Selling handicrafts without loss: learning how to calculate costs and profit.

One of the biggest challenges in small craft businesses is the lack of clarity regarding the true profit margin of each piece. It's common to not accurately account for costs, forgetting about labor, waste, and other expenses that make all the difference in the final result.

When determining the value of a part, we have to take into consideration:

- materials (including water, gas and electricity if we use them)

- labor

- packaging

- commissions from sales platforms (e.g., commissions from platforms like Etsy, ATM and MB WAY commissions, etc.)

- waste (not all pieces turn out well and those also have to be accounted for)

- tools and their wear and tear

- cost of the workspace (studio or shop rent)

- Accounting (if you pay an accountant, you must include that amount in your expenses)

- Marketing (how much time and money is spent on advertising, creating content for social media, creating and updating the online store, etc.).

Labor is not considered profit. Profit is what remains after paying all costs, including your labor.

If you don't account for labor as a cost, you run the risk of "thinking" you're making a profit when, in practice, you're just underpaying yourself... or not even that.

🚨 How to calculate labor costs (very important!)

• Set an hourly rate for yourself.
  (e.g., €10, €15, €25 — choose something realistic for your level and market)
• Calculate how long it takes to make a piece.
• Ex.:
  • 30 minutes per piece
  • $10/hour → $5 labor per piece

👉 This is included as a cost , just like the materials.

Set the selling price.

Example:

• Total cost of the item: $12
• Selling price: €25

Calculate the profit per piece.

Profit = Selling price – Total costs (including labor)

R$25 - R$12 = R$13 profit

👉 That R$13 is the business's profit , not your salary.

Your labor is your "salary." Profit is what's left over to reinvest, save, grow, or take as extra income.

Good profit margins for a small craft business.

🟢 Minimum acceptable level (survival zone)

20–30%

• It's possible to avoid losing money.
• There's almost nothing left for unforeseen events.
• Dangerous in the long term.
  👉 Only acceptable for very easy-to-make items or to clear out stock.

🟡 Healthy / Recommended

40–60%
✅ Very common in craft businesses
✅ Allows you to pay for your work + grow
✅ It allows for promotions and errors.

🔵 Premium / ideal

60–70% (or more)

• Original pieces, unique design.
• Slow and manual production
• Well-positioned brand
• An audience that values ​​"handmade"

👉 Free spreadsheet

To manage the cost of the items and profit margin, I created an Excel spreadsheet that helps me keep track of my costs, the price I should set for each item, and my profit margin.

You can download it here and adapt it to your needs.