How to Price Handmade Items for Etsy Sellers

How to price handmade items for Etsy sellers: A simple craft pricing guide to make sure items in your Etsy shop are priced for profit.

If you're pricing crafts for Etsy, you'll need to account for a lot of the same factors as people who sell at other venues such as materials, labor, and profit.

Etsy sellers also have selling fees and shipping costs that need to be included in any pricing decisions. That's why an Etsy-specific pricing formula can be an extremely useful tool for anyone who is opening an Etsy shop.

Understanding Etsy Selling Fees and Shipping Costs

Etsy Fees

No matter how you sell your crafts, you'll encounter selling costs in some form. Some are easier to calculate than others.

If you sell at craft shows, you'll need to pay for your booth fee, transportation, and displays. If you sell wholesale or on consignment, the retailer will take a percentage of your item's retail selling price.

Etsy sellers have clear selling fees that are easy to work out per item. You'll definitely need to pay listing fees and transaction fees if you sell on Etsy.

There are other Etsy fees like advertising, subscription, and payment processing that you may also need to pay, depending on which Etsy programs and services you choose to use.

If you'd like more details, you can find a full list of Etsy's selling fees here.

Shipping Costs

When selling online, be sure to account for shipping costs.

You can add shipping costs into the price of your products and offer free shipping. Or charge separately for shipping. as you decide how to handle shipping fees in your Etsy shop, you'll need to consider what's standard in your market, and how much shipping your products will cost.

While shipping fees were once a large deterrent for online shoppers, attitudes have changed for some. Check similar Etsy shops to see how they handle shipping.

Etsy Pricing Formula

This Etsy-specific pricing formula takes fees and packaging / shipping into account. It's a great starting point for many Etsy sellers. You can also use it if you sell on other marketplaces.

Formula: ((Materials + Labor) × Markup) + Etsy Fees + Packaging

Try entering your own numbers into this formula to see how it works.

Different pricing strategies work best for different types of businesses. If you're not certain if the Etsy-specific pricing strategy is right for you, explore other craft pricing formulas to find the one that fits best with your business goals.

Research Competitor Prices

It's not enough to simply plug your numbers into a formula and use those results to price your products.

You'll need to know how your prices compare to other Etsy shops that sell similar items. That's your competition, and their prices will set shoppers' expectations.

If your prices are significantly higher than your competition, you can make adjustments, but don't under-sell yourself.

You can try a different pricing method. Alternatively, you can use strategies to to boost the price shoppers are willing to pay.

The book, How to Price Crafts and Things You Make to Sell is an excellent source of information about how to boost the perceived value of your products and increase profits.

Use the Free Etsy Pricing Calculator

Don't feel like doing all of the math by hand? No problem!

Just head over to our free online Etsy pricing calculator.

Enter your business expenses into the calculator to instantly see a suggested selling price that take Etsy fees and packaging and shipping costs into account.

Download the Etsy Pricing Worksheet

If you prefer working on paper and pencil, we've got you covered, too!

Download the free Etsy Pricing Worksheet. 

It uses the same formula as the online calculator, but gives you the freedom to track everything on paper. The worksheet shows how expenses add up and affect your final product price.

Common Mistakes Etsy Sellers Make When Pricing Handmade Items

Start your Etsy shop off right. Avoid these common pricing mistakes!

1. Underpricing to Compete on Price Alone

Many new Etsy sellers think they have to offer the lowest prices to attract buyers.

Mistake: Competing on price is not a viable business model for craft sellers. Underpricing often leads to low profits, and positions your products as lower-quality in the buyer's mind.

2. Forgetting to Include Etsy Fees

It's easy to overlook Etsy’s listing, transaction, and payment processing fees when setting prices.

Mistake: Etsy fees may look small at the outset, but they can really start to add up! Skipping these costs can significantly eat into your profits.

3. Ignoring Packaging and Shipping Costs

Sellers sometimes forget to factor in the cost of packaging materials or free shipping offers.

Mistake: Just like Etsy fees, shipping and packaging expenses add up quickly too. They can erode your profit margins if not included in your product price.

4. Not Paying Themselves a Fair Wage for Labor

Handmade products require time and skill. You must factor your labor costs into your prices

Mistake: Some sellers only charge for materials and ignore labor costs. To build a sustainable business, you need to include a fair hourly wage for your work in your pricing strategy.

5. Basing Prices Solely on Competitor Listings

While competitor research is important, copying prices without understanding your own costs can be a disaster.

Mistake: Competitors may have very different cost structures, or they may be underpricing themselves!

6. Not Building in a Profit Margin

Profit isn’t "extra". Profit is necessary to keep your business sustainable.

Mistake: Sellers who price just to cover costs will struggle to grow beyond the level of a small scale hobby or even stay in business.

7. Failing to Reassess Prices Over Time

Costs change. Etsy fees, shipping rates, and materials rise over time.

Mistake: Sticking to old pricing without regular reviews can cause profits to shrink without you even realizing it.

8. Offering Free Shipping Without Adjusting Product Prices

Free shipping is great for customers but expensive for sellers if not handled carefully.

Mistake: Offering free shipping without increasing product prices to compensate can quietly destroy your profits.

9. Assuming Lower Prices Will Always Increase Sales

Price isn't the only factor shoppers consider, particularly when buying handmade items.

Mistake: People also look at product quality, uniqueness, and seller credibility. Lowering your prices too much can backfire by signaling lower quality.

10. Overcomplicating the Pricing Formula

It's easy to get overwhelmed by trying to calculate every tiny cost.

Mistake: While you want to be thorough, it's smart to use a simple, reliable pricing method, especially when you're starting your business. You can adjust over time based on real-world experience.

Etsy Pricing Examples

Let's look at some examples that show how pricing mistakes can impact sellers' profits, and how to correct those mistakes

Case Study 1: The Underpriced Jewelry Seller

Problem:

Alicia opened her Etsy shop selling handmade gemstone bracelets. She based her prices on competitor listings and ignored Etsy's transaction fees, thinking lower prices would mean more sales.

Result:

Although she got several orders, Alicia realized she was barely covering her material costs and wasn't paying herself for labor at all.

Solution:

She recalculated her prices using a formula that included materials, labor, Etsy fees, and packaging. She raised her jewelry prices and communicated the value of her handmade designs more clearly with excellent descriptions and product photography.

Outcome:

Sales dipped slightly, but profits increased. She also started attracting more serious customers who respected her skill and the quality of her work.

Case Study 2: The Maker Who Forgot Shipping Costs

Problem:

Daniel sold hand-thrown pottery mugs. He priced each mug based on materials and labor but forgot to factor in the high cost of shipping heavier ceramic items.

Result:

With free shipping promotions, Daniel was losing money on many orders without realizing it.

Solution:

Daniel updated his pricing strategy to include an average shipping cost per mug based on previous shipping records. He rolled the cost into his product prices and continued offering "free shipping" to stay competitive.

Outcome:

His margins improved immediately, and his "free shipping" listings were popular in Etsy search results, bringing in more customers.

FAQ: How to Price Handmade Items for Etsy Sellers