The maker looks at the piece, thinks about what the last one sold for, glances at what someone in a neighbouring trade is charging, and lands on a number that feels askable. Sometimes it is close. Often it covers the materials and about half the hours.
A built price has four parts:
Price = (materials + labour + overhead) ÷ (1 − margin)
Materials are what went into the piece, including what you wasted. Labour is your hours at a rate you can live on. Overhead is your share of rent, insurance, tooling and the hours you spend not making. Margin is what is left for the business itself — the cushion that buys the next bandsaw and absorbs the commission that goes sideways.
We build Vidual, which runs workshops where the work is made to order — a steel frame, a hand-set ring, a bespoke suit, a guitar under construction — so we spend a lot of time looking at what a commission actually cost against what it was quoted at. The gap is almost never in the materials. It is in the hours nobody wrote down, and in overhead that was never allocated to anything.
Step one: cost the materials properly, offcuts and all
Start with a real components list rather than a guess: every piece of stock, every fastener, every consumable, listed with how many, what each cost and who supplied it. A cabinetmaker pricing a walnut side table needs the board footage they bought, not the board footage that survived into the finished table — you paid for the sapwood you cut away. A luthier costing an Adirondack top and East Indian rosewood back and sides prices the set they selected from, not the set that survived. A framebuilder pays for the full tube, not the mitred length.
Then add the things that hide in the invoice rather than the piece:
Inbound carriage and customs on stock you had shipped in. Minimum order quantities — if the smallest bag of a fitting is fifty and you need four, the build carries more than four. Consumables per piece: abrasives, glue, finish, solder, thread, blades, wheels, tape. Packaging and outbound shipping, if you are not billing it separately. And payment processing on the way in.
Many makers add 10–15% on top of material cost to cover sourcing, holding and the pieces that get rejected. That is not a fiddle; it is payment for the buying, which is real work.
Step two: turn your hours into a shop rate
An hourly rate is not what you would like to earn per hour. It is what you must charge per billable hour so that your yearly earnings and your yearly costs are both covered by the small number of hours you actually spend making.
Count your productive hours honestly. Say you are at the bench forty weeks a year, forty hours a week — 1,600 hours. Then subtract quoting, ordering, client email, photography, bookkeeping, deliveries and the Monday morning spent across eight supplier portals. For most one-person workshops the making hours land somewhere between 900 and 1,200. Use your own figure, and use the low end if you are unsure.
Decide what you need to earn. Not a fantasy figure — the salary you would have to be paid to do this job for someone else, plus tax and pension. Say £32,000. Across 1,000 productive hours, that is £32 an hour before the workshop has cost you anything.
Add your overhead per hour. Total everything the shop costs whether or not you sell a thing: rent, power, insurance, software, accountant, tool replacement, website, trade shows. Say £10,000 a year. Over the same 1,000 hours, £10 an hour.
Together: a shop rate of £42 an hour. Every hour you spend on a commission is charged at that rate, and the overhead is recovered automatically because it is baked in.
Work out your own price
Your shop rate and a finished price, from the three steps above. Nothing is sent anywhere — it all runs in your browser.
Figures are ex-VAT. A working aid, not tax advice. If you also sell wholesale, cost to the wholesale price first — see the question below.
Step three: apply margin, then sanity-check the market
Take the walnut side table. Materials, consumables, packaging and a sourcing uplift come to £180. It takes twenty-six hours across design, machining, joinery, fitting and finishing — 26 × £42 = £1,092. Direct cost, £1,272.
Now the margin. At 25%, the price is £1,272 ÷ 0.75 = £1,696, so you would list it at £1,700. If you had priced that table on feel at £1,200 — which sounds like a lot of money for a side table — you would have paid yourself roughly £39 for a week’s work.
Only once you have that number do you look outward. The market check is not “what do others charge?” but “at the price my costs demand, can I convince the right buyer?” If the answer is genuinely no, the fix is the making — faster jigs, a repeatable version, fewer bespoke variables — not a rate you cannot live on.
Where the price and the record meet
The formula is only as good as its inputs, and the inputs come from finished work. This is where handmade pricing usually breaks down: the hours were remembered rather than recorded, so next quarter’s price rests on the same guess as last quarter’s.
Vidual is built around that record. Every commission carries a worksheet where each line holds a description, how many, what it cost per unit, the supplier and any notes, and it totals as you go — so you watch cost run up against what you quoted while the piece is still in front of you, rather than months later. The components list, calendar and payment ledger work as one view of a build: what it needs, when it is due, what has been paid.
On the Intelligence page you can see average step duration across completed builds, which is the number your labour estimate actually wants — not how long you think finishing takes, but how long it has taken, and across how many finished pieces.
What that changes, practically: when the next enquiry of a familiar kind arrives, you open the last one, read what it really consumed in stock and in days, and quote from evidence in a few minutes. The nervous pause before you send a number — the one where you wonder whether you have just underwritten someone else’s furniture — stops happening, because the figure came from your own completed work. And when a work order goes out, the invoice is raised in QuickBooks Online or Xero, so your books carry the price you built.
Common questions
What costs do makers typically forget to include?
Their own time, first and foremost — particularly design, quoting, sourcing, client correspondence and delivery, none of which feel like “making” but all of which the commission caused. After that: inbound carriage, minimum order quantities, consumables, waste and offcuts, payment fees, and overhead that never gets allocated to any single job. Sample work and remakes belong in overhead too, spread across everything you sell.
How do you turn hours worked into an hourly rate that is fair?
Divide the pay you need plus your annual shop overhead by the hours you genuinely spend making — not the hours you are in the building. Most one-person workshops find their productive hours are far lower than their working hours, which is exactly why a rate based on “hours worked” underpays. Then track actual hours on real builds, because the estimate and the outcome are rarely the same for the first year.
What is a sane margin for handmade or craft goods?
Once you have paid yourself a proper rate and recovered overhead, 20–30% on top is a working target for direct commissions — enough to fund tooling, absorb a build that goes wrong, and survive a quiet quarter. Below about 15% you have no room for error, and the first difficult commission comes out of your own wages.
How does this differ from pricing manufactured or wholesale goods?
Manufactured pricing leans on volume: unit cost falls as runs get longer, so margin is defended by efficiency. Handmade cost per unit barely moves, so labour is the dominant line and your rate is the whole argument. If you sell wholesale as well as direct, your retail price must leave room for a stockist’s mark-up — typically around half — which means costing to a wholesale price first and only then setting the retail figure, rather than discounting a direct price you have already published.
When should you raise prices as a small maker?
When your waiting list is long enough that you are turning work away, when material or overhead costs have moved, or when your work has genuinely got better and faster than the price it is carrying. A single annual review, applied to new enquiries and honoured for anyone already quoted, is easier to hold than apologetic ad-hoc increases. If your recorded hours show that jobs consistently run over estimate, that is a price problem, not a discipline problem.
This page prices one piece. For the period figure your accounts need — and what counts as a direct cost rather than an overhead — see the cost of goods sold formula, explained for makers.