How to Price What You Make Without Underselling Yourself
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To price what you make without underselling yourself, work out your cost per machine hour, add a margin, then build every price from that rate plus materials, packaging and platform fees: a price floor you can defend. Start a little low if you need early sales, never below that floor, then keep testing increases one percent at a time.
Underpricing is one of the most common mistakes we see in small personalised product businesses. It's not usually greed in reverse; it's 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, including the method we use at Cherry Grove Craft, which removes most of the guesswork.
The most common approaches
1. Cost-plus pricing
A 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 just 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 something to build towards than as 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. We've run OMTech CO2 lasers in daily production since January 2023, and it's the method 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 software. LightBurn, for example, is a one-off licence with optional paid update years, so include the renewal only if you buy it. 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 a margin. Getting job times and settings dialled in quickly matters here; if you want help with that, we also run a 2-hour training session on settings and setup.
What makes this method useful 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 main activity; if you're also doing significant design work for each order, you may want to add a design fee on top.
If you're VAT-registered, remember that one-sixth of a VAT-inclusive price at the standard 20% rate goes to HMRC, so build your floor before VAT. Registration is compulsory once your taxable turnover over the last 12 months passes £90,000, or if you expect to pass it in the next 30 days alone (the threshold since 1 April 2024, checked October 2026).
Testing prices upward
Whichever method you use to set your first prices, they shouldn't be permanent. Many small makers underprice early, partly for confidence and partly to build reviews and sales volume. Starting a little low is fine as a starting strategy, but the price should never stop moving. Our guide to starting a laser engraving business in the UK gives the same advice for year one.
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 profit.
Here's a hypothetical example of why. Say your business turns over £30,000 a year and your costs are £21,000, so you keep £9,000: a 30% margin. Raise every price by 10% and sell the same number of items, and turnover becomes £33,000 while costs stay at £21,000. You now keep £12,000. That's a margin of about 36%, not 40%, but your profit has gone up by a third. In other words, a 10% price rise with no drop in sales adds roughly £3,000 a year, and most of it is profit.
Not quite all of it: percentage-based fees take a slice of the extra £3,000. On Etsy the percentage fees (transaction, payment processing and the UK regulatory fee) come to about 11% in October 2026, so about £330, or about £395 if you pay VAT on Etsy's fees; on Shopify Payments (Basic plan, October 2026) the percentage part is 2%, about £60. And if you're VAT-registered and your prices include VAT, one-sixth of the increase (£500) goes to HMRC. Our post on what each sale costs on Etsy and on your own website sets out those fees in full.
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 plastic 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 stay low to win volume. Volume at the wrong margin just means more work for the same (or worse) return. A low launch price is a starting point, not a strategy: you want profitable volume, not any volume.
Need help working this through?
Pricing is one of the areas where an outside view 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 and marketing consultancy covers building a rational pricing structure, testing it methodically and growing margins without losing customers, at £80 an hour plus VAT.
Frequently asked questions
How do I work out a price for laser-engraved products?
Work out your machine's annual running cost (depreciation, consumables, electricity, maintenance, software), divide it by the hours the laser actually fires each year, and add a margin to get a machine rate. Multiply the job's machine time by that rate, then add materials, packaging and platform fees to get your price floor.
Should I start with low prices?
Starting a little low can help you get early sales and reviews, but only if you keep testing the price upward. Staying low for the long term is the mistake.
How much should I raise my prices at a time?
We test increases one percent at a time, product by product. If sales hold, the new price stays; if they fall, you've found the ceiling for that product.
Does a 10% price rise mean 10% more margin?
No. If sales volume holds, a 10% price rise on a £30,000 turnover adds about £3,000, and most of that is profit. In our hypothetical example a 30% margin becomes about 36%, and profit rises by about a third, before percentage-based selling fees and any VAT.
Should I charge for my time separately?
Not usually, if production is your main activity: build your time into the machine rate. If an order needs significant design work, add a separate design fee.