Pricing
How to price handmade products without eating the fees
Most makers price by adding a markup to their material cost and hoping. The number that matters is not the price — it is what survives the fee stack, the shipping and the box.
1. Start from the money you keep
“Cost plus 3×” is a rule of thumb from a world without platform fees. On Etsy, a $12.00 item sold at $45.00 with $6.00 shipping leaves you $28.51 — a 56% margin. That sounds healthy until you notice the 10.4% that never reached you, and the $5.20 of postage you paid.
The habit to build is simple: every time you set a price, calculate the payout. Not the margin on the item, the payout after everything.
2. The fee base is bigger than your price
Etsy charges its 6.5% transaction fee on the item price plus the shipping you collect. Charge $6.00 for shipping and you pay commission on $51.00, not $45.00. Then you pay the actual $5.20 to the carrier.
This is why “free shipping, price it in” is usually the better structure: you pay the same percentage either way, but you stop paying postage out of a separate line that the fee has already taxed.
3. The same $10.00 price increase is not worth $10.00
Here is the Etsy ladder with a $12.00 item, $6.00 shipping charged and $5.20 postage — same product, only the price moves:
| Price | Fees | You keep | Margin |
|---|---|---|---|
| $25.00 | −$3.40 | $10.41 | 33.6% |
| $35.00 | −$4.35 | $19.46 | 47.5% |
| $45.00 | −$5.30 | $28.51 | 55.9% |
| $55.00 | −$6.25 | $37.56 | 61.6% |
| $65.00 | −$7.20 | $46.61 | 65.6% |
Notice the effective fee rate falls as the price rises — from 11.0% at $25.00 to 10.1% at $65.00. Fixed fees are a bigger share of a small order. If your products are cheap, the fee stack is structurally against you and bundling is the fix, not a price tweak.
4. Work backwards from the target
Decide the profit you need per unit — few makers ever write this number down — then solve for the price. With Etsy's US schedule and the same $12.00 item, keeping $20 requires a $35.60 price, not the $28.00 that “cost × 2.3” would suggest. Our reverse pricing calculator does this for any platform.
5. Three things that quietly break a price
- Discounted sales. A 20% off coupon cuts revenue by 20% but not the fee percentage and not the fixed fee — the margin falls much faster than 20%.
- Returns. You usually lose the original processing fee and sometimes the return shipping. Budget 2–3% of revenue for it if you sell clothing.
- Packaging. It is a real cost per unit and almost never appears in a maker's price. Add it to item cost.
The short version
- Write down your target profit per unit.
- Add material cost, packaging, and the real postage — not the postage you charge.
- Divide by (1 − fee rate) and add the fixed fees back in.
- Compare the result with the market. If the market will not pay it, the product is wrong, not the maths.
Put it into practice
The other guides: What counts as revenue for platform fees · Reverse pricing: from target profit to price