How to Price Crafts for Sale – Pricing Formula
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Wondering how to price crafts for sale? Before you start a craft business, you must know how to price your handmade items. There is nothing worse than designing an item, creating it, packaging it, selling it, and then realizing you made no profit – or worse – you lost money selling an item!
Craft Pricing Formula
There are a number of pricing formulas out there, but this is the one I like the most. It takes into account supplies, labor, and overhead costs.
Generally, a handmade item is priced using a formula similar to this:
Cost of Supplies + Labor + Portion of Overhead = Total Costs
Total Costs x 2 = Wholesale Price
Wholesale Price x 2 = Retail Price
Let’s break down the parts of the formula.
How to Figure Out the Cost of Supplies
The cost of your supplies is how much you paid for the supplies. This is straightforward. However, it can get tricky if you use a portion of a supply in a project for sale.
For example, if you make a tshirt using a half a sheet of vinyl, you’d only use half of the cost of the sheet of vinyl in your formula. Similarly, if you use a third of a container of glitter in your product – you’d only use 1/3rd the total cost of the glitter in your formula.
How to Figure Out Labor Costs
The labor costs are how much you want to pay yourself. There are too many times where I have seen crafters selling products, and not paying themselves. Sadly, you are not going to be in business long if you aren’t making any money.
So how much should you pay yourself? I talk in length about how much to pay yourself in another post.
How to Figure Out Overhead Costs
Don’t forget: When figuring out your overhead costs, you’ll need to take into account everything you used to create your item. From the software costs, machine costs, actual supplies used, packaging (box or envelope, packing supplies, tape, the label paper you used), the cost of the scale you used, the amount of electricity used, the space in your home or studio, even a portion of your advertising costs or store fees.
How to Price Crafts for Sale Example
Example: I’m selling a personalized glitter tumbler sealed with epoxy. After creating the tumbler, the customer will pick up.
Supplies and costs:
- Stainless steel tumbler. $1.39.
- Glitter. I use one quarter of a container that cost $5.99. One quarter of $5.99 is roughly $1.50.
- Epoxy. I purchase epoxy by the gallon for $50.00 and can make 35 tumblers with one gallon. 1/35th of a gallon costs $1.42.
- Vinyl. I use one quarter of a sheet of adhesive vinyl to add personalization to the tumbler. One sheet of adhesive vinyl costs $1.42. One quarter of a sheet is $0.36.
- Total supply costs: $5.56.
Labor:
- I pay myself $10 an hour to make tumblers, based on my experience and expertise. It takes me one hour to make the tumbler.
Overhead: Things like electricity, space in my home studio, online store fees, legal fees, and more all go into the overhead of your business. You can think of your business overhead as the amount it costs you each month to keep your business running – or your break even point.
Here’s how to figure out your monthly overhead:
- List out all expenses in your business for the previous month.
- Add these expenses together. This was your total overhead for the month.
- Divide by 744 (the total number of hours per month in a month with 31 days).
Let’s do it: $450 (total expenses)/744 = .60
What does .60 mean? This figure is your monthly overhead cost by hour. Simply add it to your labor rate in the formula and the overhead costs are accounted for.
My adjusted labor rate is $10.60 an hour.
Put the numbers into the formula:
Cost of Supplies + Labor + Portion of Overhead = Total Costs
Total Costs x 2 = Wholesale Price
Wholesale Price x 2 = Retail Price
$5.56 + $10.00 + (which includes my overhead) = $16.16
$16.16 x 2 = $32.32
$32.32 x 2 = $64.64.
This gives us a selling price of $33 wholesale and $65 retail.
Online Craft Calculators
There are a number of online craft calculators available, as well as a handful of apps. Honestly, they will all use a different variation of one of the popular pricing formulas. If you find one you love, use it. If not, just grab your calculator and the formula above to price crafts for sale.
One more thing: Have you ever heard of dynamic pricing? You may not have, but you see it every day. Your prices should be dynamic, not static. Read more about dynamic and static pricing.
Since 2015, Christine Schinagl has been helping crafters start and run craft businesses through her blog, Cutting for Business. As a Silhouette and Cricut crafter herself, she has a unique take on what works and what doesn’t work in the craft business world. She also enjoys teaching other crafters how to create digital SVG designs, available through the Design with Me series.
Crafts Calculator is closed and no longer in business, effective 2/2015, per message on their website.
Thanks Sheryl, I updated the list. Christine
Just getting started…I pulled up the craft calculators and I never really thought of hourly rate. Is there a way to figure that out? I just always assumed that it was all factored in the price.
Generally, I recommend you pay yourself at least the same amount you would make if you worked outside the home. This varies regionally. Hope that helps!
Hi
Thanks for the helpful information about costing products. I was wondering if you have any advice about how to cost design time into the picture. I create my own pictures and designs – for example making an intricate paper lace pattern for wedding invitations – designing the lace pattern may take a whole day, but once its done – it may be used many times over in lots of different products. Or I create watercolour designs that I then include in future products – how do I include this? If I add this time into the single product – its not affordable/competitive, but it takes a lot of time.
If it were me, I’d set a selling goal for each design. It doesn’t matter if it’s 20 or 1,000 – whatever works for you. Then, I’d divide your labor costs across that number of products. Once you sell that many, you’ve covered your labor. Anything on top is pure profit. Hope that helps!
I am just getting started with cricut explore air2. Thank you for the awesome information
My pleasure!
Hello,
I was wondering what an approximate cost for Labor is?
This is a personal choice, but you can find more information here: https://cuttingforbusiness.com/2016/09/26/much-pay-craft-business/
Hi Christine! Thanks so much for all the advice. The one thing I can never figure out is the overhead cost. I understand the basic materials but when you are supposed to add cost of the Silhouette Cameo, electricity and using the scale to weigh it….how do you know how many times you’ll use the Cameo or scale to divide it out? Thanks again!!
Hi Suzanne, Generally you will account for your machines as machines with depreciation and not count them in the individual product price.
Hi Christine,
How can we know about our silhouette machine depreciation cost, to add to our product?.
Thanks, Claudia
Hello! Most crafters don’t depreciate their machines because they don’t cost enough.
How do I know what materials cost would be? If I buy a sheet of vinyl for $3-4 buy I only use a portion of it, how do I figure that.
You can account for this two different ways: 1) Charge the supply cost for the entire sheet of vinyl and put the rest in your scrap bin, or 2) Divide the cost of the sheet into portions and account only for what you use.
Where do you find htv for $3-$4?? I pay $8-$11 per yard!!
It’s the same as what you pay. A sheet is generally 12 inches by 12 inches. One yard contains 3 sheets; therefore that’s $9 to $12.
Thank so much for this! I had not factored in overhead (nor would I have thought to include all those pieces). This helps me arrive more scientifically at a price rather than a SWAG!
Awesome!
I’ve just started and am still testing my Cricut to see which materials I can market. How do I cost the machine’s cutting, for example, I’ve been asked to cost on cutting a stencil from a full sheet. How do I cost that because I’m actually just cutting out of the acetate. My husband sells industrial CNC machines and he says it tells you exactly how much its cut. Is there a way for me to find out that information on my machine?
No, unfortunately, the Cricut isn’t as advanced and won’t provide that information to the user. I’d account for the full sheet of acetate when pricing your product. Link for more information: https://cuttingforbusiness.com/2015/01/13/pricing-your-handmade-silhouette-or-cricut-items-for-sale/
You can also estimate cost based on the size of the cut and what ever is left on the sheet that is still usable product. Example you use 1/4 of the sheet and you have 3/4s left over that can be used; the entire sheet is worth $1 so you add .25 to your product cost. If the cut goes beyond 1/4 but not 1/2 than add .50 to the product cost to account for the loss.
I have been using my Cricut for my small business for several years now. While I do make a profit, I have found that pricing my items with this formula they would be priced much higher than what will sell. I am working on making something other than party decorations that will have a higher profit margin.
Yes, unfortunately, paper goods often have a lower price point.
Hi Christine – i am into print business. I needed to know if i can cut 500 cardstock (letter size) in a day for wedding invitation using silhouette curio? I need to cut around the borders.
Yes, you could – it would probably be a long day though.
Thank you so much. My first attempt at selling on etsy, I only made one order. I am restarting.. but doing research first. Your advice was very helpful!
Happy to help!