Creating and selling custom party favors can be a rewarding and profitable business. However, figuring out how to price your handmade items appropriately can be overwhelming. This guide will assist you in establishing fair and competitive pricing for your custom party favors.

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Setting the right prices for your custom party favors is crucial to the success of your business as a business owner. Begin by researching local markets to determine the prices of similar items being sold. This will give you an idea of what your customers expect to pay for custom party favors. It's important to be competitive yet ensure that your costs are covered and that you make a profit.

To begin, it is recommended that you first calculate all the costs associated with creating your custom party favor this includes: 

Calculate Material Costs

To calculate your material costs, gather all your receipts for the supplies used in creating the favors. Divide the total cost by the number of items produced to get the per-item material cost. Don't forget to include sales taxes if applicable.

Calculate Profit Margin

To ensure you make a profit, multiply the material cost by 3. This will give you a healthy profit margin while still offering competitive pricing.

 Factor in Labor Costs/Design Fee

Next, consider the time and effort spent designing and assembling your custom party favors. Don't undervalue your time – add a design fee to your pricing to account for the labor involved.

Determine the Final Sale Price

Once you've calculated the material and labor costs, you can determine the final sale price. Keep in mind the market rate for similar products – your prices should be competitive but still allow you to make a healthy profit.

 Third-Party Market Fees

If you're selling your custom party favors on an online marketplace, such as Etsy, factor in any fees charged by the platform. These fees can impact your profit margin, so be sure to include them in your pricing calculations.

 

Here's an example, let's say you receive an order from a client for 12 custom chip bags for a birthday party. To price the order fairly and competitively, you'll need to consider the material costs, profit margin, and labor/design fees.

 

Materials we're going to use in this example

Paper: Uinkit 36lb Thin Flyer Paper Glossy 8.5x11 

Printer: Epson EcoTank Photo ET-8550

Hot Glue: Gorilla Hot Glue Sticks

Lay's Classic Potato Chips, 1 Ounce

 

Step 1: Calculate Material Costs

To determine the material cost per bag, add up the costs of paper, ink, adhesive, and pre-filled bags:

• Paper: $0.15 per sheet
• Ink: $0.12 per sheet (estimated cost to print high quality 8.5x11 photos.)
• Adhesive: $0.02 per bag
• Chips: $0.35 per bag

Total material cost per bag = $0.15 + $0.12 + $0.02 + $0.35 = $0.64

Common Mistakes to Avoid:

1. Not keeping track of receipts or documentation for materials purchased.
2. Forgetting to include sales taxes in the material cost calculation.

Step 2: Calculate Profit Margin

To ensure you make a profit while offering competitive pricing, multiply the material cost by 3:

$0.64 (material cost) x 3 = $1.92

Round up to the nearest dollar for simplicity:

$1.92 ≈ $2.00 per bag is the suggested selling price

For the order of 12 custom chip bags, the base cost would be:

$2.00 x 12 = $24.00

Tips for Optimizing Profit Margin:

1. Purchase materials in bulk to lower per-item material cost.
2. Look for discounts or sales on materials.

Step 3: Factor in Labor Costs/Design Fee

To account for your time spent designing and assembling the custom chip bags, add a flat labor/design fee. In this example, let's assume a design fee of $20.

Common Mistake to Avoid:

1. Undervaluing your time and labor costs. Never underestimate the value of your skills and expertise.

 Step 4: Determine the Final Sale Price

Once you've calculated the material and labor costs, you can determine the final sale price. Keep in mind the market rate for similar products – your prices should be competitive but still allow you to make a healthy profit.

Now, add the base cost and labor/design fee to calculate the final price for the order:

$24.00 (base cost) + $20.00 (labor/design fee) = $44.00

The total price for the order of 12 custom chip bags would be $44.00. This pricing strategy ensures that you cover your material and labor costs while maintaining a healthy profit margin.

 Step 4: Add Third-Party Market Fees

If you are selling your custom party favors on an online marketplace such as Etsy, add their fees to your pricing calculations.

Currently, when you list an item for sale on Etsy they charge $0.20 to sellers for each listing, Once the listing sells they will take a fee of 6.5% of the item's total listed price, which includes the cost of shipping and gift wrapping. Additionally, when processing the payment, Etsy will charge an extra fee of 3.0% + $0.25 USD. (this payment varies by country).

For our example, the total cost of fees would be:

$0.20 (listing fee) + $2.92 (6.5% of listed price) + $0.25 (payment processing) = $3.37 USD

Now, add the third-party market fees to the final price calculation:

$44.00 (final price) + $3.37 (fees) = $47.37  Round up to the nearest dollar for simplicity: $48.00

The total cost for the order of 12 custom chip bags, including all material, labor, and third-party market fees the suggested selling price would be $48.00 USD.

These fees can impact your profit margin, so be sure to include them in your pricing  calculations.

Craftybase.com provides a free Etsy fee and profit calculator. This tool can help you accurately price your custom orders and ensure a healthy profit margin.

 

Here are some tips that will help you maximize the potential of selling custom party favors and ensure that you make a profit on every sale.

 1. Research Your Market: Familiarize yourself with the competition by researching similar products on the market and their prices. This will help you set a competitive price point for your custom creations.

2. Consider Volume Discounts: Offer discounts if customers buy in bulk or place large orders as this could increase your profit margin while giving them an incentive to buy.

3. Focus on Quality: Invest in high-quality materials and offer a guarantee for your workmanship. This could help you stand out from the competition and increase customer satisfaction.

4. Utilize Social Media: Promote your custom party favors on social media platforms like Facebook, Instagram, or Twitter to reach a broader audience.

5. Re-evaluate Your Pricing Structure: Monitor your pricing structure to ensure that you are making a profit on each sale and adjust accordingly if necessary.

By following these tips, you will be in the best position to make money selling custom party favors.

 

After you finalize your prices, take a look at our Custom Party Favors Business Menu Template. It will help you create a professional and personalized menu for your party favors business.

• Easily change the text, colors, and add images to create a custom menu tailored to your business needs
• Add your own logos and branding for a cohesive look
• Print at home or send to a printer for convenience
• Save time and money by creating your own menu!

 

We hope that our pricing guide has provided you with useful information and tips on how to determine the pricing for your custom party favors. Remember to factor in all costs – including materials, labor, design fees, and marketplace fees – when calculating your pricing. 

We wish you success in your business endeavors and hope that this pricing guide has been useful to you. With these steps, we are confident that you will be able to set the right prices for your custom party favors and make a profit on each sale.

Happy crafting & selling!