The Biggest Mistake Crafters Make

The most common mistake in handmade businesses is pricing based on what competitors charge, rather than based on actual costs. If you do not know your true cost per unit, you cannot know if you are making a profit — no matter how many products you sell.

Calculating True Cost Per Unit

Your cost per unit includes:

• Ingredient costs — the exact amount of each oil, butter, fragrance, and additive in each unit, based on the actual prices you paid (tracked in your inventory lots)
• Packaging costs — containers, labels, boxes, shrink wrap
• Yield loss — if a batch should make 10 bars but you only get 9 usable ones, that loss is baked into the cost of the 9
• Overhead allocation — a portion of your utilities, equipment wear, and workspace costs

Apothecary Wizard handles the first three automatically when you log your lot costs and packaging. For overhead, a simple rule is to add 10-15% to your ingredient + packaging cost.

The Pricing Formula

A common pricing formula for handmade goods:

• Wholesale price = Cost × 2 (100% markup)
• Retail price = Wholesale × 2 (or Cost × 4)

This gives you room to sell wholesale at a profit, and retail at a higher profit to reward direct customers. Apothecary Wizard lets you set both retail and wholesale prices on each recipe, and calculates your profit margin and absolute profit per unit.

Margin vs. Volume

A high-margin product (like a lip balm that costs $0.80 to make and sells for $3.50) makes a large percentage profit but a small absolute dollar amount. A low-margin product (like a large candle that costs $6 to make and sells for $18) makes a smaller percentage but a larger dollar amount per sale.

The scheduler dashboard in Apothecary Wizard ranks your products by both margin percentage and absolute profit, so you can see which products deserve your production time.

When to Raise Prices

If your ingredient costs rise (and Apothecary Wizard will show you this when you log new lots at higher prices), you need to raise your product prices. Many crafters are afraid to raise prices, but remember: your customers are paying for handmade quality. If your costs have gone up, so have everyone else's — including the mass-produced alternatives.

The Profit Dashboard

Apothecary Wizard's sales reports show you monthly revenue, cost of goods sold (COGS), gross profit, and profit margin. Check these numbers monthly. If your margin is shrinking, it is time to either raise prices, negotiate better ingredient costs, or rethink your product mix.