only price range you have is £350. It’s much higher than what our customer had in mind, but they love your work. But since it’s way above their budget they will walk away. If you’d had a range of prices – say a printed set of greeting cards (£3.50 – £6), small prints of your pictures perhaps even framed (£25-£75), the chances are that our customer would purchase a print of your original.

Equally if you only sell one type of item for £2.50, our customer is not going buy 25 times your product to spend their £60, because they just need one thing and the one thing has to be of a higher value.

Developing a pricing range as part of your collection is an important part of shaping your business.

If you have one type of item of a high value, that’s your ‘aspirational’ piece in your product collection. People really want it, admire it, but you might not have a buyer every day. And that’s fine, because those kind of people will buy the mid range product as a gift (say it’s a print of the original) or if they don’t want to spend much money, they will go for the greeting cards. The point is that they will walk away with something.

Having 3 price points also gives you room to concentrate on the high end product, because (I’m assuming…) that’s where as an artist or craftsperson you want to be. And you don’t have to feel guilty (if you do…) charging a high price, because if somebody wants to spend a smaller amount of money they can do that too.

This pricing strategy (e.g. low, mid and high end price point) is also often used for services. When a potential customer is faced with a choice of 3 different prices and range of benefits that come with them (the cheapest being of course the most basic service with often important functionality missing), the automatic choice is always to go for the mid range (or the high end).

This is because people don’t want to ‘look cheap’ or have others think that of them.  If your original service (product) was mid range, develop a cheaper type of product and an aspirational piece. You will find your original product still selling the most, but the chances are that it will be in much higher quantities.

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10. Psychology of costing for selling online

Here are a few things that are completely different to selling online as opposed to selling at craft fairs. You might not agree with all of them, but it might help you to get your pricing right.

Price online is not real

When you have your customer in front of you at a live event, the chances are they will pay by cash. As cash is real money people are more aware of spending it. They might have just £20 in their purse and that means they are not going to spend more.

If you have a card machine that’s a different matter, but the customer still needs to make a decision on not paying by cash and paying by card. In their head that means they are spending more (because they are using their credit card) instead of paying by cash. And that’s not what they wanted to do when they arrived at your stall. They might feel guilty and might not spend anything at all.

But when your potential customer is sitting alone in front of their computer, they have to pay by card – that’s a given and since electronic money is not ‘real money’ it’s very easy to spend more than what you originally planned. Customers will be more interested in making sure that whatever they are buying is the right thing rather than worrying about being £2 over their imaginary budget.

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11. Should I worry about the competition?

Yes and no!

A bit of competition research is always useful, but don’t get worried about it too much.

You are not selling widgets, where you need to make sure that you are selling them as cheap as the next factory down the road.

The point is that your work is handmade and unique to you. And that’s pretty difficult to compare to anyone else. Even if you make a similar type of jewellery, it has your style and customers will not be able to find another product exactly the same to compare the prices.

So, price your products fairly to yourself and to your customer and just be you!

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12. I have costed up my product and the price is way too high!

If you have costed your item and the price is way too high in comparison to a similar market product, you have a couple of options.

You can revise your material and production cost and see whether you can cut some cost there.

If that’s not possible and you want to stick with making this product, you can also look at designing a more cost effective version of your product.

Originally written on 4 August 2015 and last updated on 9 June 2025