How to cost materials for handmade products properly

Updated September 14, 2026 · 7 min read · Sources checked on publication

Nobody forgets the expensive material. What sinks a costing is the arithmetic — dividing by the wrong number — and the small consumables that feel too trivial to record. Together those two habits routinely understate what a product costs by a third, which is enough to turn a healthy margin into an imaginary one.

Rule one: divide by what the purchase yields

You bought a $34 box of 500 labels. The cost of a label is not $34, and it is not nothing. It is about seven cents, and the only way to know that is to divide.

This sounds too obvious to state until you notice the two ways people get it wrong. Some write in the purchase price, which makes a single product look absurdly expensive and gets abandoned. Most write in nothing at all, because seven cents feels like rounding — and then do the same for eight other cheap inputs.

Rule two: count the cheap things

Here is a full bill of materials for one candle, including everything.

The wax, the fragrance and the vessel are the ones anyone would remember, and they come to $4.52. The five lines most people skip — wick, two labels, box, and the tissue-and-tape set — add $1.06, which is 19% of the total. Leave them out and you believe this candle costs $4.52 to make. It costs $5.58.

On a $28 candle that missing $1.06 is about 4% of the sale price and nearly a fifth of what you believed the materials cost. It compounds, too: a seller who undercounts by a fifth here prices the next product the same way, and every product in the shop inherits the same optimism.

The things people leave out, in order of how often

• Packaging. The box, mailer, tissue, tape, thank-you card, stickers. It is consumed by the sale exactly like the wax is.
• Waste and failures. If one in twenty pours is unusable, your real material cost per sellable unit is about 5% higher than the recipe says. Build it in rather than discovering it at stocktake.
• Partial units you can’t reuse. The last 30 ml in a bottle that isn’t enough for another batch is a cost, not a leftover.
• Shipping on your supplies. If a $42 sack of wax cost $11 to deliver, your wax costs $53. That one gets missed almost universally.

Rule three: record the material, not the product cost

This is the difference between a costing that survives and one that quietly rots. If you write “materials: $5.58” onto a product, you have stored an answer. When wax goes up 15% next spring, that answer is wrong and nothing tells you.

Record each material once with its unit cost, and build products as recipes that reference them. Then a supplier price change is one edit, and every product containing that material updates at once. It is the single structural decision that determines whether your numbers are still true in a year — and it is why MakerMargin works that way rather than asking for a cost per listing.

What this does not include

Materials are only half of what a product costs you. The other half is your time, and it belongs in the calculation for the same reason the wax does — see what a good margin looks like for why a figure without labor consistently flatters a product that isn’t working.

Once you have both, the pricing follows arithmetic rather than nerve: work the price backwards from the margin you want, and the free calculator will show what Etsy’s fees leave of it.

The bill of materials above is an illustrative example with realistic supply quantities, not a survey of real prices — substitute your own suppliers’ figures. Etsy fee context is from Etsy’s Fees & Payments Policy, read 14 September 2026.