The short version
- • Start from your true cost per unit — materials, freight-in, packaging, labor, overhead and rejects.
- • Price = cost ÷ (1 − margin). A 50% margin doubles your cost; a 60% margin is cost × 2.5.
- • If you sell wholesale, your wholesale price must still clear your cost — and retail is usually about double wholesale.
Step 1: know your true cost per unit
Everything below depends on this number. Add materials, the freight you paid to get them, sellable packaging, labor at a real wage and a share of overhead, then divide by the units you can actually sell. Our cost per unit guide walks through it, and the free calculator does the math.
Step 2: margin vs. markup
These two get mixed up constantly, and the mix-up costs money.
| Formula | Example at $4.00 cost | |
|---|---|---|
| Markup | Price = cost × (1 + markup) | 50% markup → $6.00 (a 33% margin) |
| Margin | Price = cost ÷ (1 − margin) | 50% margin → $8.00 |
Margin is the share of the price you keep after product cost. When someone says “aim for a 50% margin,” they mean the price is double the cost — not cost plus half.
Step 3: price for your channel
- Direct to customer (your website, markets, your shop): you keep the retail price, minus payment and platform fees.
- Wholesale (shops that resell your product): a common convention is that retail is about double wholesale, so the shop keeps about half. Your wholesale price has to clear your cost per unit with room to spare.
- Consignment: the shop pays you only when it sells, and keeps a share. Price as you would for wholesale.
- Marketplaces: listing, transaction and payment fees come out of every sale. Check your marketplace’s current fee page and subtract the fees before you decide the margin is enough.
A worked example
Using the candle batch from our cost per unit guide — a true cost of $4.23 per candle:
| Price point | How it’s set | Price | Margin on cost |
|---|---|---|---|
| Wholesale | Cost ÷ (1 − 0.40) | $7.05 | 40% |
| Retail (about 2× wholesale) | $7.05 × 2 | $14.10 | 70% |
| Direct, 60% margin | Cost ÷ (1 − 0.60) | $10.58 | 60% |
Now sanity-check: do similar candles in your market sell at around $14? If shoppers won’t pay it, the fix is usually on the cost side — better yield, cheaper freight, a smaller jar — not a lower margin.
Mistakes that quietly lose money
- Pricing from materials only, with no labor, freight or packaging.
- Dividing by units made instead of units you can sell.
- Using markup when you meant margin.
- Setting a wholesale price that doesn’t clear your cost.
- Forgetting marketplace and payment fees.
- Never re-checking after material prices change.
How GodKey MFG helps
GodKey MFG works out cost per unit for every batch from what you actually paid — freight included, rejects spread over the good units — so your pricing starts from a number you can trust, and your profit and loss shows real margins by product as you sell.
Questions
What is a good profit margin for handmade products?
It depends on your channel. Selling direct can work at a lower margin than wholesale, where a retailer keeps about half of the retail price. CandleScience suggests roughly 25–50% as a workable range for candles (see our cost per unit guide).
What is the difference between markup and margin?
Markup is added on top of cost: price = cost × (1 + markup). Margin is the share of the price you keep: price = cost ÷ (1 − margin). A 50% markup on $4 is $6; a 50% margin on $4 is $8.
How do I set a wholesale price?
Start from your true cost per unit and set a wholesale price that clears it with room for profit. A common convention is that retail is about double wholesale, so check that your retail price would still be one your market pays.
Should I include my time in the price?
Yes. Your time is a real cost of making the product. If you leave it out, your “profit” is really an unpaid wage.
Sources
The prices in the examples are illustrative — run the numbers on your own costs and market.