Seller Handbook

Advice and inspiration for successfully running your Etsy shop

Seller Handbook

The Art of Pricing: Understanding Your Costs

An Etsy business operations expert weighs in on how to calculate the costs of your business, and how to reflect those in your prices.

By Beth Ferreira Oct 10, 2007
Photo by Reminiscence Papers

Figuring out how to price your items can feel like the most challenging part of selling. Don’t worry — it's normal to feel a little overwhelmed. Fancy business schools devote full semesters to this subject. And the one thing they teach? There is no magic pricing formula. Fortunately, pricing is more art than science, and Etsy is full of great artists.

If you are running your Etsy shop as a business and not just as a hobby, the first thing to do is to cover your costs.

Direct costs include materials used to make the item, packaging, PayPal fees, and Etsy fees.

Indirect costs may include machinery or tools like a loom, or payment for access to a darkroom or a metal shop. These costs should be factored in as well.

Next, consider your time. Think about the time it takes to create the item and list it. On the creation side, don’t forget to count time spent designing the item as well as the time spend physically making it. Include time that might otherwise be considered “down time,” like working on the item while at your table at a craft fair, knitting on the bus on the way to work, or spinning during your favorite television show. In addition, remember it also takes time to take a great photo, to list your item, as well as to carefully pack and ship the item.

Picture by gisarah used by permission

On Etsy, sellers don't fold the cost of shipping into the price of the item; it's a separate but real cost you need to consider. When you list an item on Etsy, you are responsible for calculating accurate shipping amounts. You name the cost of shipping for your customer to pay. In determining the shipping prices, don't forget to think about insurance, tracking, or international shipping costs (for articles on shipping and packaging, click here.

Consider how much you want or need to make for your time. This is how much of a wage you're paying yourself. This is particularly important if are looking to quit your day job. You need to make a profit to make a living. You deserve to be paid for your efforts, your time and your creative talents.

Danielle had this to say from her education at art school and her experience being a fulltime Etsy seller preciouspups:

"Here's one way a professor of mine taught us pricing. Figure out how many pieces you make a day. Figure out what salary you need to be paid/would like to be paid.  Figure out how many pieces you can make in a year and then divide your desired salary by this and see what you come out with.  Most people will find they are selling themselves way short."

Once you know your total costs and total time to make the item you can start to think about price. Many of you sellers have your own calculations, no doubt. Share them below in the comments. We want to hear what you think!

Author

Beth Ferreira

Beth is a former Etsy Admin.

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