I Undercharged for Three Years Before I Figured Out What Was Wrong

I Undercharged for Three Years Before I Figured Out What Was Wrong

My first jewelry sale was a pair of sterling silver earrings with small turquoise cabochons. I made them in my apartment, listed them on Etsy for $18, and they sold within a week. I was thrilled. Someone wanted something I'd made with my hands. That feeling carried me through months of late nights, sore fingers, and a growing collection of tools that took over my dining table.

Here's what I didn't calculate: the silver wire cost me $4. The turquoise cabs were $3. The ear wires were $1.50. The sandpaper, polishing compound, and other consumables added maybe another $0.50. So my material cost was $9. I sold the earrings for $18, which means I made $9. The earrings took me about two hours to make, once you factor in cutting, filing, soldering, setting, polishing, and photographing. I had essentially paid myself $4.50 an hour for skilled labor.

I didn't realize this at the time. I was just happy someone bought my work. And that mindset — "I'm just happy someone bought my work" — kept me underpricing everything I made for the next three years. By the time I did the actual math, I was exhausted, barely breaking even, and wondering why my "business" felt more like a hobby that occasionally generated income.

Here are the pricing mistakes I made and what I changed. If you're making jewelry and selling it, even casually, some of this might save you years of the same cycle.

Mistake 1: Pricing Based on What Others Charge

My approach to pricing was simple and, as it turned out, completely wrong. I'd search Etsy for similar items, look at the price range, and aim for the lower end. My logic: I was new, so I should be cheaper than established sellers. People would try my work because of the low price, and once I built a reputation, I could raise prices.

There are several problems with this. First, I had no idea what those other sellers' costs were. They might have been buying materials wholesale at 40% less than my retail prices. They might have been using faster techniques. They might have been losing money on every sale too — the "race to the bottom" on Etsy is real, and a lot of sellers are operating at unsustainable margins.

Second, aiming for the low end of the market positions you as a budget option, which is extremely hard to escape from. Once customers associate your brand with "cheap," raising prices feels like a betrayal. I learned this the hard way when I finally increased my prices by 30% and got multiple messages from repeat customers asking why I'd gotten "so expensive." My earrings went from $18 to $23.40. That was "so expensive."

Third, competing on price is a losing strategy for handmade goods. You cannot compete with factory-made jewelry on price. Period. A factory in another country can produce a similar-looking pair of earrings for $2 in materials and labor. You're not in the same market, and pretending you are means you'll never price your work correctly.

Mistake 2: Not Counting My Time

This is the big one, and it's the most common mistake handmade sellers make. When I calculated my "profit" on those first earrings, I subtracted materials from revenue and called the remainder profit. $18 minus $9 in materials equals $9 profit. What I didn't subtract was the two hours of my time.

Time has value. Even if you're making jewelry as a side hustle and don't need it to replace your full-time income, the time you spend making jewelry is time you're not spending on something else. If you could earn $25 an hour at a part-time job, then every hour you spend making jewelry that earns you $4.50 has an opportunity cost of $20.50. You're effectively paying for the privilege of making jewelry.

That's fine if jewelry-making is a hobby and the money is a bonus. But if you're trying to build a business, your time needs to be factored into the price. Every single piece. No exceptions.

How I fixed this: I started tracking the time it took to make each piece, from raw material to finished product, including photography, listing, and packaging. Then I set an hourly rate for myself — $25 per hour to start — and added that to the material cost. So a pair of earrings with $9 in materials and two hours of labor would be priced at $9 + ($25 x 2) = $59, before markup.

That felt absurd when I first calculated it. $59 for a pair of silver earrings with small turquoise? But when I looked at what other skilled artisans were charging for comparable work — not the Etsy bottom-feeders, but the people actually making a living at this — $59 was on the low end. I'd been selling at a third of a reasonable price.

Mistake 3: Forgetting About Overhead Costs

Materials and time are the obvious costs. But there's a whole layer of expenses that don't attach to any single piece but still need to be paid for. Tools wear out and need replacement. The Dremel buffer I bought lasted eight months before the bearings started making a horrible noise. Soldering torches need fuel. My rotary tumbler went through polishing compound weekly. I bought a jeweler's saw and went through blades at an alarming rate while learning to cut metal.

There are also fixed costs: photography equipment (even basic lighting and a backdrop add up), website hosting, Etsy listing fees, transaction fees, packaging materials, shipping supplies, and the electricity to run all those tools. These costs don't show up on a per-piece materials list, but they eat into your margins every month.

My fix: I added a 20% overhead charge on top of materials and labor. This covers tool wear, consumables, fees, and other indirect costs. It's not a precise calculation, but it's better than ignoring these expenses entirely. Some months the overhead is higher than 20%, some months it's lower, but over time it averages out.

Mistake 4: Not Accounting for Failed Pieces

Not every piece of jewelry you make will turn out well. Some will be ruined during fabrication — a stone cracks during setting, a solder joint fails, a piece gets scratched beyond repair during polishing. These failed pieces represent wasted materials and wasted time, and their cost needs to be spread across the pieces that do sell.

Early on, I'd estimate that about 10% of my output was unsellable. I'd melt down the silver and reuse it (mostly), but the stone was lost, and the time was gone. So if it took me ten attempts to make nine sellable pairs of earrings, the cost of those nine pairs needed to absorb the materials and time from the tenth failed attempt.

My fix: I added a 10% "waste factor" to my material costs. If the silver for one pair of earrings costs $4, I'd calculate it as $4.40. Small adjustment, but it adds up over a year of production.

Mistake 5: Giving Away Free Customization

This one sneaked up on me. A customer would message and ask for a small modification — could I use a different stone, or make the earrings slightly longer, or add a tiny charm? I'd say yes because I wanted the sale, and I wouldn't charge extra because the modification seemed minor. A few minutes of extra work, right?

Except "a few minutes" of extra work often turned into twenty minutes of rethinking the design, sourcing a different stone, adjusting measurements, and rephotographing the finished piece. And I'd charge the same price as the original design, which was already underpriced to begin with. I was effectively giving away custom work at stock prices.

My fix: I created a custom order pricing structure. Custom work starts at a 25% premium over the stock price, and it goes up from there depending on the complexity of the changes. Minor adjustments (different ear wire style, small size change) are 25%. Major changes (completely different stone, structural redesign) are 50% or more. I communicate this clearly upfront, and most customers are fine with it — people who want custom work expect to pay more for it.

The Pricing Formula That Actually Works

After years of trial and error, here's the formula I settled on:

Base price = (Materials x 1.1) + (Hours x Hourly Rate) + Overhead (20% of materials + labor)

Then I apply a markup of 2x to 3x on the base price to arrive at the retail price. The markup covers profit margin, accounts for wholesale pricing (if I ever sell wholesale), and provides a buffer for sales and discounts.

Let's run those original earrings through this formula:

Materials: $9 x 1.1 (waste factor) = $9.90
Labor: 2 hours x $25 = $50
Subtotal: $59.90
Overhead (20%): $11.98
Base price: $71.88
Retail (2x markup): $143.76

$144 for a pair of handmade sterling silver turquoise earrings. That's not cheap, but it's not unreasonable for one-of-a-kind handmade jewelry made by a skilled artisan. And for the first time, I'd be actually making money — real money, not the $4.50-an-hour fantasy I'd been operating under.

The Hardest Part Was Changing My Own Mindset

All the formulas and calculations in the world don't help if you don't believe your work is worth the price. And that was my deepest, most persistent problem: I didn't think my jewelry was good enough to charge what it was actually worth. I was comparing my work to established jewelers with decades of experience and setting my prices based on how I felt about my skill level, not what the work was objectively worth.

Changing that mindset took time. It took positive feedback from customers who happily paid my (new, higher) prices. It took seeing other makers at craft shows charging fair prices and doing well. It took a mentor — a local jeweler who'd been in business for fifteen years — looking at my work and saying, "Why are you charging so little? This is good work."

If you're in the position I was in — making jewelry, selling it, but not making real money — do the math. Calculate what your time is worth. Add up your actual costs including overhead and waste. Then price accordingly. Some people won't buy at the higher price, and that's okay. The customers who do buy are the ones you want — they value handmade, they understand the cost of skilled labor, and they'll come back.