Homemade Items

Complete guide on How to price your Homemade Products

More and more people are starting to sell their craft online and in trade shows and bazaars. In a sense, they are participating in online jobs, with themselves as their own boss. With websites like Etsy dedicated to serve as a platform to thousands of artisans, it can be sometimes difficult to stand out and make a significant amount of profit, especially when you’re just starting your online shop.

See Also:

Pricing Essentials: How to price your craft
A simple formula for Wholesale Pricing of Your Art

Whatever your reasons are for selling your handmade crafts, you should make sure that you’re covering all the costs and earning beyond break even. How should you price handmade goods to make money online? What should you do when the sales are low and you want to offer discounts or free shipping? How can you make money work for you? How can you make online selling more profitable? Here are some tips on how to price homemade items.

The Easy Formula


selling homemade


The typical formula that most beginners use when selling homemade items online is to add the cost of the materials, labor and overhead expenses in producing one unit and then multiply it by three. If there are decimal figures, round of the amount. For example, you make handmade silver jewelries. You’re just beginning so you pay yourself $5 hourly.  It takes you 1 hour to make a simple ring with a single crystal stone.

The cardboard packaging costs $1. The overhead costs include depreciation of your materials, rent and other variable costs like electricity consumption. The total cost would amount to $25, for example. Tripling this would give you the retail price. Doing so would give you twice the base price for making the same unit ($25) and to expand your profits to acquire new materials and make new projects ($25). The faster you make a certain item, the lower your base price can be.


make money by selling craft


When you want to make money by selling your craft, you should take time to figure out the cost of the materials. It’s tempting to “eyeball” your creation; if your work looks expensive, then it should be expensive. Tracking your expenses will give you exact details on how much profit you earn and not just gross sales. It’s ideal to draft the cost of your materials, overhead and labor on an Excel file along with the base price and retail price of your homemade items.


earn online by selling crafts


The problem with this easy method is that some people have no idea how much they should pay themselves hourly. Some overvalue their labor cost whereas others undervalue it in an attempt to keep the base price affordable. Other online sellers even skip paying themselves. If you fear that your item would be too expensive, don’t worry. Clients who take time to browse homemade items and crafts make sure that they get what they pay for. However, despite an impressive experience, pay yourself the minimum when you’re still starting to earn online by selling your crafts.

Other Fees


Price Homemade


Now that you have an idea how much the retail price of your homemade item should be, you have to consider the other fees that you and your customers should pay for. Etsy, for example, charges 3.5% of the item’s retail price. So if you’re planning to sell your craft in Etsy, you should multiply the base price by 0.035 to modify your item’s retail price on Etsy, otherwise, you shoulder that fee with your profits.

PayPal charges a 2.9% transaction fee off of the retail price. Once you get the result, you still need to add $0.30. To modify your retail price to accommodate Paypal fees, multiply your base price with 0.029 then subtract 0.30 from the answer.

So what if you want your base price to cover both Etsy and Paypal fees? Taking the previous example, you may simply add the Etsy fee and the Paypal fees:

$25 + (25 x 0.035) + [(25 x 0.029) + 0.30] = $26.9 or $27

Your new retail price should be thrice $27 ($81). Now, you’re probably thinking about credit card fees. Some sellers opt not to include the credit card fee. There are some people who set up a credit card account exclusively for their online shop just so their customers can pay them. Credit cards have different amount of fees so it’s complicated to generalize. However, all credit card companies charge an annual fee, which is something your homemade items should cover.


The taxes that you should apply on the retail price of your homemade items depend on the state you’re doing business in. It’s best to check your state’s regulations on taxing online merchandises.

Keeping Up with the Competition


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Eyeballing is a no-no when it comes to pricing your craft. To have a general idea how your item is usually priced, do a market research. It can be as simple as searching for what you’re selling in Etsy or similar websites. Again, using the same example above, searching for “silver rings for women” would probably yield thousands of results, but it will give you an idea how much your craft usually costs.

As per Kartikeya Sharma, You can also click on the listing and check the sellers and their sold items. How many similar items have they sold? Was the sold because it was discounted? If you see a particularly expensive or cheap, click the listing and try to check what made it expensive or cheaper than the rest. What you earn online is usually a reflection on the quality of your work reinforced by your advertising and marketing efforts. No matter how much you market your goods, if people are frustrated with their purchases from you, your online business will not flourish. You build your reputation based on the quality of your work.

Now that you have an idea how much a particular item sells, you have to think about your marketing strategies. Your new retail price for a handmade silver ring with a single crystal stone costs $81. There will be items cheaper and more beautiful than what you’re offering. Likewise, there will be those that are less impressive in style yet more expensive. How should you then position yourself? One basic principle of marketing is to reiterate what your customers will gain from you. Obviously, they will be $81 poorer when they purchase your craft.


Sellers who make money


To earn online by closing a sale, list the advantages and even privileges that your customers will gain from buying your craft. How did you make that ring? Did you acquire the silver from a small community of miners, thus supporting the local industry? What are the materials used and if it helps your craft appear better, from whom did you acquire those materials? How much effort did you put in perfecting your craft?

Did it undergo quality checks? Are there any prominent personalities who loved your work? How long have you been selling online? What are your expertises that are related to your handmade item? These questions will help you brainstorm on the advantages that your clients will get from purchasing your item.

Wholesale Pricing for your Craft

The wholesale price for your homemade item should be higher than the base price, so you can make a profit while covering all your expenses. However, your wholesale price should be lower than your retail price. If you used the easy formula in determining your retail price, you should multiply the base price by 2 or lower.  Most online sellers set up wholesale “packages” with varied prices. For example, for 10 units, the wholesale price would be:

10 (Base price x 2)

The wholesale price computation for a 20 unit package could be:

20 (base price x 1.75)

This is just a guide to show you that high volume purchases equals lower profit per unit compared to the retail price profit. However, don’t assume that you’re losing profit with wholesale purchases. Time is gold. Being able to sell more items in less time translates to equal profit as well.

Buy Wholesale, Too

If you can, buy your materials in wholesale so you would have bigger profits. Buying in bulk may cost you more if you’re renting a storage space, so only buy what you know you can sell.

Discounts, Free Shipping and other Bonuses


start to make money


When you start to make money by offering your crafts, you will realize that a lot of sellers do free shipping promos and 10% to even 50% discounts. How do they do that without losing profit? They usually give discounts during peak months, like Christmas and Cyber Mondays. This way, they could increase the volume of sales, making up for the cost of giving discounts and free shipping. Etsy also has a Christmas in July event wherein sellers also give a lot of perks as well as discounts to lure buyers into a once-a-year opportunity.


online store


There will also be times when you need to host clearance sales to get rid of items that take too long to be sold. It’s natural to have a lower profit in clearance sales, but a bulk of online shoppers check the clearance section first. Also, if you sell perishable items like lotion, soap and creams, it’s best to put slow moving inventory in the clearance section of your online store.


make money


Free shipping is often reserved for repeat customers and sales during peak season. Sellers who make money online know how to value their loyal customers by giving them small gestures to show appreciation like free shipping. Giving out free shipping promos to lure customers could do your online business more harm than good in the long run.  Your item is still more expensive than the shipping fee so give them reasons to like and buy your craft instead.


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