Of all the numbers that go into a price, your hourly rate is the one you choose rather than look up. Materials come from receipts and fees come from Etsy, but nobody hands you a rate for your own time. So it is easy to leave out, or to set at a number you would never accept from an employer.
This guide explains how your hourly rate works inside the pricing calculator, what it does to your price, and how to pick a rate you can stand behind.
The figures below are example numbers, not market prices or wage advice. Your rate is your decision.
How labor works in the formula
The calculator turns your time into a cost before it does anything else:
Labor = labor minutes / 60 x your hourly rate
That labor is added to materials and overhead to make your cost per item. Then the calculator works out the price that leaves your target margin after fees. So your rate is not a bonus on top of profit. It is part of the cost, and profit is what is left after you have been paid.
This is the difference between earning a wage and running a business. If you leave your time out, the “profit” the calculator shows is really your wage, and you have no way to tell whether an item is worth making.
What the rate does to your price
Here is worked example A from the sublimation mug guide at three hourly rates. Everything else stays the same: $6.00 of materials, 15 minutes of labor, $0.50 of overhead, $6.00 shipping charged and $6.00 shipping cost, sold on Etsy at a 30% target margin.
| Hourly rate | Cost per item | Suggested price | Fees | Profit | Earnings per hour |
|---|---|---|---|---|---|
| $15 | $10.25 | $21.61 | $3.07 | $8.29 | $48.15 |
| $20 | $11.50 | $23.67 | $3.27 | $8.90 | $55.61 |
| $30 | $14.00 | $27.81 | $3.66 | $10.15 | $70.59 |
A few things stand out:
- Doubling your rate does not double your price. Doubling the rate from $15 to $30 adds $3.75 to the cost of a 15-minute item and $6.20 to its suggested price.
- Profit moves too. Because the margin applies to the whole price, a higher rate also raises your profit, from $8.29 to $10.15.
- Earnings per hour adds it all up. It is your profit plus your labor, divided by the hours the item takes. At $15 an hour this mug really pays you $48.15 an hour; at $30, it pays $70.59.
How to choose your rate
There is no single correct rate, but there are good ways to think about it.
Start from what you need
Work out what you want the business to pay you in a month, and how many hours a month you actually spend making things. Divide the first by the second. Be honest about the hours: only count time spent making and packing, not time spent on photos, messages or markets, because that time is paid for by overhead and margin.
Compare with real alternatives
Think about what the same hours would earn you in other work you could realistically do, and what similar skilled work pays where you live. A rate far below other work you could do is a signal to look harder at your prices.
Check it against the market
Run your items through the calculator at your chosen rate, then compare the suggested prices with similar listings that are actually selling. If your prices are close to listings like yours that sell, your rate is workable. If they are far above, look at your minutes and materials before lowering your rate.
How to time yourself
Your hourly rate only works if the minutes are right. The easiest way to get them is to time a whole batch rather than a single item:
- Note the time when you open the design file or start setting up.
- Make the batch the way you normally would, including mistakes and breaks to fix the printer.
- Note the time when the last item is packed.
- Divide the total minutes by the number of items you finished.
Do this for each product type, and again every few months. Use that number in the calculator, even if it is higher than you expected.
Your rate and your speed
Earnings per hour rewards speed. The faster you make an item, the more each hour pays, even at the same price. That is why batching matters: pressing a run of the same design in a row, keeping templates ready, and setting up your space so you are not hunting for tape all cut minutes from every item.
Time yourself regularly. As you get faster, the labor line shrinks and the calculator’s suggested price can come down while your earnings per hour stay the same or rise. That is a healthier way to become more competitive than cutting your rate.
When to raise your rate
Revisit your rate when:
- You have become noticeably faster or more skilled
- Your custom work is booked up ahead
- Your costs of living or doing business have gone up
- Your best sellers keep selling at prices well above what the calculator suggests
Raising your rate does not have to mean raising every price at once. Start with new listings and custom orders, and watch how buyers respond.
Common mistakes
- Using your fastest time. Use your average across a batch, including the slow ones.
- Counting only pressing time. Design, prep, quality checks and packing are part of the item.
- Putting your profit goal into the rate. Keep them separate: the rate pays you, the margin funds the business.
- Never updating it. A rate you picked when you started is probably out of date.
Questions sellers ask
What hourly rate should I start with?
The calculator starts at $20 an hour so you can see how labor works, but that is not a recommendation. Change it to your own rate, using the steps above.
Should my rate be different for custom work?
You can use the same rate and count the extra minutes custom work takes. That keeps ready-made items cheaper while custom work pays for its own time. See our guide to pricing custom and personalized orders.
Why is earnings per hour higher than my hourly rate?
Because it includes your profit as well as your labor. It shows what the item pays you for each hour in total, which is the number to compare between products.
