Handmade Product Pricing Mistakes That Are Costing You Profits (And How to Fix Them Fast)

7 handmade product pricing mistakes you need to avoid to build a sustainable, profitable craft business.

Pricing your products right is key to building a successful business.

Set your prices too low, and you're leaving real money on the table and possibly sending a message that your products aren't high quality. Set your prices high without elevating the perceived value, and you'll lose sales.

In this guide, I'll walk you through common craft pricing errors sellers make and how to fix them, so you can feel confident your prices are right from the start.

Why Handmade Product Pricing Is So Tricky

As a craft seller, you're personally invested in your product. You made it with your own hands, using care and skills that took years to master.

That makes it tough to take the emotion out of pricing your crafts.

7 Handmade Product Pricing Mistakes That Are Costing You Sales (and How to Fix Them)

Mistake #1: Pricing Like a Hobbyist

One of the biggest mistakes when pricing handmade items is pricing their work like it's just a hobby.

It usually starts with good intentions. Maybe you just love creating, or you're unsure whether people will actually buy. So, you set a low price to attract buyers or just cover your materials.

But here's the problem: that mindset leads straight to burnout and zero profit.

Remember: Just because your business started as a passion project doesn’t mean it shouldn't pay you like a professional.

How to Fix It: Start Pricing Like a Business Owner

Know Your Costs: Track not just materials, but also time, packaging, and overhead.

Set an Hourly Rate: What’s your time worth? Factor it into the price of every product

Include Profit Margin: Add a markup that reflects your value, not just costs.

Even if you're just starting out, your pricing should reflect the true value of what you create. You're not selling mass-produced products. You're offering something unique, thoughtful, and made with care.

Mistake #2: Ignoring Your Time

Many handmade sellers make the mistake of not accurately charging for their time when pricing products. 

Maybe you've thought, "I enjoy making this, so I don't mind if I don’t get paid much for the time."

Perhaps you've felt shoppers wouldn't buy your product at the price you'd need to charge to account for your time.

But here's the truth:

If you don't value your time, no one else will.

Time is one of your most valuable resources. If you ignore it, you're not just underpricing, you're literally working for free.

How to Fix It: Put a Dollar Value on Your Time

Choose an Hourly Rate: What would you pay someone else to do what you do? Start with at least minimum wage, or higher if your skill level justifies it.

Track Time Per Product: Use a timer to determine how long it really takes to make your product from start to finish.

Add Time Into Your Pricing Formula: Whatever formula you use to calculate your prices, be sure to include your labor costs.

Experiment with Different Pricing Methods: If you price isn't in line with market expectations, try a different craft pricing formula. Different pricing strategies work for different scenarios.

Pro Tip: Time-based pricing also helps you see which products are worth continuing, and which ones might be draining your time without providing a real return.

Your time is limited and valuable. When you factor it into your pricing, you're not just making money in the moment, you're building a business that's sustainable over time.

Mistake #3: Forgetting About Overhead or Shipping or Other Incidentals

It's easy to remember the cost of raw materials when pricing your products, but what many sellers forget the other costs that go into running your business.

Every handmade business has hidden costs, small expenses that add up quickly and eat into your profit if you don't account for them.

How to Fix It: Build Overhead into Your Pricing

List Your Monthly Business Costs: Add up all recurring expenses, so you have a clear picture if what you're actually spending. You'll need this information when you do your income tax, so it's wise to track it all from the start.

Use a Pricing Formula That Includes Overhead: If you're concerned you're losing money to incidental costs, make sure they are included in the pricing method you use!

Estimate Your Overhead Costs: Many craft sellers add 10-15% of their material plus labor costs to cover overhead. It's a good way to account for overhead without getting bogged down with complex calculations.

Mistake #4: Guesstimating Instead of Using a Formula

Pricing based on a gut feeling might be fine for a yard sale, but in a real handmade business, guesswork is dangerous.

If you price based on what feels fair or what you think your customers will pay, you have no idea whether you're making a profit.

Does your price covers your costs, pay you fairly, or earn any profit at all? Is there room for improved efficiency to boost your profits? You have no way of knowing if you never use a pricing formula.

A formula gives you confidence and clarity, so you always know how your price was calculated and why it works.

How to Fix It: Use a Proven Pricing Formula

Find the Right Strategy: There are several craft pricing formulas designed to fit different scenarios and business goals. Enter your numbers into each of them, and see which one works best for your business.

Mistake #5: Copying Competitor Prices

When you're not sure how to price your crafts, it can be tempting to look at what others are charging and just match it.

It's important to know what competitors are charging for similar products, but pricing based solely on your competitors' prices is a risky shortcut that can lead to real problems.

You have no way of knowing their costs, business strategy and goals, or whether their business is even profitable.

How to Fix It: Price Based on Your Own Business Metrics (Adjust if Needed)

Use Your Own Formula: Start with your real costs, time, and goals.

Focus on Value, Not Price: Make sure shoppers know what makes your product special. Emphasize quality, uniqueness, customer service, or custom options.

Use Competitor Prices for Range, Not Rules: It is important to understand the market, but your final price should reflect your business, not someone else's guess.

Pro Tip: How you position your product, through branding, quality, or customer experience, matters more than offering the lowest price. People don't always choose the cheapest option. They choose the one that resonates with them.

The book, How to Price Crafts and Things You Make to Sell teaches you how to position your product to tell a better story, develop stronger branding, or offer better packaging, so you can absolutely charge more.

Mistake #6: Not Leaving Room for Profit

If your prices only cover your materials and labor, you haven't left room for your business to grow. You're working for an hourly wage, not building a sustainable business.

How to Fix It: Add a Real Profit Margin to Every Product

There are a few ways to determine how much profit to add into your prices. Here are three options.

Double Your Costs: Add up your materials, labor, and overhead. Double that number to add in profit.

Example: If your costs to make an item add up to $10, multiply that number time 2 to get $20. 

Add a Dollar Amount: Determine a set amount of profit per product, and add that to your costs.

Example: You may decide you want to make $5 profit for each item you sell. Add that amount to your costs.

Work Back From a Profit Goal: Decide how much profit you'd like to make each month, and how many items you can realistically sell in a month. Work backward to determine the profit per item needed to meet your goals.

Example: If you'd like to make $1000 profit each month, and, on average, you can sell 100 items monthly, you'd need to make $10 profit on each item sold to meet your goal.

Mistake #7: Pricing Emotionally not Strategically

This one's tough. It's the biggest mistake I had to overcome when I was first pricing my own crafts.

You're proud of your handmade work. But that emotional connection can cloud your judgment when it comes to pricing.

You might think:

• I don't think anyone will pay that much.
• I feel bad charging more. It didn't cost me much to make.
• I'm new at this, so I shouldn’t charge too much yet.

But here's the truth: Pricing from guilt or fear shortchanges you and undervalues your work.

While it's normal to have these feelings, they don't belong in your pricing strategy. Pricing should be based on facts, not feelings.

How to Fix It: Step Into a Confident Business Mindset

Recognize Your Value: You're not just selling a product. You're selling time, skill, creativity, and care.

Detach Emotion from Pricing: Use your formula, not your feelings. 

Practice Saying Your Prices Out Loud: It helps build confidence and reinforces that your prices are fair, because they are.

Use Feedback Strategically: If customers comment your prices are too high, ask yourself why they are saying that. Maybe you need to work on perceived value. Possibly you're not selling in the right venue. 

FAQs About Handmade Product Pricing

Free Tools to Help You Price Like a Pro

Learn more about how to price your handmade products.

Download the free craft pricing formula guide. It covers how to use several different pricing formulas to price your product and includes worksheets for each formula, so you can try them all yourself.