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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 Price Crafts for Sale - by cuttingforbusiness.com.

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 - Great for Silhouette Cameo or Portrait and Cricut Explore or Maker crafters - by cuttingforbusiness.com.

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 $2.39.
  • 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:

  1. List out all expenses in your business for the previous month.
  2. Add these expenses together. This was your total overhead for the month.
  3. 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.

How to Price Your Silhouette Cameo or Cricut Crafts for Sale - by cuttingforbusiness.com

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.

Breanna wells

Monday 18th of April 2022

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!

Christine, Cutting for Business

Friday 29th of April 2022

Happy to help!

Casey

Wednesday 13th of April 2022

Hello,

My wife is just starting an Etsy shop! Thank you for the tips! But I wanted to follow up on your pricing guide, for your tumblr, it costs all in for you $16.16 but you sell it at retail for $66? Or am I reading this wrong? Thank you so much for your assistance!

Lesly

Wednesday 14th of March 2018

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.

Christine

Thursday 15th of March 2018

Yes, you could - it would probably be a long day though.

Tracie

Saturday 19th of August 2017

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.

Christine

Sunday 20th of August 2017

Yes, unfortunately, paper goods often have a lower price point.

Lianda

Saturday 12th of August 2017

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?

Joy R

Sunday 20th of August 2017

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.

Christine

Tuesday 15th of August 2017

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/