Pricing for Profitability: Determining Your Cost of Goods

We touched briefly last week on how to price your products. Knowing how much your product costs you to make is key to determining your retail price.  This is otherwise known as costs of goods which is a crucial component in pricing your products for profitability! Say for example you make canvas tote bags.  The cost of goods for you to make those tote bags can be broken down as follows:


  • Fabric (including delivery or shipping cost)
  • Thread
  • Lining or Interfacing
  • Zippers or Snaps (or both is applicable)
  • Labels

Selling Costs

  • Your time (how much time and labor do you put in to make this item, how much time did you spend going to the post office). Can you put an hourly figure on this?  If so add this to your selling price.
  • Banking Fees
  • Any listing or advertising fees
  • Packaging costs- tissue paper, mailing labels, ink, paper, stickers, personalized cards, polybags
  • Shipping supplies- envelopes or mailing boxes
  • Shipping fees (if you are offering free shipping)
  • Hangtags