What's a good profit margin for a handmade business?

After paying yourself a real wage for labor, 25–40% net margin is healthy for most handmade categories. Below 15% leaves no buffer for slow months, supply price hikes, or returns. Above 40% is excellent but rare without a strong brand or a digital component (printables, patterns, classes).

Should I include my own labor as a cost?

Yes — always. If you don't, the calculator will tell you you're 'profitable' when you're really paying yourself nothing per hour. Pick an hourly figure you'd accept from a part-time job ($12–$25 is typical for most makers), multiply by hours actually worked, and put it in the Labor field.

How is profit different from revenue?

Revenue is everything customers paid you. Profit is what's left after every cost — materials, labor, fees, shipping, ads, overhead. A shop with $3,500 in monthly revenue and $3,200 in expenses has only $300 of profit; another with $1,800 in revenue and $1,000 in expenses has $800. Revenue is vanity, profit is reality.

What counts as 'platform fees'?

Anything the marketplace or processor charges you. For Etsy that's the listing fee, 6.5% transaction fee, ~3% + $0.25 payment processing, and any subscription. For Shopify it's the plan plus payment processing. For a craft fair it's the booth fee plus card-reader processing. Use the Etsy Fee Calculator if you want an exact figure for an Etsy month.

Can I use this calculator for a single sale?

Yes. Just enter one sale's revenue and the proportional costs for that sale (materials, packaging, shipping, fees, your labor in hours for that piece). For per-sale pricing decisions before the sale happens, the Handmade Pricing Calculator works backwards from a target margin.

Should refunds be subtracted from revenue?

Yes — enter net revenue (gross sales minus refunds). Otherwise the calculator overstates profit by the refunded amount plus whatever costs you ate on the refunded order (materials, shipping, transaction fees that Etsy keeps).

How often should I run this calculation?

At minimum monthly, so a slow patch shows up while you can still react. Many makers also run it after every craft fair and quarterly across all sales channels — the cross-channel view catches creeping fees and overhead that a single-channel report misses.

Handmade Profit Calculator

Pull together everything your handmade business actually earned and everything it actually cost — materials, your labor, packaging, postage, platform fees, ads, and overhead — to see what's left as real profit. It works for a single sale, a craft fair weekend, a month of Etsy orders, or a whole year of bookkeeping; the math is the same as long as every input covers the same time window.

Last Updated: June 2026

New calculator — handmade business net profit and margin after materials, labor, fees, shipping, ads, and overhead.

Revenue

The total amount your customers paid — for a single sale, a month, or a year. Match every cost below to the same period.

Total sales revenue ($)

Gross sales before fees, refunds, or costs.

Your expenses

Include everything it took to make and deliver the work — and pay yourself.

Materials cost ($)

Fabric, yarn, beads, clay, packaging inserts — anything in the product.

Labor cost ($)

Pay yourself an hourly wage × hours worked. Don't leave this at $0.

Packaging cost ($)

Boxes, mailers, tissue, branded inserts, tape.

Shipping cost ($)

Postage you actually paid (minus any shipping you collected).

Platform fees ($)

Etsy listing + transaction + processing, Shopify fees, market booth fees.

Advertising cost ($)

Etsy Ads, Meta/Instagram ads, Pinterest, paid promo.

Other business expenses ($)

Software, studio rent, equipment, accounting, mileage.

Total revenue

$3,500.00

Gross sales

Total expenses

$2,675.00

All costs combined

Net profit

$825.00

Profitable but tight

Profit margin

23.6%

Profit ÷ revenue

Verdict

Profitable but tight

You're keeping $825.00 (24%). Profitable, but the margin is tight — a single bad month, return, or fee bump can wipe it out. Aim for 25%+.

Expense breakdown

Every dollar of revenue, divided across your costs and what's left as profit.

Materials: $700.00 (20%)
Labor: $900.00 (26%)
Packaging: $120.00 (3%)
Shipping: $220.00 (6%)
Platform fees: $385.00 (11%)
Advertising: $200.00 (6%)
Other overhead: $150.00 (4%)
Net profit (what you keep): $825.00

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All calculations are estimates based on average platform fees. Real profits may vary depending on category, ads, and shipping.

Formula

Total expenses = Materials + Labor + Packaging + Shipping + Platform fees + Advertising + Other overhead · Net profit = Total sales revenue − Total expenses · Profit margin % = (Net profit ÷ Total sales revenue) × 100

Worked example

A month of handmade jewelry sales: $3,500 revenue, $700 materials, $900 labor (60 hours × $15), $120 packaging, $220 net shipping, $385 Etsy + processing fees, $200 Etsy Ads, $150 software & studio overhead.

Total expenses = 700 + 900 + 120 + 220 + 385 + 200 + 150 = $2,675
Net profit = 3,500 − 2,675 = $825
Profit margin = (825 ÷ 3,500) × 100 ≈ 23.6%

Answer: $825 net profit · 23.6% margin — profitable but on the tight side of healthy.

How it works

Most handmade sellers track revenue carefully and then estimate everything else, which is exactly how a 'good month' becomes a break-even month once the numbers are added up. A real profit picture needs three honest things: every category of cost, your own time priced as labor, and a consistent time window so revenue and expenses match.

Materials and shipping are usually easy. The two that hurt are labor and overhead. Labor — the hours you spent making, photographing, listing, packing, and replying — needs a real hourly figure attached, even a modest $12–$20/hr. Leaving labor at $0 is the single biggest reason handmade businesses look profitable on paper but feel exhausting in real life. Overhead — software, studio space, accounting, mileage to source supplies — gets ignored because each line is small, but together it's often 5–10% of revenue.

Once the numbers are real, two outputs matter. Net profit tells you what's left to reinvest or pay yourself with. Profit margin tells you how resilient that profit is: a 30% margin survives a slow month or a fee bump; a 10% margin collapses the first time a supplier raises prices. Healthy handmade businesses generally run 25–40% margin after labor; below 15% you're effectively volunteering for the business.

Common mistakes

Leaving labor at $0 — your time is the largest hidden cost in any handmade business.
Forgetting platform fees on shipping — Etsy charges its transaction fee on the shipping the buyer pays, not just the item price.
Mixing time windows — comparing one month of revenue to a year of overhead (or vice versa) makes the math meaningless.
Excluding refunds and returns from revenue — count net sales, not gross orders.
Treating ad spend as separate from profit — it's a cost; if a campaign doesn't return its spend plus contribution to overhead, it's a loss.
Ignoring small overhead lines — Canva, design software, Etsy Plus, mileage, and supplies easily add up to several hundred dollars a year.

Go deeper with plain-English guides on the same topic.

FAQ

What's a good profit margin for a handmade business?: After paying yourself a real wage for labor, 25–40% net margin is healthy for most handmade categories. Below 15% leaves no buffer for slow months, supply price hikes, or returns. Above 40% is excellent but rare without a strong brand or a digital component (printables, patterns, classes).
Should I include my own labor as a cost?: Yes — always. If you don't, the calculator will tell you you're 'profitable' when you're really paying yourself nothing per hour. Pick an hourly figure you'd accept from a part-time job ($12–$25 is typical for most makers), multiply by hours actually worked, and put it in the Labor field.
How is profit different from revenue?: Revenue is everything customers paid you. Profit is what's left after every cost — materials, labor, fees, shipping, ads, overhead. A shop with $3,500 in monthly revenue and $3,200 in expenses has only $300 of profit; another with $1,800 in revenue and $1,000 in expenses has $800. Revenue is vanity, profit is reality.
What counts as 'platform fees'?: Anything the marketplace or processor charges you. For Etsy that's the listing fee, 6.5% transaction fee, ~3% + $0.25 payment processing, and any subscription. For Shopify it's the plan plus payment processing. For a craft fair it's the booth fee plus card-reader processing. Use the Etsy Fee Calculator if you want an exact figure for an Etsy month.
Can I use this calculator for a single sale?: Yes. Just enter one sale's revenue and the proportional costs for that sale (materials, packaging, shipping, fees, your labor in hours for that piece). For per-sale pricing decisions before the sale happens, the Handmade Pricing Calculator works backwards from a target margin.
Should refunds be subtracted from revenue?: Yes — enter net revenue (gross sales minus refunds). Otherwise the calculator overstates profit by the refunded amount plus whatever costs you ate on the refunded order (materials, shipping, transaction fees that Etsy keeps).
How often should I run this calculation?: At minimum monthly, so a slow patch shows up while you can still react. Many makers also run it after every craft fair and quarterly across all sales channels — the cross-channel view catches creeping fees and overhead that a single-channel report misses.

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