Why Most Handmade Sellers Undercharge (And the Simple Formula to Fix It)

You’re Busy, You’re Talented — But Are You Actually Making Money?

You’ve got orders coming in. Your DMs are full. Your craft fair booth had a line last weekend. From the outside, business looks great. But when you sit down and check your bank account, the numbers don’t add up. Sound familiar?

You’re not alone. The vast majority of handmade sellers — whether they’re pouring candles, stringing jewelry, sewing bags, or decorating cookies — are undercharging for their work. Not by a little. By a lot.

The good news? Fixing it doesn’t require an accounting degree or a complete rebrand. It starts with a simple formula that any maker can use to price with confidence and actually turn a profit.

Why Handmade Sellers Undercharge

Before we get to the formula, it helps to understand why undercharging is so common in the handmade world. It usually comes down to three things:

1. Emotional Pricing

This is the big one. You look at your finished product and think, “Would I pay $45 for this?” And because you saw every imperfection along the way, the answer is usually no. So you list it for $22 and hope for the best.

The problem is that you’re not your customer. Your customer doesn’t see the tiny bubble in the resin or the slightly uneven stitch. They see a beautiful, one-of-a-kind handmade item — and they’re willing to pay for that.

2. Copying Competitor Prices

It’s tempting to browse Etsy, find someone selling something similar, and price yours a few dollars cheaper. But here’s the thing: you have no idea what that seller’s costs look like. Maybe they buy materials in bulk at wholesale rates. Maybe they’re in a country with a lower cost of living. Maybe they’re also undercharging and barely breaking even.

Basing your prices on someone else’s guesswork just multiplies the problem.

3. Forgetting the Hidden Costs

Most sellers remember to include their raw materials. But what about everything else?

• The gas you burned driving to the craft supply store
• The Etsy listing fees, transaction fees, and payment processing fees
• The tissue paper, boxes, and branded stickers for packaging
• The hours you spent photographing, editing, listing, and responding to messages
• Your workspace — whether that’s a spare bedroom or a rented studio

When you skip these costs, your “profit” quietly evaporates.

What Undercharging Actually Costs You

Thin margins aren’t just a numbers problem. They create a cascade of real consequences:

• Burnout. When each sale barely covers costs, you need more and more volume to survive. That means longer hours, less sleep, and eventually, resentment toward the craft you used to love.
• No room to grow. Want to invest in better equipment, a website, or a booth at a bigger market? You can’t reinvest what you don’t have.
• Devaluing the entire market. When handmade sellers consistently undercharge, it trains buyers to expect handmade goods at mass-produced prices. That hurts every maker in your niche.

Pricing isn’t just about you — it’s about building a sustainable handmade economy.

The Simple Pricing Formula

Here’s the framework. It’s not complicated, but it works:

Materials + Labor + Overhead + Profit Margin = Wholesale Price

Wholesale Price × 2 = Retail Price

That’s it. Let’s break down each piece.

Materials

This is what most sellers already track — the physical stuff that goes into each product. But the key is tracking all of it, down to the smallest component:

• Raw materials (wax, beads, fabric, flour, resin, wire)
• Findings and hardware (clasps, hooks, zippers, buttons)
• Packaging (boxes, tissue, labels, ribbon, thank-you cards)
• Any consumables used per batch (glue, sandpaper, parchment paper)

Be specific. If a spool of wire costs $12 and you get 15 necklaces from it, your wire cost per necklace is $0.80 — not “about a dollar.” Those small rounding errors add up fast across dozens of products.

A tool like the Craft Business Manager from Ardent Workshop makes this easier by letting you enter your purchases once and then build out a bill of materials for each product — so every bead, clasp, and inch of cord is accounted for automatically.

Labor

This is where most handmade sellers shortchange themselves the most. Your time has value. Full stop.

Pick an hourly rate that reflects the skill involved in your craft. If you’re not sure where to start:

• $15–$20/hour for straightforward assembly or basic crafts
• $25–$35/hour for skilled work (sewing, woodworking, cake decorating)
• $40–$60+/hour for specialized or highly technical crafts (fine jewelry, custom leatherwork, intricate embroidery)

Then track how long each product actually takes to make — not just the fun creative part, but also prep, cleanup, drying/curing time, quality checks, and packaging. A candle that takes “10 minutes to pour” might take 45 minutes when you include melting wax, mixing fragrance, curing time, trimming wicks, labeling, and boxing.

Overhead

Overhead covers the ongoing costs of running your business that aren’t tied to a single product:

• Workspace costs (rent, or a percentage of your home mortgage/utilities)
• Equipment and tools (amortized over their useful life)
• Software and subscriptions (Etsy Plus, Canva, shipping label services)
• Platform and payment processing fees
• Marketing expenses (business cards, social media ads, craft fair booth fees)
• Insurance, licenses, or permits

A common approach: add up your monthly overhead, divide by the number of products you typically make in a month, and add that per-unit amount to each product’s cost.

Profit Margin

Here’s where many sellers stop and say, “But I already covered my costs — isn’t that enough?”

No. Profit is not optional. It’s the money that lets your business survive and grow:

• Build a cash reserve for slow months
• Invest in better tools or materials
• Attend larger markets or trade shows
• Eventually hire help so you can scale

A healthy profit margin for handmade goods is 15–30% on top of your costs. Add this as a percentage of your subtotal (Materials + Labor + Overhead). If your costs come to $20, a 25% margin adds $5, bringing your wholesale price to $25.

The Retail Multiplier

The standard practice in retail is to double your wholesale price to arrive at your retail price. This accounts for the additional cost of selling direct to consumers — marketing, customer service, returns, platform fees, and the reality that not every item you make will sell.

Wholesale Price × 2 = Retail Price

If your wholesale price is $25, your retail price should be $50.

Yes, really.

Putting It Into Practice

Let’s walk through a real example. Say you make hand-poured soy candles:

Now, if you’ve been selling those candles for $28 because “that’s what everyone else charges,” you can see the gap. At $28, you’re not even covering your costs — you’re paying your customers to buy from you.

Even if you adjust the formula to fit your specific situation (maybe your overhead is lower, or you work faster), the exercise of running the numbers always reveals where money is leaking.

Tracking all of these costs across dozens of products by hand gets overwhelming fast. That’s exactly what the Craft Business Manager was built for — it combines inventory tracking, bill of materials, cost calculations, and profit margin reports in one spreadsheet, so you can see your true per-product cost at a glance. It’s available for both Excel and Google Sheets.

”But My Customers Won’t Pay That”

This is the most common objection, and it deserves a real answer.

Reframe the value conversation

Handmade buyers aren’t shopping for the cheapest option — if they were, they’d be on Amazon. They’re buying a story, a person, a craft. They want to support a real maker and own something unique. When you price too low, you actually undermine that perception. A $73 hand-poured candle in a beautiful jar with a handwritten note says “luxury artisan product.” A $28 candle says “hobby project.”

The race to the bottom is a losing strategy

There will always be someone willing to sell cheaper — often someone who hasn’t done the math and will burn out within a year. You don’t want to compete on price. You want to compete on quality, story, and experience.

Your time has value regardless of scale

Whether you sell 10 items a month or 1,000, the hours you spend creating them are hours you can’t spend doing anything else. Even if crafting is “just a side hustle,” pricing your labor at zero tells the market — and yourself — that your skill doesn’t matter. It does.

Not every product needs to be for every buyer

If raising your prices means some budget-conscious buyers go elsewhere, that’s okay. You’ll attract fewer, higher-value customers who appreciate your work and are less likely to haggle, leave negative reviews over shipping times, or request refunds. Quality customers come from quality pricing.

Start Today

You don’t need to overhaul your entire shop overnight. Start with your top three best-selling products. Run them through the formula. See what the numbers say. You might be surprised — or you might finally have the confidence to raise prices you’ve been second-guessing for months.

Knowing your numbers isn’t just about money. It’s about respecting your craft, valuing your time, and building something that lasts longer than the next craft fair season. When your prices reflect the true cost and value of what you create, everything else gets easier — the long hours feel worthwhile, growth becomes possible, and your business becomes something you’re proud of, not just something you do.

The Craft Business Manager from Ardent Workshop was designed for exactly this — helping makers like you get clarity on costs, track inventory, and price with confidence. Because the best thing you can do for your craft is treat it like the business it deserves to be.

And when your business outgrows a spreadsheet — when you’re juggling multiple sales channels, managing production batches, and need real-time inventory across your whole operation — Ardent Seller is the next step. It’s a full business management platform built specifically for makers, with inventory tracking, manufacturing workflows, and sales analytics all in one place. Start with Craft Business Manager to nail your pricing, and graduate to Ardent Seller when you’re ready to scale.