Let’s Break Down Profit Margin: How to Make Sure Your Craft Business Isn’t Just Breaking Even

Because We’re Not Doing All This Work Just to Pay the Post Office and Call It a Day

You’re selling products. You’re getting orders. You’re feeling good.
But when you check your account balance… it’s giving, “Where’d the money go?”

Let’s fix that.

Here’s the truth:
If you’re not building profit margin into your pricing, you’re not actually making money—you’re just recirculating it.

And that’s not the business we’re building.

Let’s talk about what profit margin really is, how to calculate it, and how to actually keep some of those coins in your pocket.

---

What Is Profit Margin, Exactly?

Profit margin = how much money you keep after covering your costs.

It’s what’s left after you’ve paid for:

• Materials

• Your time (yes, your hourly rate matters!)

• Overhead (all the behind-the-scenes costs of running your biz)

The margin is what you get to keep as the owner of your business.
Not the maker. Not the packer. Not the customer service rep.
The CEO.

---

Let’s Talk Numbers (But Keep It Simple)

Here's the basic formula:

Profit Margin (%) = (Profit ÷ Price) × 100

Example:

• You sell a handmade candle for $25

• Your total cost to make it (materials + time + overhead) is $15

• Your profit is $10

➡️ ($10 ÷ $25) × 100 = 40% profit margin

That means you keep 40 cents of every dollar after covering costs.

---

What’s a “Good” Profit Margin for Handmade Products?

There’s no one-size-fits-all, but here’s a solid guide:

Bottom line?
You should aim for at least a 30–50% profit margin—and more if you’re selling something highly custom or limited edition.

---

Why Makers Skip the Margin—and Why You Shouldn’t

Here’s what I hear all the time:

“I don’t want to charge too much.”
“What if people think I’m being greedy?”
“I’m just starting—I don’t need profit yet.”
“I’ll raise my prices after I grow.”

Friend. Let me stop you right there.
You’re allowed to be paid for your creativity and your ownership.

Profit margin is what gives your business room to grow—to hire help, restock supplies, run ads, pay taxes, or just take a break without panicking.

You’re not being greedy. You’re being strategic.

---

How to Build Profit Into Your Pricing (on Purpose)

Here’s a simple formula to make sure your profit is baked in from the start:

(Materials + Time + Overhead) ÷ (1 – Desired Profit Margin) = Final Price

Example:

• Materials: $10

• Time: $15

• Overhead: $5

• Desired profit margin: 40% (or 0.40)

➡️ ($10 + $15 + $5) ÷ (1 – 0.40)
➡️ $30 ÷ 0.60 = $50

That’s the price you should be charging to earn a 40% margin.

No more “hope math.” Let’s price like we mean it.

---

Action Step: Audit Your Current Profit Margins

Pick 3 products from your shop. For each one:

1. Add up total costs (materials + labor + overhead)

2. Subtract that number from your current price = your profit

3. Divide profit by price × 100 = your profit margin

👉 Are you where you want to be? If not, it's time to adjust. Don’t be afraid to raise your prices—you’re not charging for just the thing, you’re charging for the value.

---

You Deserve to Profit—Not Just “Make Sales”

Let’s stop wearing hustle like a badge.
Let’s stop confusing “busy” with “successful.”
Let’s stop building businesses that can’t afford to pay the founder.

Profit is not a dirty word. It’s how you create freedom.

So charge what you’re worth. Build in your margin. And know that you deserve to keep some of what you create.