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How to price your products – a simple formula


How to price your products – this is a question I get ALL the time. And every time I browse Etsy and many other online stores I see it ­– the shockingly low price. Too many sellers think low prices mean selling more. Are you one of them?

The reality is that savvy shoppers looking for handmade goods disagree. Pricing low could mean pricing yourself out of a sale. Your price communicates your product’s value to the consumer and is a major factor in your success.

How do you choose your prices? Do you look at competitors’ prices and chose a comparable price, or do you aim lower? Do you factor in labor, materials, and profit? Do you keep your prices low because you are afraid that pricing higher will mean selling less?

Instead of asking yourself what an item is worth, you might tend to ask what will consumers pay? If that's the case, not only are you cheating yourself with an unfair price, but also other sellers. When too many sellers in a niche under-price their products consumers grow accustomed to the low price and feel cheated when asked to pay a fair rate.

It’s time to change that. 

If you’re looking for a way out of the bargain basement and into profitability, here are some things to consider when you price your products:

1. Price your products according to the market

One simple way to ensure your prices are fair to you (and other artisans) is to look at sellers in your niche. Find 3-5 who are selling items similar to yours and find the average price. This can give you an idea of where your own pricing might fall, but should, in no way, determine your final price. This is just a starting point…

2. Price your products according to your manufacturing costs

How much does it cost you to manufacture your products? Make sure to include all materials, including raw materials or ingredients, hangtags, labels, packaging, taxes and duties, shipping costs (how much it costs to have the product shipped to you from your manufacturer) and so on. These are often referred to as variable costs. There are also fixed costs, which include your rent, your utilities, storage, etc. I don't recommend including your fixed costs in your pricing. Instead, these will be automatically added in Step 4.

3. Price your products according to your labor costs

If your price includes only material costs, you’re not paying yourself for your labor costs. Do you personally spend your time making your products? How long does it take you to make each product and how much do you want to get paid per hour? Do you want to get paid $20 per hour or $200 per hour?

This depends on your skill and experience, the uniqueness of your product and the details in the product. It might take you 5 minutes to make a pair of earrings, but it might take you 5 hours to knit a baby blanket. Your time should definitely be taken into consideration and should be built into your price.

If an hourly wage is not what you want to measure, then think about how much salary would want to pay yourself per month (or per year) and use that number instead of the hourly rate.

4. Price according to your business strategy

Do you want to sell your products on your e-commerce website only? Or do you want to also sell them to other retail stores for re-sale? Do you plan on working with distributors and wholesalers? Are you going to use a fulfillment house to ship your products or are you going to ship them yourself? These are all questions you should ask when determining your final price.

Keep in mind that distributors and wholesalers take 10-15% and fulfillment houses charge a flat fee plus a percentage for each shipment, in addition to storage and packing fees.

How to price your products

This is the simplest formula for pricing your products:

WHOLESALE PRICE = (Labor + Materials) x 2 to 2.5 

The x2  to 2.5 takes into account your profit and overhead as well, so you're covered. If your products are in the luxury or upscale market, you'll be closer to 2.5. If they are mass marketed, you'll be closer to 2.

If you plan on selling your products to other retail stores, you'll also have to take that into account. Your retailers will usually mark up your wholesale price at least 2 times.

RETAIL PRICE (MSRP) = Wholesale Price x 2 to 2.5 

Let's say you are a jewelry designer and it costs you $10 to make a necklace( this includes your time and materials). You should charge $20 to $25 wholesale (to stores) and $40 to $50 retail (on your website).

To figure how you should price your products, download the free pricing calculator below – simply plug in your own numbers and you'll have a range of pricing to start with. Please keep in mind that if you plan on working with sales reps or distributors, you will want to factor that into your pricing.

I hope the strategies above will help you figure out how to price your products and bring your prices to a level that treats you fairly and rewards your creativity and efforts.  Pricing your products fairly tells consumers that you have a quality product to offer, so start spreading the news.

In the comments below, I'd love to know about YOUR pricing strategy. What pricing formula do you use and how is it working out for you?

 


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  1. It’s worthy to note that there was an experiment done (Stanford I think?) and customers actually preferred speed over discounts.

    Offering a shipping upgrade or a quicker processing time would be much better than under-pricing.

  2. thank you for this formula! i have typically taken my cost of materials and tripled or quadrupled it. that seems to take it to what other similar shops / items price theirs. so, if i applied this formula, it would raise my prices significantly. for example, a necklace cost me $11.68 to make (using GF and SS materials…but a very simple piece). it took me 15 minutes to make. i charge $38 for it in my shop. based on this formula, that should be my wholesale price and i should charge $77 in the shop.

    couple questions:

    1. even if this takes my prices above what other similar items (on etsy) are priced, should i still do so?

    2. does it look bad to go through your shop and drastically raise prices? or should i do the increase slowly, in increments?

    thanks for this great formula! pricing is always so tricky!

    1. Patricia, great question! You don’t necessarily need to go and change all of your prices now… but you can adjust your prices for future items that you make. If it takes your price above what other Etsy sellers are charging, that’s ok, but you want to make sure that you’re offering something “extra/special” so they are more likely to go with you. Maybe a gift with purchase or faster shipping… Also, if you don’t plan on selling your products to other stores/wholesale, then you have a lot more room in your pricing formula!

      1. Interesting thought. However, you are now losing money on the gift with purchase item or the cost of upgrading shipping. Wouldn’t it be better to lower your price to be closer to the higher end?

    2. thank you! the “extra / special” has been a hard one for me to come up with! i don’t know what i would include with jewelry. i do already wrap it up in a gift box, but i don’t know if that really counts.

        1. Hello Delynn… I create handmade jewelry and this I never thought of may I say.. I will try this with my sales from now on…
          Hopefully my customers will enjoy the effort I put into their gifts.

      1. Hi! Also a jewelry maker. Not on Etsy yet but I sell at festivals and local shops. People seem to love the colorful little draw string bags I offer. You can get them super cheap on Wish.com

      2. You could offer them a polishing cloth if its metal jewellery. Or 20% off their next order over a certain amount spent?

      3. I’ve had jewelry bead suppliers send me a few extra beads as a thank-you gift. THAT’S INFURIATING! What am I supposed to do with 5 beads of one type, or worse, 5 completely different beads?! Just offer me a loyalty program: a discount on a future purchase based on my rolling 3 months past purchases. Ex. I buy $100 of beads in 3 months. I get 10% off on my next order within the next 3 months.

  3. Well thought out strategy. Easy to calculate. I’ve discovered that I am about 1/2 of what I should be.
    When I revamp my site, I will revamp my pricing structure, too.
    Thanks so much for your helpful formula.

  4. Wonderful article, Andreea. I see so many producers and professional craftspeople under pricing their product. And as ridiculous as it may sounds, sometimes sales increase when the price is increased!

    We have a FREE email course on Pricing Your Products that may help readers get into the nitty-gritty of appropriate pricing.

    Thanks again for the great blog!

    Sandy Dell
    ‘GiftRepSandy’

    1. Thanks for sharing, Sandy! It’s so true – when I increased my t-shirt prices, my sales actually increased, too!

    2. Interested in learning more. I’m still not confident on the pricing and have lost sales in the past from people saying I wasn’t charging enough. I do crochet.

  5. Great article! And great comments! I will actually try Blaire’s suggestion about shipping upgrade specials!!

    I’ve had customers buy something AFTER a discount special has gone off or customers not use a coupon code on their order purposely. So I do agree that people will buy want they want no matter.

  6. Pricing my products has always been difficult for me, even after 28 years in business. When I first started my Custom clothing business I notoriously under charged,35.00$ for a blouse?!? I was always trying to figure cost,time and what I thought the client would/could pay until a dear friend pointed out to me that I was being very judgmental and how dare I assume what someone can afford!
    Let’s face it if you want to survive and thrive in business you need to pay your bills and make a profit.
    Andreea,your simple equations are very helpful,I will pass them on.

    1. Bonnie, it really depends on how much YOU want to get paid… I know some entrepreneurs who give themselves $10 an hour when they first start and then $50 an hour after a few years, so it all really depends on you!

      1. I had a customer question my prices, knowing how long it took to make his custom-fitted items with premium quality (cashmere!) yarns. When he realized that I was making his items for less than minimum wage, he shut up. He also quit buying from me. That he had purchased a dozen different items in just over a year was a boost to my credibility on Etsy (his reviews were stellar).
        I WISH I could get paid what my creations are really worth…on Etsy, I am nearly the most expensive shop in my genre. So many mass produced, yet “handmade” (my butt!!), and now I am being told, DROP-SHIPPED, kippot are flooding my market.

        1. Hi Ginger, I am probably going to leave Etsy for just that reason. I make EVERYTHING in my shop myself. I see similar items on Etsy priced less than the materials I use to make mine. These are NOT hand made items and it seems that with the changes to Etsy this is actually encouraged. I can’t and wont compete with the Chinese market.

      2. Great comment….THANK YOU!…..I was struggling with this figure as I start my own food business. And this article, although good, misses your point of view. I’m coming from an IT job that pays me $65 an hour and there is now was I could price my product to include material costs and an equivalent hourly rate of $65…….no way. More like $25-$32 an hour if not less.

  7. Great post and you hit the nail on the head, women undervalue their work and time, I wish everyone would read this!

  8. Great article and information, I know I’m still underpaying myself and have even increased my prices slightly. With my slight increase I’ve seen more sales trickle in. I’m going to try your pricing strategy on a couple of my newer products and see how they do as an experiment. I also like the idea of discounting their shipping Blaire, think I’ll try that after my first experiment is complete!

  9. I follow the pricing strategy you outlined above. When I started to get more wholesale inquires, I raised my prices by a couple of dollars…just thinking about the future and if I would ever need to pay someone to help me. It was uncomfortable for me at first, but honestly, it hasn’t hurt sales enough to make me feel like I made the wrong choice. I read somewhere (and probably common knowledge) that if you raise your prices, you may be selling less at first, but in the long run, you may be making more. I thought of that as I raised my prices and it made the decision a lot easier for me. Great article, and one that makes it easy for others to follow.

  10. Great post!

    Every item I sell seems to have a “magic number” and when I find that price, I can really sell a product. I am happy to report that it’s usually a higher price than where I think it should start. I use the standard formulas to get the starting price and usually tweak it over two or three weeks. Then I review pricing over time and make those tweaks again – always higher.

  11. I use 4 times my material costs is my whole sale price and 2 times my wholesale is my msrp.

    I find this works pretty well for me and keeps me competitive with bigger companies.

  12. I have a very hard time deciding what to price my art at and I’m not 100% sure this formula will work for me. But I’ll give it a go–it’s better than what I’ve been doing, for certain!

    1. Hi. 4 years ago you posted this I am a new artist in the southwest and was wondering how your pricing strategy is working out?

  13. Thanks Andreea for another great article. I have been told many different ways of pricing like 2.5 wholesale x 2.4 retail, 2.5 Wh x 2 retail or 2 wh x 2.5 retail.

    Is 2 x 2 considered to be the norm ?

  14. My site is so niche-y that that aren’t comparisons. The
    one that did show up recently seems to be gone. I’ve had my original site for over 11 years (www.belly-jeans.com) and an Etsy shop for 3 years. I know my material costs and what I expect for my labor, but I think, since it is so original, I could add a few $, especially since I haven’t raised prices, even shipping, since the bad economy rolled in.

  15. Thank you for this informative post, Andreea! I feel like my jewelry is priced a lot higher then others in my niche on Etsy (but priced “low” if you were to find it in a specialty boutique/catalog). According to the formula in the post, most of my pieces are $15-20 under-priced. PS – I would really love to start wholesaling but my retail prices aren’t high enough to cut 50%. So, I have to decide whether I want to raise retail (and *really* outprice similar pieces on Etsy) and do wholesale or keep things as is …It gives me a lot to think about ..

  16. Great article!!!
    But I have a dilemma when you are entering a market with new product on a mission to give the community a cheaper price on a particular product with a great taste to compete with my competitors.
    My company will be producing a product that will cost us $0.70 (all expenses inclusive) and plan to sell at $0.85 to Wholesalers and $0.95 to Retailer while the consumers buys at $1.
    While our competitors sells at $1.30 to end users.
    putting this into consideration that we will produce about 4,000 units of our products in a month.
    Please advise,is that a good pricing?

    1. If your cost is .70 and you sell for .85 you don’t have much markup, does that include salary for you ( overhead etc ). Then a wholesaler would need to make more that .10 . Finally if a retailer bought it for .95 they would double it… Not sell it for $1.00. The MSRP is almost always twice the wholesale cost….I do understand selling in volume( we used to sell our products to Walmart) but I do not understand your figures and still making money.

  17. Thank you for this article. In the past I have always offered my products for less then they are worth. Mainly out of feeling insecure about my creations. I equated sales with approval. And luckily I have sold a lot. After figuring my taxes this year, I reflected about how much time and effort I have invested and how low my profit margins were. I now feel like I cheated, and undervalued myself. Bottom line is raising my prices is no longer optional. If I want to keep operating and offering I must do it. Tomorrow is my first wellness fair where I will proudly offer my product priced for its value, not out of my fear. I am a little nervous but, I keep reminding myself it as a way of honoring my business and myself.

  18. Thank you for a great article! I recently ventured out to starting my app business and I was struggling with how to price it. Although I am not on Etsy, there are great tips that I can take away and apply it with my business. Thank you once again!

  19. Great post and I learned a lot from the comments and your replies, Andrea. It is hard when your competitors charge whole sale price for retails. My jewelry is labor intensive, and I don’t want to pay my self $10 an hour. Now, these marketing strategies you all mentioned are worth thinking. Thank you.

  20. I have had comments that my prices are too high compared to some other sellers and that’s when you need to educate buyers what they are actually getting when they buy your handmade product, in my case jewelry.
    I only use precious metals and quality gemstones and pearls in my work. So, yes, I will charge more than someone who used silver colored metal and glass and shell pearls; I have lost sales to someone who charges less, but I am in business to make a profit. Gradually though, my sales are increasing and I hope what I learn from your course will help them increase even more.
    My biggest gripe with Etsy is that they do not police who sells what on their site – there are now a large number of “handmade” jewelry from China that sells for under $10. So, I am looking at other sites now for my jewelry.
    One thing I did notice was that people do not like to pay for shipping. So, I increased my prices to cover shipping and shipping is now “free” and people like that. It’s very funny sometimes to figure out what is keeping people from purchasing from you.

    1. As a consumer I don’t mind paying more for a quality product and service. Things like quick shipping, courteous responses to emails and presentation of an item all count when paying a premium price. If its cheap, tossed in a plastic bag and takes 3 weeks to receive with no communication or return policy its not worth buying.

  21. Andreea,

    Thank you for your wonderful approach. You make things look simple and that’s a great gift! I would also to ask your opinion on the following. I ‘ve started making appliqué jute tote bags and sell them on ETSY since 2011. My problem is obviously pricing. I knew that the selling price is not the right one. So, I follow your instructions how to price and I realized once more that the price I am charging is definitely tooo low. My shop has the following standards . All bags are 100% handmade, designed, appliqued, embroidered and , sewed .I use only high quality jute and fabrics. I never repeat the same design twice and moeover it takes me about at least 8 hours work for each one of them. And the question is “Do you think that anyboby would buy a jute tote bag for at least USD 120 ?? What would be my marketing approach??

    Thank in advance for your time
    Apopsis

  22. I always have a problem making the typical pricing formula/labor charges work for me. For example; my most recent creation – chunky cable knit earwamers cost $5 in materials and 3 hours to make. If I priced this according to your formula my wholesale price (if I charged $30 per hour for labor) would be $190 and my retail price would be $380. There is NO WAY on God’s green earth any sane person would pay that much for this item unless it was made of pure solid gold. The pricing formula that I use is; cost of materials (I buy a lot of my yarn on sale but I base my pricing on the highest retail price) + labor (I pay myself $7 per hour)+ a little bit extra for profit. When I do this it prices my items competitively but not too low either. Also I am not trying to live off of my shop, it is just a side business to make a little bit of extra money.

    1. but why would you pay yourself $30 an hour in the formula she’s provided, when you are currently only paying yourself $7 an hour?

  23. This very informative for me. I am currently working on inventory for a shop on etsy. As this is new to me, pricing has got me intimidated to say the least. Reading the comments has been very informative as well. Thank you everyone, this gives me a real good idea how to go about this.

  24. Hi,

    Such a lovely simple articl.

    I am not sure it if it worked well for me.

    I want to sell a set of 8 cards.
    Wholesale price came to £32.60
    Retail Price £65.20

    Which price should I be using for Etsy?

  25. Thank you for such helpful advise. I think the formula is similar, and could help work things out based on your skill level.

    I hope that’s helpful 🙂

  26. Great information. We will certainly make good use of it as we are selling handmade clothing and leather boots for women. Thank you for sharing, would love to hear your thoughts about our products.

    Gypsy Dharma

  27. This was definitely some thought-provoking information. I’ve struggled with pricing lately, mostly because by this formula, I would need to charge $52 for a set of 4 charms. That seems outrageous to me, and nowhere in line with industry standard (even at retail stores). So…..that leaves me sort of lost and confused! =)

  28. I too never know what to charge people, this is the biggest problem I have. And this post has helped me some. I also make clothes but what I have been doing lately is alterations on just about everything. Now someone wants me to make them some skirts from old skirts that they have
    and someone else wants me to make them some dresses, which they will provide the patterns and fabric. So I really need help pricing that

  29. I enjoyed reading your article. I have made jewelry for about 20 years but I have very little confidence in my work. I like your formula but I’m terrified that if I charge that much no one will buy from me. They can always buy similar items from places like Wal-Mart at a much lower price. I currently just take my cost X 2 for the selling price and people say they love my stuff but even at that low of a price some say it cost too much.

  30. I have an Etsy shop and I really don’t understand why anyone would want to sell wholesale. I work to provide an income for myself and provide quality products that are also affordable to my customers. If I were to sell wholesale I would have to double my price on Etsy to make it a retail price. And the reason for doing this would be so that some shop owner can also make money for themselves selling my goods? I am for supporting myself not a bunch of people that run brick and mortar shops. My customers get quality products at wholesale prices as I don’t care to generate revenue for some middle man! Am I missing something? Why should other people be making money from my hard work?

    1. Sheri, thanks for reading and leaving a comment. There are many reasons why selling wholesale makes sense and I fully believe that there’s enough to go around for everyone. I think as entrepreneurs we need to have an “abundance” mentality and not think that in order for someone else to gain then someone else must lose.

  31. Hello! Thank you for your article. I have been struggling with pricing my graphics. I have an Etsy shop. My clipart takes me between 1-5 hours to complete, but once I create it I can sell it infinitely . I have a very expensive computer $1500, and I pay for monthly software $29.99/month in order to create my clipart sets. It is just me- one man company, who creates all of the clipart sets. How do you price that accordingly. I would love any feedback as to what you think is fair for pricing. 😀

  32. I’m a bit confused. I sell my item for 22 usd. I would like to sell my item in a store in my town. So how much would I sell my item to the store? 11? And then they would sell it in there store for 44? Or do I sell my item to them for what I sell my item online at 22? And then they increase my items price themselves to whatever they want?

      1. When you sell to stores, you have to usually decrease the cost so that they can mark it up. You should ask the store how much they mark up their products. I have been pricing so that I double the material costs to sell wholesale. When they mark it up, it goes to the price that I sell retail. So if an item costs $2 in material, I sell it to private individuals (etsy, or my own website) for $6, and then sell it to stores for $4 so they can mark it up 50% to $6. I’m probably undercutting myself a little because I don’t figure in the cost of shipping materials to me, but that just means I make a little less per hour.

    1. Yes, at least you are making $22/hour and is a great price. If they sell at 2.9% above, they will have to pay sales tax and shipping costs, if any. You get your money up front and only get a 1099 at end of year for total items sold to the company at that price, $22.

  33. Great article, and I love the comments, especially the one noting the research that many people PREFER higher prices.

  34. Do retailers only accept 50% off retail as wholesale? I have products I would like to bring down to wholesale, but 50% off retail would fall below wholesale… the x2=wholesale x2=retail formula doesn’t work with all my products as they cost more to make, but the formula retail price would be exaggerated. I’m not sure what to do. -Thanks

  35. please tell me what i am missing here…. maybe i adulted too much today and my brain is fried, but my math is coming up different:” So if each set of earrings you make costs you $2 in materials, and you pay yourself $15 for the half hour it takes to make them, then your wholesale price is $34 and your retail price is $68.”
    what i am getting is $2 materials, $7.50 wage (1/2 hour) is $9.50 x 2 = $19×2=$38. i don’t get how the pricing quoted comes out with the information given. thanks for help.

    1. I see that you have $2 in materials and you charge $15 an hour, but it takes 1/2 hour, ($7.50) which would be $9.50 x 2 and your retail price is $19.00. If you want to sell for more, your $9.50 x 3 times the cost and your retail would $28.50; however, test your competition and see what they sell the earrings similar to your and cut your price by $5.00 — which would be $23.50. Also, if your quality of work is much better than competition, leave at $28.50. Just make sure everything is tightly glued and look beautiful and wear a pair to checkout the feel of the product.

  36. Hi, Interesting article. However, my wife and I are having a pricing issue with our products. We make 100% handmade cat toys and currently price them at £8.99. We have sold a couple but not many, even though we often get great comments. The cat toy market is huge and many of the large retailers selling similar (not the same, our product is distinct different) for less than £2. The problem we have is we do not charge a fair price for us. For example, each toy takes 3 hours to make and materials cost about 50p. Using your formula we should charge (lets take £10 a hour) £61 for wholesale and £122 for retail. As amazing as it would be to sell for that price, I cannot imagine anyone paying for our basic cost (labour plus materials) of £30.50 for the product. Any advice you have would be appreciated as we love making and selling our products, but we cannot take our business full-time for lack of decent pricing.

    Thanks.

    1. Hi Dan, Is there a way to decrease the time it takes you to make your cat toys? Or hire someone else to do it who can make it faster? After looking at your website, it doesn’t seem like it should take three hours to make one toy… I think that ultimately you have to do what makes sense to you…

      1. This is why many companies have products manufactured overseas. They can hire someone elsewhere who charges a fraction of your hourly wage to make the product…and they do it in bulk. So, it will be hard to compete with pricing from a large retailer that sells a similar product.

    2. Listen, you need to make money on your product and if you get a lot of comments about your product, don’t downsell your product. A lot of love and care goes into making your product; look at the quality and test the waters. Price them honestly and don’t undersell yourself. Check the competition when your price is, as theirs. Don’t let anyone intimidate you and sounds like competition is fierce, check it out. Raise your price, you are the competition.

  37. Starting my bag business i am always fearful of pricing too high. But i am using eco friendly materials and manufacturing in the US, i believe that consumers will pay a price that not only gives them a quality item but the positive experience owning an item that has eco and ethical standards.

    1. Making jewelry is expensive and you have to buy by bulk. Try and find a supplier with bulk prices. If it is a lovely piece, and buyer loves it, price won’t matter, it’s what she wants. OF course, you know that she will be telling her friends where she purchased it. Make sure quality is impeccable,when making the jewelry, as if it is for a Queen. The price at $20 to $25/hour when you get experience and customers is fair. Sky is the limit when you are good at what you do. Thanks. If you have a brand of chains, stones, etc. for your jewelry, find a Show for those products, Jewelry supplies, and attend. You can find pieces at bulk rates and make your jewelry at cost savings and profitability. Had a friend who did this and it worked out very well for her.

  38. Hi…just taking my first steps…your formula seems good although its scarey looking at what I should be selling my pieces for.. I have a shop interested in buying from me wholesale but I also sell on Etsy. I’ve just worked out my costs for wholesale according to your calculator which brings the price to £22.00 per item which seems too much..i can drop my hourly rate to bring it down but how does it work if I want to sell for example 10 pieces to the shop baring in mind that they will double the price…I’m guessing WS for 10 will be less than the £22 I’ve worked out? Also should I make sure the shop buy them WS from me cheaper than what I sell them for online. I’ve read a little bit about some artists undercutting shops that have sold their work and I want to understand the pricing structures so that I can sell independently and direct to customers as well as through a shop or do you think this isn’t a good idea? Lots of questions…hope you can help
    MAny thanks

    Nat

  39. Thank you for posting this formula. Am I supposed to include the cost of my packaging as part of materials within the (labor + materials) x 2 = wholesale? The formula I’m currently using has a spot where actual packaging costs are entered, so I’m not sure what falls into your ‘materials’ category.
    Currently, sales on Etsy are very slow. Therefore, I’m strongly considering trying to get some of my simpler designs into shops & realizing they cut pricing in half, it doesn’t seem to make sense to put my time extensive pieces at wholesale – at least not using my current pricing formula). I need to have a better profit on current retail pricing to ensure a decent profit be made using wholesale pricing and my current formula calculates my retail pricing to be low enough that when cut in 1/2 there wouldn’t be enough profit for it to be worth doing.

    Thank you again for your assistance!

    1. Get a website on Shopify and take photos of sets you make and prices. You will see you how busy you will become, or take to craft shows, which are extremely profitable, at times. Think about one in February, for Valentines Day, Spring (Easter show), gifts abound, at one, feature birthday gifts. Teenagers love jewelry. Go to Claire’s Boutique and scout around at designs, pricing, etc. to assist you in this endeavor. It will help.

  40. HELP! I make necklaces and bracelet sets. The cost for the beading that I purchase is pricy. It varies from 50-100 at times. My last piece in material came to $64. I charge $10 an hour and it took 2hrs to design and put together. After using the calculation for wholesale pricing my total is $168.. This is really high!!!! How can I charge a comfy for price that I can profit from but a price that will not scare the customers away?

    1. I would suggest finding a way to lower the cost of materials without sacrificing quality. I have had to do the same with custom jewelry. I found chains that look just as beautiful as sterling silver and won’t tarnish that cost me a fraction of what sterling silver did. Buy your supplies in bulk or wholesale websites. That is what I do.

    2. @Georgia – I have a purchasing background so I have wholesale accounts with my material suppliers. I am already getting the best price that I have negotiated, however, at times I have purchased fabric (in my craft) that was on sale via RETAIL stores (always looking at getting quality at cheaper prices) and then I take into consideration the original price (retail). I then go off the original price to take into account the fluctuation that I may get if I had to buy at full price. So – the calculator you are using giving you $168 may be high however they are handmade products, and you didn’t employ slave labour to produce. I totally understand your frustration and of scaring people away. Truth is people are always wanting to buy the cheapest they can get, many people just don’t care if its handmade, those that appreciate the time and effort made to each piece will pay that higher rate.

    3. We purchase Fabric Protector to go on everything we upholster for the customer. We retail it for $15.99/can and that covers one full sofa and a club chair. You can use this on dining room chairs, etc. from one can. Good price. People do pay to take care of their upholstery; however, don’t know about fly repellant, but if have a lot, it may be worth $15.99 per can. Just giving example for you. Hope this helps.

  41. I’ve been designing and making jewelry (or ‘jewellery’ where I’m from) for over 20 years and I operate a full time jewellery business. I’ve spent a huge amount of time learning about, evolving and testing a professional pricing formula for my jewellery designs which covers all the bases.

    1. Hello Simone, I make denim choker and matching earrings and hair accessorries, I am have pricing problems. You been in business for alone time , can you help me with your formula?

  42. Thank you so much….this has helped me more than I can express. I cant seem to find the downloadable pricing calculator. If you can help with that it will be greatly appreciated.

  43. Great article. Does this pricing strategy apply to big ticket items? We manufacture a high-end decking material (new to the market) and have just decided wholesaling to retailers is the direction we want to head. Pricing is a bit tricky though because we absolutely want to make a profit and know our retailers do too, but we don’t want to price ourselves too high and out of the market. If our cost is $6.00/sq.ft what would your recommended retail price be? Most decks will cost between $2000 and 20,000 depending on the size. We’re currently selling factory direct on a sliding scale based on quantity. 10.50/sf to $14.00. I appreciate your feedback!

  44. Hi, I’m making horse fly repellents and from using that formula it says I should be pricing at $94… So I’ve just gone with $5 each because I done think anyone will pay that much for a spray!

  45. so (cost + labor) x 2 = wholesale x 4 = msrp
    what if you are paying a sales rep? where does that come into play? in what step is that added?

    1. We purchase Fabric Protector to go on everything we upholster for the customer. We retail it for $15.99/can and that covers one full sofa and a club chair. You can use this on dining room chairs, etc. from one can. Good price. People do pay to take care of their upholstery; however, don’t know about fly repellant, but if have a lot, it may be worth $15.99 per can. Just giving example for you. Hope this helps.

  46. I’d like to ask for assistance as this is my first wholesale experience. I make lip balms and just put them out on the market at what I thought was a fair price$3.00 and then 4 /$10.00. Then this wholesale request came out and I found your wholesale calculator and got to work. Wow no wonder I never did it before its very time consuming breaking down the cost of each raw material you use down to the price per 1 usage. If I put my labor cost into the formula $10 per hr x 2 /50 = the cost is well out of what someone would pay. isn’t it true though if you don’t put your labor into the formula, yet you double the formula # (that’s what your doing at that point is getting your labor costs paid ??? So without labor my time in your formula calculator I get $1.07 $2.14 and $4.28 at low end of retail I sell at $4.00 for Lip balm now at previous rates I was loosing money. So What do I charge for someone who wants to buy 50 units not alot of units but she’s just starting a new venture as well and it could build. AND then I have customer who wants to know my pricing for custom Lip Balm Labels so he can leave them with customers instead of business cards. Some companies do this at .63 for 100 but there product is lousy and made with mineral oil and parabens etc, THANK YOU SOOO MUCH for sharing your expertise with everyone!!!!!!

  47. Just a note, this formula works best when the factor of wholesale vs retail materials used is addressed. This formula works better assuming that the purchased materials for said project were bought at wholesale pricing, not retail. Thus there will be many more items not fitting this model if supplies were bought at retail pricing.

  48. I’m looking to move away from Etsy (or rather, add to my Etsy shop) into wholesale to a local vendor who’s asking for wholesale cost and suggested retail cost. I’ve seen this formula before and I struggle with my products. I create hand made fused glass pieces. Each piece uses pieces of cut glass, crushed glass and thin glass stringers and are very detailed. I make my own crushed glass and stringers that I use for multiple items. Calculating material costs is difficult for this reason. Second, my time…I can make a very detailed piece that takes me 5 + hours to create. There’s kiln running costs to consider as well. When I implement the formula, my pieces would cost hundreds of dollars. An example: an 8″ square plate that features flowers and butterflies could cost me $30 in materials, take 5 hours to create (If I pay myself $20 per hour, which is not unreasonable) and consider a kiln load costs approx $10 (I do try to have as many pieces in the kiln as possible, so with this example let’s say there were 5 other items in the kiln). $132 in materials and labor would put a retail cost at $264. It’s difficult for me to find other items that are similar to my work, there aren’t many. There are very few on Etsy, some other online sources and art galleries. The range for anything even remotely similar is incredibly wide. I also have to consider there is so much mass produced glass product on the market that are sold at the retail level at incredibly low prices. Is it wise to start lower and as demand increases to raise the price accordingly? Each of my pieces are one of a kind and unique, no two are alike.

    1. Hi im with you on this. I have changed to jewelry because of the expense of glass. Its labour intensive and artistic. I see she didn’t reply. Probably only someone who does glass and knows the handmade business side of it could answer that.

  49. Hi I am looking for a formula that can calculate the price for autographed items, is there any better way or a formula that used to calculate the price? Thanks in Advance!

  50. Thank you so much for all the great information. I do pottery and have had a lot of requests from ppl to purchase. I have never known how to charge…this helps…thanks

  51. Hi,
    I was chatting with a friend who was concerned about what retail price to give the store that’s carrying her products. Their setup is different because in exchange for promoting the local makers, they take 55% of the retail price. So in the case of the retail store not marking up the price, does this formula still apply? Would she just use the wholesale markup formula?

    1. Remember, when a store has a sale, your product will go on sale. How much will you make when that happens? Think about that.

  52. Please. Post this article at least twice a year! 🙂 we need to create a craft culture that elevates it’s worth. I’ve seen rampant “under-charging” in four separate craft genres I participate in….soapmaking, art, fiber crafting, candlemaking….it’s cRaZy! Not to mention when customers have the gall to tell you “You charge too, much. I can get the same thing on Etsy for half that price!” Customers like that, I can do without….but it just goes to show how under-charging creates an atmosphere that hurts all in the same industry/craft genre. You get what you settle for, which also explains why there is often such high turnover in many craft businesses. When these business owners finally realize they are making next to nothing, they fold up shop saying you can’t make a living selling crafts….when in truth, they just never priced to earn what their craft and their labor are worth.

    Too, ….many begin their craft business as a hobby, while having some other source of income to sustain them. I think that if more created their business from the gitgo, thinking of it as their main and only source of income, it would make the likelihood of accurate pricing to begin with, much more common. Many are content to just bring in a little extra hobby money to augment the household income . But if it were all they had to put meatballs on the table and pay the bills, you might see more unwillingness to settle for “what everyone else is pricing at”.
    Filing your taxes each year is the perfect wakeup call to really LOOK at your costs vs. profits and decide if you are content with what you see.

    I SO agree with Andreaa…..this issue is bigger than any one person. When you’re a member of any craft community, under-pricing hurts the whole community, sets a low bar that sends the wrong message to consumers. In the end, the real loser in the situation is the under-charger.

  53. I need to work out what my wholesale price should be from my already established retail price
    I have a product an art print that I sell for £249 on my own site
    I want to approach retailers but what would I expect to have as a resonable wholesale price?
    I want to contact a well known London shop buy have been told they expect a very low ( read unfair) wholesale price
    Any ideas or advice would be gratefully received
    Thank-you

  54. Thank you for this thread! I’m embarking on an unique felted fiber journey combined with my son’s art. Getting ready to launch my Etsy biz and also being approached by local businesses. Pricing (retail & wholesale) has been in the forefront of my mind.
    Is it better to add state tax into the price of the product or have it added at the end of the transaction?

    1. I would say it’s probably better to add it at the end of the transaction rather than build it into the price. That way you can easily keep track of it. I believe with Etsy it automatically ads it on for you at the end of the transaction.

  55. I would also recommend that if your making your own items, just to make sure you are buying your supplies at wholesale prices as well. This is a great pricing structure to follow.

  56. Hi I was wondering if there a site where I can go and look up the value of children’s or women’s clothing because I have four daughters and I just wanted to know if I’d be better off selling my kids used clothing through eBay rather than taking their clothes to the Baby resale consignment stores

  57. Hi. This is such a great article and found it as I was searching on how to wholesale my products. I sell Cosmetics and purchase directly from manufacturers. I’ve had people asking me about ordering wholesale which always make me nervous because I’m not sure how to go about pricing each item. After reading this, let’s say that if I purchase an item for $3, add my label (.10) then the cost of having the item shipped to me, let’s say .25 per item (depending on the quantity of items ordered) then it cost me a total of $3.35 wholesale. Now let’s say I decided to retail this item for $12 and someone wants to buy wholesale from me, and I offered them a wholesale cost of $6 each per dozen? Should I have a minimum opening order of maybe $300 since they will be purchasing at 50% off the retail price? I’m also looking at the fact that they will be making a higher profit ($6) than I would be making selling to them. In the cosmetic industry, I think it’s more like 40% off the retail price. I put this in a question because this is the dilemma I’m facing right now but want to learn as much as I can so I can create a fair pricing structure for myself on future orders.

  58. Greetings! I’m an interior designer with a luxe product currently shown & sold in ‘trade’ showrooms (net pricing to designers) – Recently, 2 companies have approached me about representing the piece in their stores, which are retail home goods stores – How best to establish traditional retail pricing structure from a previously established net pricing model.

  59. Hello! How would this formula work if I am not making my product but buying it from the manufacturer? What formula do I use to come up with a retail cost then?
    Thank you!

      1. Hi Andrea
        Why, in this case, would you not take total (purchase) cost x 2 for wholesale and then again x2 for RRP as in the case of manufactured goods?

  60. I like the formula, and I would say it is close to what I go by in some cases, but there is another element that gets me in many cases…..What are people willing to pay for an item?
    I always look at anything I make from a potential customers point of view. After figuring up materials and labor and what I would have to charge to make it worth my time and money to produce an item, I step back and ask myself if I saw this item in someone else’s shop and loved it, would I be willing to pay that much for it?
    I have faced the fact that I personally would not pay the price that I would have to charge to make enough on an item I made quite a few times. Of course, there are some places to sell things at a price that you wouldn’t get anywhere else. There is a big arts fair once a year, if you’re lucky enough to get a booth, where you can charge what you need for an item and sell them all day, but other crafts fairs wouldn’t sell as many of the same item at the same price and may even be lucky to sell at a price that you break even on.
    I am always looking for a new place to purchase materials at lower prices, but unless you have enough to purchase in big bulk volumes, you it’s hard to find anyone who will wholesale you materials at a true wholesale cost.

    1. I think a good thing to remember is…you are not your customer. There are many, many people that will have more disposable income than the artisans producing the work. It’s absolutely fine, in fact desirable, that you can’t afford your own product, because that probably means you are pricing it at its true value as a labour-intensive hand-crafted item that is not manufactured with slave labour in some overseas hellhole that mercilessly exploits its workers.

      Be proud of your work, work hard to find your customer base that correctly values what you make, and above all do not collaborate in your own exploitation. It devalues us all.

  61. Shouldn’t “time” come into play with your pricing?
    If I buy a product, and sell it for 2x my COGS in one month, that is certainly better than selling it at 4x my COGS, if it takes 12 months. So, where does Time fit into your formulas?

  62. Hi, thank you for a very informative article… i am a qualified clothing designer, but my skills are just as good as a beginner, I am slow in sewing… how do i factor this into my labor per hour?

  63. I have been creating jewelry…clothing and small center pieces for a long time now. I have just pulled a price out of the the hat here and there that I believed to be a fair price based on what I have seen other artists charge. How do you calculate your time if you have a full time job?

  64. I am struggling to price a hand crocheted twin afghan. My 14 year old has been asked to make 4 of these for a friend of mine. It cost 30.00 for the yarn and took her at least 40 hours to complete. I’ve looked on Etsy and twins are going anywhere from 60.00 to 350.00. If we take the cost and add 2.00 an hour for labor (which barely seems like enough) that gives the price at 110.00. I’m struggling! 🙁

  65. Hello,

    I have a product that i am selling online and to whole sellers. the problem is i have priced my product too low and now i am stuck and afraid to raise the price. any suggestion on how i can accomplish that with out freaking out my customers?

    1. Genet, please understand that now would be the time to raise the price, as shipping has increased, supplies have increased in price. I mean sometime you may have to wait for supplies to come in, but items are increasing. You have to raise your price. Try it. Your customers will understand. Please a sign to state that supplies and shipping have increased and it has caused me to increase our prices, as well. I use to do crafts, custom designed wedding and formal wear, I lost out, because supplies went up and I stayed the same in pricing. No profit, just saw one year how much I lost. Not good. I wanted to please all my “friends”, but that was my job I was losing in. Don’t sell yourself short, please.

  66. I’m very new to online business. My husband and I are starting our “retirement business’ a bit early. We make American Girl and other 18 inch doll furniture, linens, and clothing. I appreciate the information and would welcome any advice on ways to market from seasoned pros. It Etsy worth the amount they charge? Any thoughts would be appreciated.
    Kathy

  67. Does the cost of getting a prototype/sample done should be added to total cost to figure out the final price point for the product?

  68. Hello! I am just starting my first business. I am having an issue with while sale pricing. Each product costs me $1.50 to make but I have to make it in batches of 6. So how much should I charge them if the minimum order price is set for 6 items? Because I don’t take my time in to count (it’s about 30mins for 1 batch and 1 hour dry time)

  69. Is there a minimum order rule to wholesale pricing? I have a potential wholesale customer who approached me on Etsy asking to buy 5 units of 9 of my items. My Items range in price on Etsy from $20 – $10 (which I have discovered is not high enough based on the formula you have provided, something I will be working on to change). I was thinking instead of offering a typical wholesale price, that I give a percentage off, Let’s say 20% off the total order since it is a larger then normal order and inform them that I can only take 50% (wholesale pricing) if they buy at least 10 units of each item? Does that make sense? Thanks for any help.

  70. Hello, I was wondering if you had a formula to account for product launch costs, say, on a crowdfunding site…there is warehousing, handling, distribution fees; crowdfunding platform fees; shipping fees; taxes at local/state/federal levels; sales tax at point of sales; marketing/advertising costs; and promotional material costs (commercial/video/print)…

  71. Hi,

    Thanks for this post. I have a question if i sell a product on online retail and i do the delivery by myself. Will the delivery be counted as a labor (the one include in the wholesale formula) ?

    Thanks,

  72. What if the material cost changes everyday? I am trying to come up with a retail pricelist and my materials are gold and silver.

  73. I am a painter and a jewelry designer. I am struggling with pricing my jewelry because the material cost isn’t the highesr but the amount of labor is intense.

    For example: i made these chandelier earrings, that are made with silver plated copper wiring and a semi-precious gemstone. I spent over 4.5 hours making the items. Total cost of materials is about $14.

    On Etsy i priced the item at $54.99 (to be competitive) but according to the correct equation, the item should be $111. (Material+Labor+Margin)

    I feel like that is super high for a new artist with only 12 followers. Should the profit margin be removed in this case?

  74. Wonderful article. Everything makes sense. Only one question, when offering free shipping, are you calculating extra charges on top of the Retail Price? For example, CC Processing % + shipping + marketing printed material included in the envelope + shipping bag/envelop. Thanks 🙂

  75. I might have missed this info posted somewhere, but what I am wondering is if my cost of supplies fluctuates ( based on the odd sale,etc) do I pass that deal on or just use the price that the supplies are normally sold for?

  76. I really liked this article! I was stuck reading the comments because I see myself in them! I’ve been talking about it for years with friends, and for years I’ve been unsuccessful because everyone has gone down the price war. In my opinion, there are several problems that contribute to look at this formula and say: Oh my God, this is very expensive, no one will buy!
    Issue 1- Consumers (and we ourselves as consumers also do this) just want cheap products. The internet has come to help immensely because in any search even makes us lists from the cheapest to the most expensive, on similar products. It does not mean similar in quality.
    Issue 2- consumers say it’s worth buying cheap because even if it spoils, buy another new and so on
    Issue 3- Consumers do not distinguish manual art from mass manufacturing in China
    Issue 4- Etsy, a platform that everyone who produces handmade articles found as the perfect site to sell their articles, has opened doors to China, and nowadays, Etsy is a tawdry version of eBay.
    Issue 5 – Someone here has mentioned, many of the plastic artists do some things as a hobby and they go on sale just as a hobby. I also do, but I always put the right price.
    We, ourselves, various artists, have greatly despised our work, and this has been causing the forced price decline. So no one can live on the art, cannot pay the bills.
    Conclusion: if you ask me if I sell much, I say no. Not really, but having no need to live in this business, at least I try to get the message that art is usually unique, expensive in materials and always involves a lot of hours, so it should be valued. Until 2016, I was in Etsy, then I left because I actually think that Etsy is no longer what it was. But when I had the store, there were people who sent me messages just to ask if I could sell cheaper, because otherwise, they would buy similar products at a much cheaper price in another store !! Okay, I always said cordially that it did not lower my prices. Sometimes I would like to be rude, but … I always reply with patience!
    The ideal future is a serious platform for the sale of manual artists, where these formulas were simply applied at the time of the price. Everyone who sold there will be forced to put only their cost/hour, material costs and nothing else. There would be a price generator that would automatically put the right price. And they could still get their sales commission !! If I knew how to program…
    Sorry for the long text, even more, translated by Google, may contain errors, but I thought I could share my opinion here because I see that after all, I am not the only one to complain about the absurd devaluation of manual creation. The only thing that sets us apart from the rest of living beings, the ability to create, is very devalued. With great sorrow, many creative people are abandoning these projects because, in fact, they can not live on them. Thank you all for your comments and especially the author of this blog for the sharing of information very informative.
    PS: Artists, please do not give up. Keep on creating and increasing prices if possible!

  77. Thanks for the informative article. You suggested to add labor and material costs and do a mark up in the range of (times 2 to 2.5).

    Where do you factor in the price adjustments for GST, Paypal Fees, Shipping discounts?

    Since, final sale price is inclusive of all these costs, I am confused whether I should charge a mark up on these costs or simply add these costs to the price without any mark up. Everything is having a cascading effect driving sale price too high!

  78. I think I finally understand cogs. It cost me 9.00 to make a 2½ pound batch of soap – makes 12 bars @ .75 each. I want to pay myself 10.00 an hour and it takes about 3 hours from start to clean up (not including cure and wrapping yet) so each bar would run about 4.00 wholesale if sold “naked.” And 8.00 retail. I’ve been underselling my bars at the market! In reality for my bars I probably should be selling some for 10.00 since some of them are high top. 12.00 if I wrap and label for a more high end show.

  79. Hello I started my hair product line an I’m having trouble deciding on the price to sell to stores wholesale . I’m scared I might say the wrong price An they say no. So how do I base the price off what it cost me . On my website an in my salon I have set prices but to wholesale I’m stuck

  80. Sadly, the majority of people who sell their hand made crafts are drastically undercharging for their items, which hurts every other craftsman out there. We’ve got to stick together, and do our best for each other. Do all of us a favor and price you product fairly but responsibly!

  81. im a handmade dress maker and get a lot of comments saying my prices are too high. when i calculate just wholesale for my most popular dress it comes to £140, doubling to £280 at sales price.

    fabric: 14/meter= £28
    zip: £3.95
    lining: 8/meter= £8
    I charge a flat rate of £50 for the labour
    total: £139.95 wholesale
    £279.90 retail

    Id honestly love that kind of money for what i produce but would anyone really ever be willing to pay that kind of price?! at the moment the dress is for sale at £95 and though im getting over 600 visitors a month im lucky to make a handful of sales. in six years ive had 125 orders. any advice greatly appreciated

    1. Can you get the fabric, zip and lining at a cheaper price elsewhere? What if you purchase in bulk? Could you have the dress made elsewhere for less than the 50 pounds?

      If not, at least you earn the flat rate for labour.

  82. Thank you so much for this information. This helped me out a lot. I have also read so many comments from others here, that now I think I am ready for a new change. Thank you very much.

  83. So what do you suggest when a store wants your items not at retail but on 20% – 30% consignment commission? I have been selling at these shops with my retail price but take the 20% hit. I still feel like if I had to own a shop it would cost me more than that.

  84. Thank you so much for this information as it really helps me and gives me a better idea of how to do the pricing! I am in the process of learning how to set up a small business for the beauty line.

    I do have one question as this is what I am trying to figure out how to do bulk pricing? As that is what I am struggling with since I don’t want to overcharge or undercharge. Any idea of how to do pricing on a bulk like 50 items for $…. or 10 items for $…. and so on. Thank you!

    1. that depends on so many things, so I’m not able to advise you. But if you sell to retailers, you usually have to offer 50% discount from your suggested retail price.

  85. Hi
    I starting my business and pricing it is driving me crazy. I work with Swavroski crystals and some pieces cost me about $200; I plan to have a luxury brand, but I am afraid if I put my product to high nobody is going to pay for it. $200 for just the crystal I use, I have to add all the other materials plus my compensation, so it finally can be something like 300-350, and that in a single item if I plan to do like set of 4 or 6 how much I can price that? I am confuse, but your article gave me some important points to consider.
    Thank you

  86. Thanks for this and many more useful articles (and podcast).
    I have a line of body care, and my main issue is, how do i include in the price all the hours i spent researching recipes, suppliers and packaging? Or, do i only calculate the time is actually takes me to make the product, and then, sometime far far away it will be worth it?

  87. I think I’m pricing too low. I crochet and most of my stuff takes less than an hour to make and than a skein of yarn to make. I do it as a hobby more so than a business. I sell at an outdoor venue about once a month.

  88. Hi, thank you for your video. It was very helpful. I’m manufacturing home and industrial cleaning products but did not know how to cost it out. I followed your guideline and I am happy with the result. Wholesale and retail price calculations also made sense so I multiplied at both level 2.5 since I have really high quality products that people are very satisfied with. I will be going into your other posts and keep learning from you~ Thank you thank you.

  89. I appreciate the idea on pricing, but I am making very labor intensive crocheted toys. One item would be $75 or $500+ with these formulas. Neither of which seems reasonable.

  90. Hi
    I am also struggling with my pricing, I am in the process of starting Pet supplements company, the supplements are made very local to me so no real shipping cost. So say a product costs me £5 what do I need to charge? All I have to do with the products is put my own labels on them. I will be selling these from my own website shortly. Any advice would be much appreciated.

  91. I found the videos very helpful. It was clear and easy to follow. I was confused on what and how much to charge but now I see there is a formula to follow and all the items to consider before applying a price. I will watch these again.

  92. I make personalized (hot foiled) cocktail napkins here in Bermuda. I make them in my home. I charge $30 (for a packet of 25) direct to the consumer with free on island delivery. If a local store wants to stock them, creating their own personalization, what should I charge them, knowing they would order in bulk. TIA

    1. You should charge them at least double what it costs you to make them and they will sell them for double what you charge them.

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