How do I price my handmade products?

You price a handmade product by starting from what it genuinely sells for and working backwards, not by adding up your materials and putting a margin on top. I want to walk you through the backwards version properly, because the adding-up version is the one every maker gets handed first, and it's how we end up paying ourselves nothing for years without ever quite noticing it happen.

Pricing was never a theory exercise for me. I started with glitter hairbows at a point when there was no money coming in and going back to work early was the alternative, so the number I put on a bow was the thing deciding how soon I had to go back, and I got it wrong for a good while before I got it right.

Why does adding up my costs feel like the right way to price?

Because it feels fair, and because somebody can check your working. Materials cost this much, add the packaging, times it by 2 or 3 like the formula in the Facebook group said, and out comes a number you can defend to anyone who asks.

The trouble is that the formula starts at the wrong end. The market has no idea what your cotton cost you, and it doesn't quietly agree to pay more when your supplier puts their prices up. A price built upwards from your receipts is a number that has never once looked at a customer.

And there's a quieter problem underneath that one. When you build a price up from your costs, your own time usually never makes it onto the list, because you tell yourself you'll take your wage out of the profit. The profit is whatever's left, the price was already squeezed down to feel safe, so what's left is nothing, and you've just agreed to work your evenings for free without anybody ever asking you to.

That's the bit that does my head in. Nobody decides to pay themselves nothing, the formula decides it for them, so politely it can take years to catch.

What should I actually start from?

Start from what comparable pieces genuinely sell for. Sell, mind, and not sit listed at, because anyone can ask for anything, and a shop full of £80 bags with no sales underneath them is a wish list rather than a market. Find makers whose work sits at your level and the price real customers are actually paying them.

Then be honest in the other direction too. If your finishing and photography are genuinely better, and your brand feels like somewhere rather than a stall of stuff, you can sit a little above that number, because quality and branding do earn a premium when they're actually there.

What you don't do is slide in under everyone else to feel safe. That instinct is a belief problem more than a maths problem, and it deserved a post of its own, so I've written about whether you should price lower than your competitors separately. The market rate is your top line, and everything you get to keep has to come out of it.

What do I take off, and in what order?

3 subtractions, in this order, and write them down rather than doing them in your head.

Etsy's cut comes off first, because it comes off first in real life too. There's the transaction fee, the payment processing and the listing fee, plus a small regulatory operating fee, and then the one almost nobody counts, which is the 20% VAT Etsy adds on top of its own fees rather than on your sale. Budget around 15% of a standard order, more again if Offsite Ads decides it sent you the order, so on a £40 bag that's about £5.75 gone before you've touched anything.

It bites harder the cheaper your product is, because two of those fees are flat and don't care what you charge. A £5 item with £1.50 postage loses £1.34, which is nearly 21%, so if you're selling the little pieces you want to budget nearer 20% than 15%.

Materials and packaging come off next, and I mean all of it. The fabric obviously, but also the thread, the labels, the tissue paper, the mailing box, the little thank-you card. Individually they're pennies, and collectively they're much of why so many makers are mysteriously skint at the end of a busy month.

Then your time comes off, at a living wage. I use roughly £12 an hour, which is about the UK Real Living Wage, and the exact figure matters far less than the principle: your hours go on the costs list priced the way you'd have to pay somebody else to do them.

Whatever is left after those 3 is the answer, your actual profit per piece, and it's allowed to be a number that disappoints you. If it's thin, or negative, the product isn't viable at that price, and I'd far rather you found that out on the back of an envelope than after a year of making them. A product failing this sum before launch is the sum doing its job.

What do I do when I'm full and can't make any more?

This is the good problem, and it still needs an answer, because fully booked at a price that pays you properly is where handmade tends to hit its ceiling.

You've got 2 honest moves first. Cap your orders, which protects you and turns money away, because a closed order book has revenue sitting on the other side of it. Or raise your prices, which works right up until it doesn't, because even lovely branding meets market resistance eventually. Both are real ceilings, and it's worth admitting that before you hit them.

Past those, the only growth left is hands that aren't yours. Somebody cutting, somebody packing, eventually somebody making. Not every maker has that luxury, and plenty don't want it, because managing people is a whole job and not the one you started this for. Staying a one-person shop at a deliberate cap is an equally legitimate choice, and I'd treat it as a strategy in its own right rather than a failure to scale.

I did scale mine, and the number comes with its price tag attached, because on its own it's a lie. Roughly £264,000 over 3 years, and it cost me a genuine mental breakdown and 2 hours of sleep a night with a newborn. That's why I'm careful about workload now, and why I won't cheer any maker up the ladder faster than her life can absorb.

But before you climb any rung of it, there's a cheaper move sitting at the bottom, and I did it exactly backwards for years. When a jig makes you faster, or a batching day saves you a whole afternoon, you keep the price. The hour you saved becomes your margin, because the customer is still getting the same piece at the price the market already said yes to.

Most makers get faster and quietly get cheaper. The formula said costs times 3, the time cost dropped, so the price drifted down with it, and the reward for 10 years of getting genuinely better at their craft was earning less per piece than the year they started. Working backwards from the market is what stops that happening, because the market price doesn't move just because you got good.

Once you're full, price stops being your growth lever and demand becomes it, and demand gets built by reaching people who already love what you make, which is why a maker needs an email list long before she thinks she does. Building that towards a launch on a date you've picked is the Handmade Launch System, and it's the only thing I know that lets you hold a price without flinching.

You've spent years getting faster at your craft. Go and check your prices haven't spent those same years quietly getting cheaper