How Much Should I Charge? A Simple Pricing Formula for Etsy Sellers

By The myShop Team · 2026-07-02 · 6 min read

The most common mistake new Etsy sellers make is pricing too low. It feels safer, and it even feels generous, but underpricing quietly burns you out and makes the shop impossible to keep running. The fix is not a gut feeling. It is a simple formula that makes sure every single sale actually pays you. Here it is, step by step, with a worked example you can copy.

Key takeaway: Price from the bottom up. Add materials, labor, and overhead, multiply by a profit factor to get your wholesale price, then double that for retail so Etsy's fees and the occasional discount do not come out of your own pocket.

Why underpricing is so risky

When your price only covers materials, every hour you work is unpaid and every fee comes straight out of your pocket. You end up busy and broke at the same time, which is the fastest route to quitting a shop that could have worked. Charging a fair price is not greedy. It is what keeps you making things next year.

Step 1: Start with your true costs

Add up everything that goes into one finished item, including the small things people forget:

Materials: every physical component, plus packaging, thread, glue, labels, and the box it ships in.
Labor: your time, valued at an hourly wage you would actually accept. If an item takes 45 minutes and you value your time at $20 an hour, that is $15 of labor before a single material cost.

Step 2: Add overhead

Your shop has costs that are not tied to any single product: tools, software, marketing, studio supplies, and a slice of your Etsy fees. Rather than track every penny per item, most makers add an overhead allowance of about 10 to 15 percent on top of materials and labor to keep these covered.

Step 3: Apply a profit margin

Profit is not the same as your wage. It is what lets the business grow, ride out a slow month, or buy materials in bulk. Once you have added materials, labor, and overhead, multiply the total by a profit factor to reach your wholesale price. Many makers use somewhere between 1.3 and 2 times, depending on their niche and how premium the work is.

Step 4: Account for Etsy's cut

Etsy takes a listing fee, a 6.5 percent transaction fee, and a payment processing fee of about 3 percent plus 25 cents in the United States, with Offsite Ads fees on top when they apply. If you do not build these in, they come out of your margin. The classic move is to take your wholesale price and double it to reach retail. This keystone markup covers the fees and still leaves room for sales and coupons.

A worked example

Here is the whole formula on one item.

Step	Amount
Materials	$6.00
Labor (45 min at $20/hr)	$15.00
Overhead (about 13%)	$3.00
Total cost	$24.00
Profit factor 1.5x = wholesale	$36.00
Keystone markup 2x = retail	$72.00

If you have been charging $30 for that item, $72 will feel like a leap. But the $30 price was quietly costing you money on every order. The formula is not telling you to be expensive. It is showing you what the work actually costs to make and sell.

Sanity check against the market

Run the formula first, then look at the market second. Check comparable listings to make sure your number is believable for your niche and quality tier. If your formula price lands far above similar items, the answer is usually not to slash it. Look instead at trimming labor time, sourcing materials more cheaply, or moving upmarket with stronger photos and branding so the higher price makes sense.

Charge what you are worth

The shoppers who value handmade work will pay fairly for it, and the right buyers are rarely won on price alone. A sustainable price protects your time, your energy, and your shop's future. Race to the bottom pricing only wins customers who leave the moment someone undercuts you.

Frequently asked questions

How do I price handmade items for Etsy?

Total your materials, your labor at a real hourly rate, and an overhead allowance. Multiply that by a profit factor for your wholesale price, then double it for retail so Etsy's fees and discounts do not eat your margin.

Should I include my labor in the price?

Always. Your time is a real cost, and leaving it out is the quickest way to burn out working for free. Value it at an hourly wage you would accept and build it in from the start.

What profit margin should Etsy sellers aim for?

There is no single right number, but many makers use a profit factor of 1.3 to 2 times at wholesale, then a keystone 2x markup to retail. The goal is a price that survives fees, discounts, and the occasional refund and still pays you.

How much of my Etsy price goes to fees?

For a United States sale through Etsy Payments, plan on roughly 9.5 percent in transaction and processing fees, plus small flat charges, and another 12 to 15 percent if the sale came from Offsite Ads. Doubling wholesale to retail is what keeps those fees from eating your profit.