What goes into your true cost per unit
Materials & ingredients
Per unit
Every raw material used, converted to your tracking unit. Build in a wastage allowance: a batch rarely yields 100% usable output.
Packaging
Per unit
Jars, labels, boxes, tissue, mailers. Easy to undercount because it's bought in bulk and feels "free" per item.
Labor
Hourly rate
Hours per batch × your real hourly rate, divided across units. The single most commonly skipped cost. Most makers price materials only.
Overhead
Per batch
Rent, utilities, software, insurance, shared across everything you produce. Allocate a per-batch amount, then divide across units.
Platform & payment fees
% of price
Etsy, Shopify, Faire, payment processor. Build fees into the price up front. Don't subtract them from what's left after the sale.
Pricing tiers, based on true cost
- 1.7–2.0×Competitive: 40–50% margin. Matches market rate; thinner margin, best for high-volume or repeat items.
- 2.2–2.9×Premium: 55–65% margin. Where most handmade sellers should land for one-of-a-kind or small-batch work.
- 2.9–4.0×Luxury: 65–75% margin. Limited runs, custom work, or strong brand positioning.
Signs your true cost is wrong
- ⚠Only materials are counted. Labor and overhead are invisible in the price
- ⚠Your hourly rate is "whatever's left over," not a number you chose on purpose
- ⚠Overhead (rent, software, insurance) has never been allocated to a single product
- ⚠Price was set first, then fees were subtracted from what's left, instead of built in
- ⚠Batch yield assumes zero spoilage, waste, or failed batches
- ⚠The same price is used on Etsy, wholesale, and your own site despite different fee structures
Before you price: quick checklist
- Counted every ingredient and packaging item per unit
- Included labor at a real hourly rate, not "free"
- Allocated overhead across your batch
- Adjusted price to absorb platform fees, not subtract them after
- Picked a pricing tier on purpose, not by accident
Batchforja
