Product Cost Calculator
Add up what one handmade item actually costs to make, with the waste share and the overhead included.
Before a price can be set, the cost has to be right, and cost is where most handmade businesses are quietly wrong. This calculator adds the materials, the packaging, the labour and a share of the overhead into one figure and then divides it across the batch you are making. It shows the cost per unit and what each cost line is as a share of the whole, which is usually the point at which a maker discovers that labour is two thirds of the price.
At a glance
- What you enter
- Materials for one unit, Packaging for one unit, Waste allowance, Hours for the whole batch, Rate you want to be paid, Units in the batch, Overhead, One off setup cost for the batch, Other direct cost per unit
- What you get
- Cost per unit, Cost for the whole batch, Material for the whole batch, Labour for the whole batch, Material as a share of the cost, Labour as a share of the cost, Overhead as a share of the cost, Setup as a share of the cost, Hours per unit, Price at twice the cost, Price at three times material cost, Labour cost per unit at 15 an hour
- Formula shown
- Yes, every step, right below your results.
- Cost and privacy
- Free, no account needed, and nothing you type is stored.
See worked examples ↓ Read the FAQ ↓ Share this calculator ↓
Results are estimates for general information only, always verify with a professional or official source before acting on them.
How to use the Product Cost Calculator
- 1 Enter Materials for one unit, Everything that leaves with the item: the main material, thread, hardware, lining, finish and label.
- 2 Enter Packaging for one unit, Box, tissue, bag and the printed label. It varies with the number sold, so it is a material cost.
- 3 Enter Waste allowance (%), The share of the material that is spoiled, misprinted or left on the bench. Use the figure you actually see over a batch.
- 4 Enter Hours for the whole batch (h), Every hour: sourcing, marking, cutting, assembly, finishing, checking and packing.
- 5 Enter Rate you want to be paid
- 6 Enter Units in the batch, The batch size the hours and the setup apply to.
- 7 Enter Overhead (%), A share of the material and labour cost for the workshop, tools, electricity, insurance, the website and the unbilled time on listings and messages.
- 8 Enter One off setup cost for the batch, A new die, a print plate, a sample, a prototype. Anything spent once for this batch and not per unit.
- 9 Enter Other direct cost per unit, Anything else that varies with the unit and is not covered above, such as a gift note or a custom insert.
- 10 Press Calculate. You get Cost per unit, Cost for the whole batch, Material for the whole batch, Labour for the whole batch, Material as a share of the cost, Labour as a share of the cost, Overhead as a share of the cost, Setup as a share of the cost, Hours per unit, Price at twice the cost, Price at three times material cost, Labour cost per unit at 15 an hour, and every intermediate step stays visible under "How is this calculated?"
- 11 Change one number at a time to see what moves the result, that is usually the most useful thing a calculator can tell you.
Worked examples
Real numbers run through this calculator. Open any example to load it into the form above and change it.
A batch of four leather wallets
Twelve dollars of material and eight hours of work across four wallets.
You enter
- Materials for one unit
- $12.00
- Packaging for one unit
- $1.80
- Waste allowance
- 15%
- Hours for the whole batch
- 8 h
- Rate you want to be paid
- $25.00
- Units in the batch
- 4
- Overhead
- 12%
- One off setup cost for the batch
- $0.00
- Other direct cost per unit
- $0.00
You get
- Cost per unit
- $73.47
- Cost for the whole batch
- $293.89
- Material for the whole batch
- $62.40
- Labour for the whole batch
- $200.00
- Material as a share of the cost
- 21.2%
- Labour as a share of the cost
- 68.1%
- Overhead as a share of the cost
- 10.7%
- Setup as a share of the cost
- 0.0%
- Hours per unit
- 2.00 h
- Price at twice the cost
- $146.94
- Price at three times material cost
- $46.80
- Labour cost per unit at 15 an hour
- $30.00
A cost per unit of about 77.39, and labour at 50 of it, which is nearly two thirds of the whole.
A batch of twenty candles
A larger batch where the setup and the packing spread further.
You enter
- Materials for one unit
- $4.20
- Packaging for one unit
- $1.10
- Waste allowance
- 8%
- Hours for the whole batch
- 10 h
- Rate you want to be paid
- $18.00
- Units in the batch
- 20
- Overhead
- 12%
- One off setup cost for the batch
- $25.00
- Other direct cost per unit
- $0.00
You get
- Cost per unit
- $17.64
- Cost for the whole batch
- $352.85
- Material for the whole batch
- $112.72
- Labour for the whole batch
- $180.00
- Material as a share of the cost
- 31.9%
- Labour as a share of the cost
- 51.0%
- Overhead as a share of the cost
- 10.0%
- Setup as a share of the cost
- 7.1%
- Hours per unit
- 0.50 h
- Price at twice the cost
- $35.28
- Price at three times material cost
- $16.91
- Labour cost per unit at 15 an hour
- $7.50
A cost per unit of about 18.29 including the 25 dollar mould setup, with labour now only about half of it.
A single commissioned piece
A batch of one, where the setup cannot be spread at all.
You enter
- Materials for one unit
- $45.00
- Packaging for one unit
- $4.00
- Waste allowance
- 20%
- Hours for the whole batch
- 14 h
- Rate you want to be paid
- $30.00
- Units in the batch
- 1
- Overhead
- 15%
- One off setup cost for the batch
- $60.00
- Other direct cost per unit
- $3.00
You get
- Cost per unit
- $613.84
- Cost for the whole batch
- $613.84
- Material for the whole batch
- $61.60
- Labour for the whole batch
- $420.00
- Material as a share of the cost
- 10.0%
- Labour as a share of the cost
- 68.4%
- Overhead as a share of the cost
- 11.8%
- Setup as a share of the cost
- 9.8%
- Hours per unit
- 14.00 h
- Price at twice the cost
- $1,227.68
- Price at three times material cost
- $184.80
- Labour cost per unit at 15 an hour
- $210.00
A cost per unit of about 633.60, which is what a one off really costs. Quoting it is the only way the time gets paid.
Guides that go with it
How to Calculate the True Cost of a Handmade Product
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How to Calculate Material Costs for Handmade Products
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Standard Paper Sizes for Crafts and Handmade Projects
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Frequently asked questions
Should packaging be in the product cost or in the overhead?
In the product cost, because it varies directly with the number of units sold. A box, tissue, a bag and a printed label are all consumed by the item that ships. Overhead is for the costs that do not change with volume, such as the website or a share of the rent. Putting packaging in overhead hides a real per unit cost and makes a small item look more profitable than it is.
How do I work out my overhead percentage?
Add up a year of workshop costs: a share of the rent or the mortgage, electricity, insurance, tools and their replacement, software, the website, and the overhead side of your payment processing. Divide that by your annual revenue to get a percentage, and use it here. Ten to fifteen percent is typical for a small home workshop. If you have never worked it out, use twelve percent as a planning figure and refine it once you have a year of accounts.
Should I include my own time in the product cost?
Yes, at a rate you would be content to earn. A cost that excludes labour is not a cost, it is a materials bill, and pricing from it means the business pays for materials and nothing else. If the resulting price is higher than the market will bear, the honest answers are to make the item faster, to make a simpler item, or to accept a lower rate knowingly. What is not honest is pretending the time is free.
Why does the cost per unit change with the batch size?
Because the labour and the one off setup are divided across the batch. A batch of four takes less total time per unit than four separate batches of one, because the setup, the sourcing and the tool changeover happen once. The material cost per unit does not change with batch size unless you buy materials more cheaply in bulk. This is why a maker who only ever makes one at a time has a higher cost per unit than the same maker working in batches.
What waste percentage should I use?
The one you actually observe. Ten percent is realistic for a simple project in a material that cuts cleanly. Twenty percent is more honest once printing, dyeing or a complex cutting layout is involved. Thirty percent is not unusual for a first run of a new design. Keep a note for a few batches of what you buy and what you actually ship, and the real figure will emerge quickly. Guessing low is the common error and it always flatters the price.
Terms used here
Short, plain-language definitions of the words this calculator uses.
Cost of goods sold
Everything that goes into producing an item for sale: materials used, packaging, and the labour to make it, plus any fees directly tied to the sale.It deliberately excludes...
Overhead
The costs of running a business that do not belong to any one product: studio rent, utilities, insurance, software subscriptions, tools, marketing and your own time on...