How to Calculate an Hourly Rate for Handmade Crafts
How to set an hourly rate for handmade work: income goal, real working hours, taxes and unpaid time, then see what each rate means for your prices.
In this guide
Your hourly rate is the most important number in your pricing. It decides whether your business pays you or just keeps you busy. Many makers pick a number like $10 an hour without thinking about taxes or unpaid time. This guide shows how to set a real hourly rate and what it means for your prices.
- Hourly rate = yearly income goal ÷ yearly production hours, plus taxes.
- Only 50% to 70% of business time is often production. The rest is unpaid unless your rate covers it.
- Self-employment taxes and income taxes reduce take-home pay. Add room for them.
- Your rate sets the labor in every price. A $10 rate and a $25 rate make very different prices.
Why hourly rate matters so much
Labor is often the biggest part of a handmade price. If your rate is too low, every price is too low.
A good rate pays for production time plus the time spent on messages, photos and shipping.
The steps
1. Set a yearly income goal
What you want to earn before taxes.
2. Count production hours
Weeks worked times production hours per week.
3. Divide goal by hours
That is your base rate.
4. Add taxes
Many self-employed people set aside 25% to 30%. Ask a tax pro.
5. Check against skill and market
Skilled work deserves a higher rate.
Worked example: three products at $20 an hour
$20 an hour, 10% overhead, 30% profit and 10% fees.
| Small item (20 min) | Medium item (45 min) | Large item (2 hr) | |
|---|---|---|---|
| Materials and packaging | $3.00 | $6.00 | $15.00 |
| Labor at $20.00/hr | 0.33 hr = $6.60 | 0.75 hr = $15.00 | 2 hr = $40.00 |
| Overhead (10%) | $0.96 | $2.10 | $5.50 |
| Cost to make | $10.56 | $23.10 | $60.50 |
| Plus 30% profit | $13.73 | $30.03 | $78.65 |
| Cover 10% selling fees (divide by 0.90) | $15.25 | $33.37 | $87.39 |
| Suggested price | $16 | $34 | $88 |
Labor is the biggest part of each price. The table below shows how the medium item changes at other rates.
What each rate means for the same product
| Hourly rate | Labor | Suggested price |
|---|---|---|
| $12 | $9.00 | $24 |
| $15 | $11.25 | $28 |
| $20 | $15.00 | $34 |
| $25 | $18.75 | $40 |
| $30 | $22.50 | $46 |
Same product: $6 materials, 45 minutes, 10% overhead, 30% profit and 10% fees.
Hourly rate from an income goal
| Yearly goal | Production hours per week | Weeks | Base rate |
|---|---|---|---|
| $12,000 | 10 | 48 | $25.00 |
| $24,000 | 20 | 48 | $25.00 |
| $36,000 | 25 | 48 | $30.00 |
| $50,000 | 30 | 48 | $34.72 |
Base rate before taxes. Add room for taxes and unpaid time.
Pricing mistakes to avoid
- Picking a rate by feel. Work backward from your goal.
- Counting all hours as production. Admin time is real but usually not billed.
- Forgetting taxes. Set aside money for taxes.
- Paying yourself less than an employee. If you hired help, you would pay them a fair wage.
Hourly rate checklist
- Yearly income goal.
- Production hours counted.
- Base rate calculated.
- Taxes added.
- Rate used in every price.
Set a rate that pays you
Type your income goal, hours and taxes into the peach cells. The calculator shows the hourly rate you need.
Get the Hourly Rate CalculatorCalculators that help
- Labor cost: Track labor for one or more workers. Use the Labor Cost Calculator – Single & Multiple Workers, Labor per Item & Blended Rate.
- Overhead: Total your business costs. Use the Craft Business Overhead Calculator – Overhead per Hour, per Item, Overhead % & Shop Rate.
- Production capacity: See how many you can make. Use the Production Capacity Calculator – How Many Products Can I Make per Day, Week & Month.
- KPI dashboard: Track your business numbers. Use the Craft Business KPI Dashboard – Monthly Sales, AOV, Conversion, Margin, ROAS, CAC & Profit per Hour vs Goal.
Common questions
What hourly rate should I charge for crafts?
Work back from your income goal and real hours. Many makers use $15 to $30 an hour.
Should I pay myself minimum wage?
Many makers aim higher, especially for skilled work.
How do taxes affect my rate?
Self-employment taxes and income taxes reduce take-home pay. Ask a tax pro.
What if buyers won't pay my rate?
Make the product faster, change materials, or choose higher value products.
Is profit the same as my pay?
No. Pay is for your labor. Profit is extra for the business.
Should I charge more for skilled work?
Yes.
Get every calculator in one download
The Lifetime Spreadsheet Vault includes this calculator and 320+ more for candles, tumblers, vinyl, resin, baking, crochet, laser and more. Pay once, and every future spreadsheet is included.
See the Lifetime VaultRelated guides
Lifetime Spreadsheet Vault
Stop guessing your prices. For every craft you sell.
- 323+ editable pricing spreadsheets in 29 craft categories
- Type your numbers in the peach cells. The math is done.
- Works in Google Sheets, Excel and Numbers
- Pay once. Every future spreadsheet is included.
