How to Price Handmade and Home-Made Products: A Simple Formula That Protects Your Profit
Most home business owners price by looking at competitors, then discover months later that they're working for almost nothing. Here's how to calculate your real price.
The hardest question for a home business isn't "what should I sell?" but "how much should I charge?". A low price brings lots of orders and eats your time without profit. A high price with no clear reason pushes customers away.
The answer isn't copying a competitor's price. It's knowing your real cost first, then choosing your price with your eyes open.
Why do so many handmade sellers lose money?
Because they only count materials. Crochet = the price of the yarn; cake = flour, sugar and eggs. They forget costs that come out of their pocket every week:
- Time. Two hours on one piece has value, even when you work from home.
- Packaging. The box, ribbon, card and bag.
- Waste. The piece that went wrong, the dough that didn't rise.
- Fixed costs. Gas, electricity, internet and tools you replace from time to time.
- Ads. If you pay for Instagram or Facebook ads, part of that cost belongs to every order.
The pricing formula, step by step
1. Material cost per piece
Divide the price of the pack by the number of pieces it makes. One kilo of yarn makes 4 bags? Then each bag carries a quarter of the kilo's price.
2. The value of your time
Set an amount for one hour of your work, then multiply it by the hours each piece takes, including preparation, packing and photos.
3. Packaging and waste
Add the packaging cost, plus a small allowance for waste (for example 5% to 10% of materials), depending on your product.
4. The piece's share of fixed costs
Add up your monthly fixed costs and divide them by roughly how many pieces you sell a month.
5. Profit margin
Once you know the full cost, add your profit margin. This is the money that grows the business. It's not your wage for your time, because you already counted that in step 2.
| Item | How to calculate it |
|---|---|
| Materials | Pack price ÷ number of pieces |
| Time | Hourly rate × hours |
| Packaging and waste | Packaging cost + waste allowance |
| Fixed costs | Monthly costs ÷ pieces per month |
| Full cost | The sum of the above |
| Selling price | Full cost + profit margin |
Delivery: included in the price or separate?
It's clearest for customers when the product price stays fixed and delivery is charged separately based on their area. That way you don't lose money on far-away orders, and nearby customers aren't overcharged. The details are in the guide to delivery zones and fees.
Show the price in the unit customers buy
Home food sells by the kilo, the box or the tray; accessories by the piece. Write the unit clearly next to the price, so nobody has to ask "is the 150 per kilo or per box?".
On Tajrova you choose each product's unit from a fixed list: kilo, litre, piece, box, cup, tray of 30 or bag. Customers see the price and the unit together on the product page.
When should you raise your price?
- When materials go up. Review your numbers at least every two months, because material prices move.
- When orders exceed your capacity. If you turn down orders every week, your price is probably below its value.
- When quality or packaging improves. More value deserves a higher price, so explain it in your description and photos.
When you raise prices, announce it a few days ahead and honour the old price for confirmed orders.
Common pricing mistakes
- Pricing only by looking at competitors. A competitor may be losing money without knowing it.
- Permanent discounts. Constant discounts make the original price look fake.
- "Price in DM". It means more messages, and customers feel the price changes from person to person.
- Forgetting ad costs. If you pay for ads, work out how many orders each amount you spend brings in.
If you're choosing between Google and Meta ads for your business, read this comparison of Google Ads and Meta Ads from OBELIX Agency.
Frequently asked questions
What profit margin is right for a handmade product?
There's no single number for everyone. What matters is that the margin comes after your full cost and your time, and that the final price works for your audience. Try it and review the result after a month.
Should I use one price for all sizes?
Not if the cost is different. List each size as its own product with its price, or state the difference clearly in the description.
Should I show the price in ads and posts?
In most cases, yes. A clear price brings customers who are ready to buy and cuts down on questions that never turn into orders.
