Product pricing - how to price your products on Etsy

Product Pricing - How To Price Your Products On Etsy

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How should I price the products I sell in my online Etsy store? Shopify Storefont? Amazon?

Am I priced too high?  Am I priced too low?

All are questions newbie sellers and veteran sellers ask themselves. Constantly!

Let's look at some ways to tell if you're priced appropriately.

So, let's just jump in.

 how to price your products on etsy - Melissa Talbott




One thing to consider when pricing your items is, Are you covering your costs?

If you are covering your material costs but not taking into considerations all your other costs associated with selling your goods, like covering your own wages, transaction fees and processing fees charged by your marketplace or credit card processing company, shipping expenses, ads and more, then you aren't going to be in business for very long. 

The result of not covering all your bases is that you will essentially end up working for free.  Your suppliers, shippers, Etsy or other online selling platform companies all want their money so you are left with whatever is left over, if any.

I know I don't want to work for free and neither should you.



Finding the right price for your items has many facets.  It's simply not a one-size-fits-all solution. Here are a few things to consider when deciding what your product prices should be.

  • Business model
  • Web hosting fees
  • Marketplace fees
  • Shipping expenses
  • Packaging costs
  • Material costs for raw materials
  • Shipping costs to receive your raw materials
  • Hourly wages for any employees
  • Your wage or salary
  • Skill level needed to make the product
  • Time involved to make the product
  • How many of this item you expect to sell in a given period
  • Whether it's a physical item or digital
  • The product life cycle
  • Utility usage - electricity, water, waste management, etc.
  • Internet fee and online storage
  • Software subscriptions like Adobe products or Canva
  • Marketing costs and online marketing software
  • Building, store lease, mortgage, etc. - costs of the facility in which you manufacture your items

These are just some of the things you will need to consider when setting your products' prices.



Well, this is different for every industry. For some items that are higher in labor such as a custom designed wedding ring, you may use a formula like this one or one similar. 

(Design fee x 3) + Cost of production fee = price

In this case, you may be working with a manufacturer or metalsmith to make the actual item, and you're being paid for your time of designing the ring and including a markup (the x 3 part).

This markup is then used to market to other buyers, grow your business, etc.  Your production costs could include things such as custom casting, specialty gemstones, metals, etc. 

Now for more standard products, you may use a formula like this one below.  This pricing strategy is used across many niches.

(Materials + labor + overhead) x 4 = price

There are many other pricing formulas and strategies.  There are also other formulas for physical product pricing vs. digital product pricing.

You'll have to see which formula works best for your business model and product line and compare it to what other sellers of similar items use.


Check out this Product Pricing Calculator Spreadsheet to easily add up your material costs, add profit margin markups and figure out what your product prices should be.






If you are looking to price your items similar to other sellers, but you see your prices are significantly higher, check to see if you are correctly calculating your prices.  Are you accurately figuring time involved, materials, fees, etc.?

Also, look at what pricing formulas are standard for your industry.

By using a similar formula as others in your niche and comparing your prices, you may see that you're paying significantly more for your materials, for example.

In this instance, you may need to explore other suppliers to cut your costs and stay more competitive. You can also explore wholesale material suppliers if you have been purchasing your supplies through your local craft stores.  This usually involves a few more steps or paperwork but can have a large impact on how much you pay for your supplies.

Looking to the industry standards, you can also see what labor rates are typically used. You may have priced your labor costs higher than other makers. To charge more for your labor, you may need to up your design skills to offer expert level designs.



This is a complex topic.  If you are priced significantly lower, you may be missing some costs in your pricing formula.

Or it could be as simple as you are getting better discounts on your material than other makers. But it doesn't mean that your product is any less valuable.

Buyers purchase many items based on the value they see in the item.  They don't know your costs involved in producing that item. 


In my personal opinion, I would say to raise your prices if you are priced lower than your competitors.  There are many issues that arise when sellers price lower and lower and lower in a bid to gain sales from their competition. 

This is what we call the race to the bottom.  It's not like winning a downhill skiing race where you want to get there first. But the exact opposite. You don't win a shiny metal. You actual lose.

You don't want to be caught in the downward spiral.  When a few sellers start undercutting the prices of the majority of sellers, this begins to happen. NO ONE WINS!

This tactic further devalues the products. DON'T DO IT!

Why shouldn't I be priced at the bottom? People like a good deal right!?!

For one, your product is seen as inferior. Not good. People won't purchase because they see the item as of lesser value than others in the niche. 

Did the maker use crappy materials?  Will this fall apart in a month? Are they not paying their employees well, AKA, sweat shops?

Buyers are just as unlikely to buy super cheap items as they are to buy really expensive items compared to their equals.

If you want to price low, you also have to be ready to pump out huge volumes of goods to make sure you are getting enough profit to cover all your costs and still eat at the end of the month.



Buyers are used to small price increase from time to time; it's expected about once a year.

Right now, many sellers are doing incremental increases as their costs are rapidly shifting upward in today's rapidly changing economy.

If you have an existing mailing list, use the time before the price increase to market to your buyers.  This will bring in some extra sales, and your buyers will feel valued that you let them know first before the changes. It will trigger the theory of reciprocity. You're giving me a heads up and bargain, so I'll buy.

They'll also feel like they'll be getting a good deal on the items they purchase right now before the price goes up. So, here is a great place to give a great deal.  NOT by undercutting!



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Increasing your prices could be done for a wide range reasons. Here are just a few.


You want higher margins

    You're tired of feeling burnt out. Working too many hours that are taking you away from other things you want in life.  No happy work-life balance. You may also feel like your time isn't valued or paid for.  This leads to overwhelm and burn out. No one likes to feel like they work for free.

    Check out this article if you are feeling the burn of burn out and find out what to do about it.


    You've added more value to your products

      This can be done by upping the design quality or using better materials.

      Or maybe you're now bundling popular items together. This increases the cost of production and warrants a price increase for a bundle compared to a single item.

      You're also increasing the cart value per customer. This increases the customer lifetime value (CFV).  If the buyer sees more value, they'll be willing to pay more for the item(s). -A little buyer psychology here.-  This is a good thing!! It means you could be getting more profit from a single buyer. WHOOP!  More moolah for you.


      You want to advertise more

        You're looking to expand your current customer base.  More buyers, more dollars for you. 

        Advertising costs money.  Whether paying for Facebook ads for your website or paying for on-site Etsy ads, this is going to impact your bottom line, and you may need to increase your prices to cover the cost of ads.


        Your costs have gone up.

          Well, crap.  This is going to happen though!! 

          Don't be afraid to raise your prices to cover these costs.  It's part of doing business. 

          Let me repeat - IT IS PART OF DOING BUSINESS!

          Your material costs rise, your shipping costs rise, your web host costs rise, your prices need to rise as well, or you will be working for free at some point.

          Etsy Seller Fee Increases
          Read more about Etsy's transaction fee increase April 2022.


          Want an easy way to calculate your Etsy seller fees and make sure they aren't eating too much into your profits? Check out this simple Etsy Seller Fees Calculator.


          Etsy Transaction Fee Increases April 2022



          For sellers who are going to keep their prices the same even though other costs are rising, this is my warning to you. 

          It will need to happen, you will eventually need to raise prices, but you may be able to push this off for a short period of time.  By prolonging this though, you risk your business failing.

          If you want to make more money from your existing products as they are currently priced (aka - more money in the bank without raising prices), you could look at these options.

          • Offering more complex products or bundles
          • Find better wholesalers for materials
          • Negotiate better shipping rates with shipping companies
          • Cut products or product lines that are not selling well and costing you more than you are making from them

          The costs associated with shipping and materials don't typically come back down once they've gone up. 

          We've all seen the large increases in our supplier costs, shipping fees, etc. in the last few years which is passed on to us as sellers for items we purchase to run our business.

          We are then tasked with passing it on to the end buyer. Your business won't be able to sustain taking these additional costs from your profits for long.

          Covid has made this process a daunting task as prices seem to constantly be rising along with inflation. I know from experience that I, too, was resistant initially to raising prices. But this is simply not something we can avoid indefinitely.

          Increasing your prices could be done to add more value like using better materials, increase your margin percentage to allow you to pay yourself a better wage or to cover additional marketing or expandion of your business.


          When all is said and done, you have two choices.  To raise prices or eat them.  What decision will you make?


          Reading this article to decide it Etsy is right for you? Use this link to get 40 FREE listing credits!!


          Earn 40 Free Etsy Listing Credits - Melissa Talbott



          Don’t forget to request to join the FREE Facebook group and drop your email in the Subscribe box for more Etsy shop goodies.




          how to price your products on etsy - product pricing - Melissa Talbott   How to price your products on etsy - Melissa Talbott   product pricing for your business - Melissa Talbott
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