When Should You Raise Your Handmade Product Prices?
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Your blank used to cost $10. Now it costs $12.50. But your selling price is still $35 because you don't want to upset anyone.
Congratulations. Your business is now personally sponsoring every order.
You should review a handmade product price when the numbers used to create it no longer represent the product you're making and selling. The point isn't to raise everything just because you can. It's to know what you're actually charging for.
When should you recalculate a handmade product price?
Check your price when your materials, material usage, hands-on production time, labour rate, packaging, equipment needs, overhead or selling fees change. Even a change to how you make the product can justify running the numbers again.
Do not automatically add your supplier's $2.50 increase to the sticker price and call the job finished. Recalculate the product using its current inputs.
Why a $2.50 increase in materials doesn't always mean a $2.50 price increase
Let's use an illustrative example. Your materials originally cost $10 and now cost $12.50. In my pricing approach, the material markup is applied to materials only. Labour is added separately, not multiplied.
Original marked-up materials: $10 × 2.5 = $25.00
Updated marked-up materials: $12.50 × 2.5 = $31.25
Difference: $6.25
That 2.5 markup is an editable example retail starting point, not some universal rule handed down by the crafting gods. The purpose of markup isn't simply to get your $10 back. It helps create room around handling, replacing and carrying the materials you use.
Recalculate overhead and machine wear, too
In this pricing method, the overhead allowance is calculated as original material cost multiplied by your chosen overhead percentage. The optional machine-wear allowance works the same way.
For illustration, let's use 10% overhead and 10% optional machine wear:
Before: $10 × 10% = $1 overhead and $1 machine wear
After: $12.50 × 10% = $1.25 overhead and $1.25 machine wear
These percentages are editable. Machine wear is a planning allowance, not a magical claim that you damaged exactly $1.25 of equipment making one item.
A complete handmade price increase example
Assume the product takes $8 in labour, with the same production process before and after the material increase. Here is the working result before selling fees:
| Price component | Original | Updated |
|---|---|---|
| Materials | $10.00 | $12.50 |
| Marked-up materials (2.5×) | $25.00 | $31.25 |
| Labour | $8.00 | $8.00 |
| Overhead (10%) | $1.00 | $1.25 |
| Optional machine wear (10%) | $1.00 | $1.25 |
| Working price | $35.00 | $41.75 |
$41.75 is the updated working result, not a mandatory selling price. Your actual asking price is still a business decision, informed by your numbers, market and goals.
What if you keep selling it for $35?
Look at the amount remaining after the listed costs and allowances. At the old cost, $35 − $10 materials − $8 labour − $1 overhead − $1 machine wear = $15 remaining before fees.
At the new cost, $35 − $12.50 materials − $8 labour − $1.25 overhead − $1.25 machine wear = $12 remaining before fees.
That's a 20% reduction in the amount remaining. Your customer paid the same price. Your business quietly accepted less. Maybe that's an intentional decision. But you should know you're making it.
Labour changes can also change the number
Maybe you added personalization, a new finishing step or more packaging. Or maybe you're finally tracking setup and cleanup time accurately.
Twenty minutes of hands-on work at $25 an hour costs $8.33 in labour. Thirty minutes at the same rate costs $12.50. That's another $4.17 to account for, separately from material markup.
The reverse can happen, too. If you improve your batch process and actually reduce your time per piece, the working result might go down. Repricing is about accurate numbers, not automatically higher prices.
Don't forget platform and payment fees
Fees vary by where and how you sell. Review the actual fee structure rather than carrying an old amount over because it was already sitting in your spreadsheet. If a fee is percentage-based, changing the selling price changes the fee too.
What about what everyone else is charging?
Competitor prices are market information, not a pricing formula. Compare similar materials, size, quality, customization and selling channels. A competitor charging $30 doesn't rewrite your supplier invoice or your time. It only tells you what they're asking, not whether they're profitable.
Do you have to defend the new price?
No. You can change a price without submitting a ten-page emotional explanation of why your business deserves to exist. Customers can choose whether the product works for them. You get to decide whether the price works for your business.
You are not Walmart. You don't get a medal for keeping a price unchanged while everything underneath it gets more expensive.
Use current costs, not three-year-old guesses
For the method behind the numbers, read the Handmade Pricing Guide or why markup alone doesn't work for handmade pricing.
If you'd rather have the math handled for you, the Ultimate Handmade Pricing Calculator lets you update your inputs and see the pricing results. Your price doesn't become correct just because it's survived unchanged for three years. Sometimes it's just old.