How to calculate the price of a handmade product
Your price comes from four things: your supplies, your hourly rate, the business expenses, and the profit you want.
Here's the formula, the order to follow, and the most common mistake with the percentage.
It works for planners, notebooks, invitations, stickers, or whatever you make.
- Your suppliesWhat goes out with the piece
- Your timeYour hourly rate × how long it takes
- Your costSupplies + time
- Your priceCost ÷ (1 − your profit)
The formula, in one line
Supplies + (your hourly rate × how long it takes) = your cost. Your cost ÷ (1 − your profit) = your price.
Step 1: the supplies that go with the piece
If it goes out the door with the piece, it's a supply. If it stays in your workshop, it's an expense: paper is a supply; a paper trimmer isn't.
If you buy in a pack, ask yourself how many pieces it covers and divide.
Step 2: your hourly rate
Your hourly rate = (what you want to pay yourself each month + what the business spends) ÷ your productive hours.
Not every hour is productive: answering messages, packing, and buying supplies take up roughly a third.
At 30 hours a week, that's 130 a month and about 85 productive.
Step 3: your cost
A notebook with $7 of supplies that takes you 40 minutes to make: $7 + $17 = $24 cost.
Below $24 you lose money, even if you can't see it: what you lose is your time.
Step 4: profit, by dividing
Price = cost ÷ (1 − profit). The common mistake is adding.
The higher the percentage, the bigger the mistake: with 50% added on top, your real profit is a third of the price.
Dividing
$24 ÷ 0.70
$34
Your profit: $10, which is 30% of the price.
Adding 30%
$24 + 30%
$31
Your profit: $7, which is 23% of the price.
If you sell on a platform that charges a fee
The fee is divided too: price ÷ (1 − fee). If tax is charged separately, it goes on at the end and doesn't touch your profit.
The three numbers to keep in view
Your price, your cost, and your profit per piece. With them you know how much of a discount you can give: never below cost.
- Supplies$7
- Your work$17
- Your profit$10
What doesn't belong in the price
What other sellers charge, because you don't know their math. A "psychological price" with no cost behind it. And what paper cost a year ago.
Frequently asked questions
What profit margin should I use for handmade paper goods?
A profit of 30% of the price is a good starting point if you sell direct. When a platform charges a fee, you'll want more.
How do I set a price when I'm new and everything takes me a long time?
Count the time it takes you today. With practice you'll take less time, and the price will come down without touching your hourly rate.
Should I charge for my time even if it's my own business?
Yes. If you don't pay yourself an hourly rate, every sale looks like profit and nothing is left at the end of the month.
What about expenses like electricity or Canva?
They go into your hourly rate: they're added to your pay and spread across your productive hours.
Do the math for your piece
In Makria the math runs on its own from your supplies and your printer, and your PDF quote comes out of it.
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