The formula most handmade sellers should start from
Materials + Labor + Overhead = Cost. Cost × 2 (or more) = Wholesale. Wholesale × 2 = Retail. That "2x2" rule is a rough industry default, not a law, but if your retail price isn't at least roughly cost × 2, you likely don't have enough margin to survive fees, returns, and slow months.
- Materials. Every input, including the ones that feel too small to count, thread, packaging, the extra yard you always waste.
- Labor. Pay yourself an hourly rate for real, even if it's just against yourself on paper. Sellers who skip this consistently underprice.
- Overhead. Studio space, tools, software subscriptions, marketplace fees, spread across your expected monthly output.
- Don't price to what competitors charge alone. Use their price as a market signal, not your cost basis, a competitor who's underpricing themselves doesn't make it sustainable for you too.
- Revisit pricing at least twice a year. Material costs and fee structures both drift; a price that worked in January can quietly become a loss by fall.
Use the profit margin calculator and Etsy fee calculator to check your actual take-home before you commit to a price.