How to price handmade products: the short answer
Work out your true cost per sellable unit: materials and packaging, plus labor at a real hourly rate, plus overhead. Set wholesale = true cost ÷ (1 − your margin), for example ÷ 0.60 for a 40% margin, and retail ≈ 2 × wholesale, so shops can stock you. Then check what each channel keeps: on Etsy that's a $0.20 listing fee, 6.5% transaction fee and 3% + $0.25 processing (plus Offsite Ads on ad-driven orders). In our soap example, true cost is $4.33 a bar, suggested retail $14.42.
1. Cost every ingredient per gram
A 3,000 g jug of olive oil at $28 is $0.0093 per gram. Jars, tins, labels and boxes count too; in the soap example they're about a quarter of materials.
2. Cost the batch, divide by good units
Add up the recipe and packaging, then divide by the units you can actually sell, after trimming, seconds and test burns. Example: $44.51 for 25 bars = $1.78 a bar.
3. Add labor at a real hourly rate
Time the whole batch: setup to cleanup and labeling. 150 minutes × $20/hour ÷ 25 bars = $2.00 a bar. At $0 labor, prices look profitable when they aren't.
4. Add overhead per unit
Insurance, equipment wear, utilities, apps, testing. Example: $82 a month ÷ 150 units = $0.55. True cost: $1.78 + $2.00 + $0.55 = $4.33.
5. Set wholesale, then retail
Shops usually double the wholesale price. Keep your own online price at that level so you don't undercut stockists.
6. Check each channel's fees
On a $14 bar (7% sales tax, no ad), Etsy keeps about $1.81; with Offsite Ads on 1 in 10 orders, about $2.02 on average. Shopify Payments takes 2.9% + 30¢ online, plus your plan. Markets add a booth fee per unit. Profit per channel tells you where to sell.
Fee sources: Etsy Help (articles 360000344908, 115015628847, 360000338367) and shopify.com/pricing, checked October 27, 2026; rates change. Example prices are illustrations. Educational, not accounting, tax or legal advice.
