Shop Strategy & Ops · P-35 — The Pricing Thinker
How to price handmade items without paying to make them
“I priced it by finding a similar listing and going slightly under. I know that's not a method.”
Help me think through the price of one product. I'll supply the real numbers.
THE PRODUCT: [what it is]
MATERIALS COST: [per unit, your real figure]
MY TIME: [hands-on minutes per unit, and the parts you forget — packing, photography,
listing, messages]
WHAT I'D LIKE TO EARN PER HOUR: [a number, even if it feels optimistic]
MY OTHER COSTS: [packaging, studio, kiln electricity, software — monthly total and
roughly how many units a month]
MY FEE FIGURES: [go to your Etsy account and get your real listing, transaction,
payment-processing and any ads or offsite figures — paste them here]
CURRENT PRICE: [what I charge now]
WHAT SIMILAR THINGS SELL FOR: [a range you've observed]
Work through it:
1. THE FLOOR — what this must cost for me not to be paying to make it, using MY
numbers. Show the arithmetic line by line so I can check it.
2. THE HOURLY TRUTH — at my current price, what am I actually earning per hour once
every minute I listed is counted? State it plainly even if it's bad.
3. THREE PRICES — a defensible low, a target, and a stretch. For each: what it
assumes about my buyer, and what has to be true elsewhere in my listing for it to
work (photos, story, reviews).
4. THE RAISE — if I should charge more, exactly how to do it: how much, over what
period, what to change at the same time so it's a repositioning rather than a
price rise.
5. THE HONEST VERDICT — is this product worth making at any price? Some aren't. Say
so if so.
Use only the figures I gave you. Do not estimate Etsy's fees, guess at my costs, or
fill in a number I left blank — ask me for it instead.
What it produced
— run with real supplied numbers: cat mug, $4.10 materials, 40 min hands-on + 15 min overhead, target $25/hr, $180/mo other costs over ~24 units, seller-supplied fee figures, current price $28, similar mugs $22-45.
1. The floor (your numbers, line by line)
Line Amount Materials $4.10 Overheads ($180 ÷ 24 units) $7.50 Your time: 55 min at $25/hr $22.92 Subtotal before fees and breakage $34.52 Breakage allowance (you lose ~1 in 8 to firing) +$4.93 True cost before fees $39.45 Fees on the sale price (using the figures you gave) apply your % here Your floor is roughly $39.45 plus fees — and you charge $28. That gap is the entire finding. Everything below follows from it.
2. The hourly truth. At $28, after materials, overheads and breakage, you’re left with about $11.50 for 55 minutes of work, before fees. That’s roughly $12.50 an hour before fees, less after — less than half the rate you said you wanted, and you asked for a modest rate.
3. Three prices
Price What it assumes What has to be true Defensible low $38 Buyers see a handmade mug and compare to other handmade mugs Photos show it’s hand-painted at a glance. At $38 you’re still under the top of your observed range Target $46 The buyer is gift-shopping, not mug-shopping One photo of it wrapped; the description leads with the freehand painting; the “no two alike” fact is prominent Stretch $58 The buyer wants this maker’s work specifically Requires either reviews in the dozens or a commission framing (their cat) — don’t reach for this on the standard listing yet 4. The raise. Go to $38 now and to $46 over about three months — not in one jump, and not by editing the number alone. Do it with changes, so returning buyers see a better listing rather than a higher price: reshoot photo 1 in a real kitchen, add the wrapped-gift shot, rewrite the opening line around the hand-painting, and add the “one in eight doesn’t survive the kiln” fact. Then raise. Same object, different proposition.
5. The honest verdict. The mug is worth making — but not at $28, and the problem was never the market, it was that nobody told you to put your own time in the arithmetic. You are currently subsidising every single sale by about eleven dollars. Selling more of them at $28 makes your situation worse, not better, which is worth sitting with for a minute.
Note: fee percentages are left for you to apply — they vary by country and account and I won’t guess at them.
Put the packing, photography and message-answering minutes in. Almost every underpriced handmade product is underpriced because only the “making” minutes got counted.
This is 1 of 50.
The other 40 are free too — they're in the vault: listings and SEO, product ideas, customer messages and reviews, marketing beyond Etsy, shop strategy, and product visuals. Every one has a real example output, like the one above.
Get all 50 free Pay what you want, including nothing