How to include labour in handmade product pricing
Materials tell you what you spent. Labour helps show whether the work is worthwhile. Include both when you judge a handmade product.
Open the Handmade Pricing Calculator →Time the whole making process
Count the work needed to produce a saleable item: preparing materials, making it, personalising it, checking it and finishing it. Time a normal batch rather than the fastest item you have ever made. If the batch produces rejects, spread the time over the items you can actually sell.
Separate making from order handling if that helps your records. A personalised product may need extra messaging or proof approval on each order. A ready-made product may share most of its preparation across a batch. The aim is to capture the work without entering the same minutes twice.
Turn minutes into a clear cost allowance
Divide minutes by 60 and multiply by the hourly rate you have chosen. Twenty minutes at £15 an hour is £5 of labour. Add that allowance to materials and other direct costs before choosing a price. Your own time can be included even when you are not paying an hourly wage through payroll.
Keep the chosen rate visible. It is a pricing assumption, not a calculation of employment taxes, statutory pay or the amount you will take home. If those matters affect your business, include suitable allowances and get advice for your circumstances.
| Illustrative making time | At £15/hour |
|---|---|
| 10 minutes | £2.50 |
| 20 minutes | £5.00 |
| 40 minutes | £10.00 |
Use the cost to review the product, not just the price
If the price needed is higher than buyers are likely to pay, examine where the time goes. A simpler variation, prepared packaging or a better batch process may reduce active minutes without lowering the standard of the finished product. Record the revised process and time it again before changing your cost library.
You may also find that one popular product uses too much of your available making time. Compare contribution with the hours it occupies, especially before a busy period. A high order count can hide a product that leaves little room for the rest of your work.
A worked example
Twenty minutes at £15 per hour costs £5 in labour. Add £4 materials and your production cost is £9 before packaging, postage and fees.
Before you use the result
- Time preparation, making, checking and finishing.
- Divide batch work by saleable output.
- Write down the hourly rate used.
- Include extra personalisation work where it occurs.
- Review time allowances after a process change.
Common questions
Should I include my time if I enjoy making the item?
For a business pricing decision, including an allowance helps you see whether the product supports the time it takes. You can still choose the price, but the cost makes that choice clearer.
Do I charge separately for design time?
You can spread design work over a realistic batch or expected number of sales, or include a setup charge for a bespoke order. Keep that allocation separate from recurring making time and explain any customer-facing charge clearly.
Put the numbers into practice
Handmade Pricing Calculator →How to include wastage in cost per saleable unit →How to price and plan a busy selling season →How to set a wholesale minimum order quantity →A practical calculation guide, not professional accounting, legal or tax advice. Examples are illustrative unless identified as official. Calculation methodology and limitations.