Pricing handmade products is one of the biggest challenges for craft vendors. Price too low and you won't make a profit. Price too high and customers walk away. Here's how to find the sweet spot.
The Basic Pricing Formula
Start with this formula:
Let's break it down:
Materials Cost
Everything that goes into your product:
- Raw materials (yarn, wax, wood, fabric, etc.)
- Packaging (bags, boxes, tags, tissue paper)
- Consumables (glue, paint, thread)
Tip: Track material costs per unit. If you buy a $50 bag of wax that makes 20 candles, your wax cost is $2.50 per candle.
Labor Cost
What's your time worth? At minimum, pay yourself a living wage. If you want to earn $20/hour and a product takes 30 minutes to make:
Labor = $20 × 0.5 hours = $10
Be honest about time. Include designing, making, finishing, packaging, and photographing.
Overhead
The hidden costs of running your business:
- Booth fees and jury fees
- Credit card processing fees (usually 2.6-3%)
- Website and marketing costs
- Equipment depreciation
- Travel to fairs
- Insurance
Calculate your annual overhead and divide by the number of products you expect to sell. Or add a percentage (10-20%) to cover overhead.
The Multiplier
Why multiply by 2? This builds in profit margin and accounts for:
- Wholesale pricing (if you ever sell to shops)
- Sales, discounts, and promotions
- Unsold inventory and mistakes
- Business growth and investment
Real-World Example
Let's price a handmade soy candle:
| Wax (10 oz) | $3.00 |
| Fragrance oil | $1.50 |
| Wick | $0.25 |
| Container | $2.00 |
| Label | $0.50 |
| Box | $0.75 |
| Materials Total | $8.00 |
| Labor (20 min @ $20/hr) | $6.67 |
| Overhead (15%) | $2.20 |
| Subtotal | $16.87 |
| × 2 multiplier | |
| Price | $33.74 → $34.00 |
Common Pricing Mistakes
1. Forgetting Your Time
"But I make them while watching TV!" Your time still has value. If you're not paying yourself, you don't have a business — you have a hobby.
2. Racing to the Bottom
Undercutting competitors to win sales is a losing game. You can't build a sustainable business on razor-thin margins. Let the cheap imports compete on price; you compete on quality, story, and customer experience.
3. Ignoring the Market
Your formula gives you a floor, but the market sets the ceiling. Research what similar products sell for. If you're significantly higher, you need to justify it with quality, uniqueness, or branding.
4. Emotional Pricing
"I can't charge $40 for a candle!" Why not? If your costs justify it and customers will pay it, that's your price. Don't let imposter syndrome set your prices.
Craft Fair Pricing Strategies
Bundle Deals
Offer savings for buying multiple items:
- "3 for $50" (vs $20 each)
- "Buy 2, get 10% off"
- Curated gift sets at a slight discount
Price Points
Have items at multiple price points:
- Entry level ($5-15): Small items, impulse buys
- Mid-range ($20-50): Your bread and butter
- Premium ($75+): Signature pieces, limited editions
This lets every customer find something in their budget.
Round Numbers
At craft fairs, simple prices work best:
- $15, $20, $25 (easy to make change)
- Avoid $17.99 — it looks cheap and makes transactions harder
When to Raise Prices
Consider raising prices when:
- Your material costs go up
- You're selling out consistently (demand exceeds supply)
- Your skills and quality improve
- You've built a reputation and following
- Customers don't hesitate at your current prices
Final Thoughts
Pricing is part math, part psychology, and part confidence. Start with the formula, test at craft fairs, and adjust based on real feedback. The goal is to build a business that's sustainable — and that means paying yourself what you're worth.