How to Price Your Handmade Products Without Underselling Yourself

Underpricing is the most common mistake in handmade and personalised product businesses. It's not usually about greed in reverse — it's about uncertainty. Without a clear system, prices get set by gut feeling, by what competitors charge, or by what feels like it won't put customers off. None of those is a pricing strategy, and all of them tend to leave money on the table.

This post covers the main approaches to pricing handmade and laser-engraved products, including the method we use at Cherry Grove Craft — which removes most of the guesswork entirely. And if you'd rather just run the numbers straight away, our free pricing calculator does it for you — machine rate and job price in one tool.

The most common approaches

1. Cost-plus pricing

The most widely taught method. Add up your costs — materials, packaging, platform fees, a portion of your overheads — and add a profit margin on top. Simple in principle, but it has a significant flaw: it doesn't account properly for time or machine use, which means many makers who use it are effectively working for nothing once those are factored in.

It's also reactive rather than strategic. You're pricing from the bottom up, which means you're always starting from cost and hoping the market will accept the result.

2. Market-based pricing

Find out what competitors charge for similar items and price in the same range. This feels safe but has a serious problem: you don't know what your competitors' costs are, whether they're profitable, or whether they've underpriced themselves. Copying a bad price is still a bad price.

Market research is useful as a sanity check — to understand what buyers are used to seeing and where resistance starts. It should inform your pricing, not set it.

3. Value-based pricing

Price based on what the item is worth to the buyer, not what it costs you to make. A personalised wedding sign isn't just a piece of engraved oak — it's a keepsake from one of the most significant days of someone's life. A corporate award isn't an acrylic plaque — it's a recognition that sits on someone's desk for years. Value-based pricing asks: what is this worth to this person, in this context?

This approach tends to produce the highest prices and the healthiest margins. It also requires confidence — you have to believe the value is real and be willing to charge for it. Many makers aren't there yet when they start, which is why it works better as an aspiration to build toward than a starting framework.

4. Time-based pricing

Set an hourly rate for your time and charge accordingly. Standard in service businesses, less straightforward in product businesses where time per item varies and customers rarely understand why one piece takes longer than another. It also creates a ceiling: you can only sell as many hours as you have, and the business can't grow beyond what you personally produce.

Time-based pricing makes sense as an input to your calculations — you should know what your time is worth — but it's rarely the right customer-facing model for a product business.

5. Machine time rate — the method we use

This is the approach we built Cherry Grove Craft's pricing on, and after years of commercial production it's the one we'd recommend to anyone running a laser engraving business.

The principle is straightforward: calculate the true cost of owning and running your machine per hour, then derive every price from that rate. Here's how to build it:

Step one: calculate your annual machine cost. Take the purchase price of the machine and divide it by the number of years you expect to use it — that's your annual depreciation. Add the annual cost of consumables (tubes and power supplies, averaged out), electricity, maintenance materials and any software subscriptions. That gives you your total annual machine cost.

Step two: calculate your productive hours. How many hours does the machine actually run in a year? Not the hours you're in the workshop — the hours the laser is firing. Be honest about this. A part-time operation might produce 500 hours a year; a full-time commercial workshop might produce 2,000.

Step three: set your machine rate. Divide annual cost by productive hours. The result is your cost per machine hour. Add a margin — this is your business, not a cost recovery exercise — and you have your machine rate.

Step four: time your jobs. How long does the machine run for each product? A simple coaster might be four minutes. A detailed sign might be twenty. Multiply machine time by your rate, add materials, add packaging and platform fees. That's your price floor — the minimum you need to charge to cover costs and make margin.

What makes this method powerful is that it's objective. Every price has a rational basis you can explain and defend. It scales automatically with job complexity — more machine time, higher price, without any subjective judgement. And it builds in all your real costs, including the consumables and depreciation that cost-plus pricing often misses.

One important note: we don't charge separately for our time in this model. Our time is factored into the machine rate — the hours we're running the machine are the hours it earns. This works because production is the primary activity; if you're also doing significant design work for each order, you may want to add a design fee on top.

Want to run your own numbers right now? Our free pricing calculator walks through both steps — machine rate and job price — with a VAT toggle for registered businesses.

Testing prices upward

Whichever method you use to set your initial prices, they shouldn't be permanent. Most handmade businesses underprice early — partly for confidence reasons, partly to build reviews and sales volume. That's fine as a starting strategy, but the price should never stop moving.

Our approach is to test increases systematically: one percent at a time, product by product. If sales hold at the new price, it holds. If they fall, you know where the ceiling is. Done consistently over months and years, this has a significant effect on margins. A ten percent price increase with no corresponding cost increase is a ten percent improvement in margin — and on a £30,000 turnover business, that's £3,000 a year from nothing more than nerve.

Start this process earlier than feels comfortable. The longer you wait, the harder the jump feels.

What not to do

Don't price by feel. "It feels like it should be about £15" is not a pricing strategy. It's guesswork with a number attached.

Don't price to compete with mass production. A personalised laser-engraved oak sign is not competing with a printed MDF plaque from a factory. If a customer thinks it is, they're not your customer.

Don't leave prices untouched for years. Your costs go up. Your skills improve. Your reputation grows. None of that is reflected in a price you set two years ago and never revisited.

Don't underprice to win volume. Volume at the wrong margin just means more work for the same (or worse) return. You want profitable volume, not any volume.

Need help working this through?

Pricing is one of the areas where an outside perspective makes the most difference — it's hard to be objective about your own work, and the habits that form early tend to stick. If you'd like to work through your pricing model properly, our e-commerce consultancy covers exactly this: building a rational pricing structure, testing it methodically and growing margins without losing customers. Get in touch to start the conversation.

And if you're at the stage of choosing a machine and building a business from scratch, the three-year plan post covers the full picture, including how pricing strategy fits into years one, two and three.