How to Price Handmade Products Without Underestimating Your Time
A fictional knitted-coaster example you can calculate yourself, including materials, making time, shipping and fees.
This article was created with AI assistance by Enkeisha, which makes the optional spreadsheet mentioned at the end. All figures below describe one fictional knitted coaster in USD, before tax. They are not customer results or evidence of what buyers will pay.
A sale can cover your yarn and still leave little for the time you spent making the item. The difficulty is that money spent and time spent do not appear in the same place. A yarn receipt is visible. Twenty minutes of knitting is easier to overlook.
You can compare prices without choosing a universal markup or buying a tool. Start with one item, write down a few assumptions, and keep the same assumptions when you change the selling price. A calculator or a blank spreadsheet is enough to follow this example.
Start with the amount you actually use
Suppose a package of yarn costs $12 and contains 120 grams. A coaster uses 15 grams. The material cost for that item is:
$12 / 120 grams x 15 grams = $1.50.
Use matching units throughout: grams with grams, metres with metres, or pieces with pieces. The price of the whole package is not the cost of every item made from it. Conversely, ignoring small amounts across many items understates the total.
For a real product, include confirmed waste where relevant, then check whether your measured usage already includes that waste. Counting the same loss twice overstates the cost. If a quantity is unknown, measure or estimate it explicitly rather than treating an empty cell as zero.
Keep cash costs and time value separate
Add $0.50 of packaging to the $1.50 of yarn. The fictional cash cost is now $2 per item. There are no other per-item costs in this example.
Next, suppose the coaster takes 20 minutes to make and you choose $12 per hour as a value for your own time:
20 / 60 x $12 = $4 of time value.
That makes $6 when cash cost and time value are combined. The $4 is an assumption for comparing options, not a claim that you paid yourself a wage or that $12 is an appropriate rate everywhere. Use a rate and a measured duration that make sense for your own situation.
This separation answers two different questions. How much money is left after the costs in the example? How much remains after also allowing for the maker’s time? Neither number, on its own, is a complete business profit figure.
Write down the shipping and fee assumptions
Now consider an order for one coaster. The customer pays $2 for shipping, and the seller pays $2 to send it. For the illustration, assume a fee of 10% of the item price plus shipping charged, followed by a fixed $0.30 per order.
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This is a made-up fee model. It is not a quotation of Etsy, Gumroad or any other marketplace’s current terms. A real platform may use different fee bases, extra payment charges, taxes, currency conversion or country-specific rules. Check the actual terms before entering them.
Write down whether the percentage applies to shipping, and whether the fixed charge is per item or per order. Those details can change the result even when two fee rates look similar. The calculations here use one item per order and amounts that resolve exactly to cents.
Compare a $12 price with a $16 price
At a $12 item price, the customer pays $14 including shipping. The illustrative fee is $14 x 10% + $0.30 = $1.70.
Subtract the included cash costs:
$14 received — $2 materials and packaging — $2 shipping paid — $1.70 fee = $8.30.
Then subtract the $4 time value:
$8.30 — $4 = $4.30 remaining after time value.
Keep the costs, time, quantity and shipping unchanged, but set the item price to $16. The customer now pays $18, and the fee is $18 x 10% + $0.30 = $2.10.
$18 — $2 — $2 — $2.10 — $4 = $7.90 remaining after time value.
The item price rose by $4, while the remaining amount rose by $3.60 because the percentage fee also increased. Both results are estimates under the listed assumptions. Rent, equipment, marketing, returns and other overhead are absent from this example. These figures are not tax or accounting profit.
Use the comparison to make a decision
The calculation does not establish that a customer will accept $16. It shows what two prices leave under one set of assumptions. Demand, product quality, presentation, alternatives and the selling context still need their own evidence.
To try this for your work, make two rows for the same item. Record materials, packaging, making minutes, an hourly time value, shipping charged and paid, and the verified fee terms. Change only the selling price first. That makes it easier to see what caused the difference.
Then test one other assumption, such as making time or shipping cost. Avoid changing everything at once. A cheaper process may reduce your time, but an optimistic estimate is not a saving until you can reproduce it. A price that covers the costs you listed is a starting point for a decision, not a sales guarantee.
Keep a dated copy of the assumptions. If your workbook references a shared material-cost list, changing that list can recalculate older scenarios. Save the earlier version before updating costs when you need to retain the original quotation.
An optional small spreadsheet
Enkeisha’s free Handmade Pricing Calculator sample provides 2 products, 6 material lines and 4 quote scenarios. It is an .xlsx file intended for import into Google Sheets on a computer, with a PDF guide. Enter 0 on Gumroad for free; checkout requests email. Excel desktop and mobile apps are untested, and completed checkout delivery has not been verified end to end. This is our own AI-assisted product, offered as an optional aid to the calculation above. The link opens Gumroad, outside Medium; information you provide there is subject to Gumroad’s terms and privacy policy:
https://enkeisha.gumroad.com/l/d5-free-en001-handmade-pricing-sample
