The five parts of production cost
- Materials: everything that ends up in the product, priced per unit actually used.
- Waste: offcuts, spills, failed pieces. A 5–10% allowance is a common starting point, but measure your own.
- Labour: your making time at an hourly rate you'd accept.
- Packaging: boxes, tissue, labels, tape, inserts.
- Overheads: a per-item share of costs that don't belong to one product, like tools, software, stall fees or studio rent.
Worked example: a beaded bracelet
- Materials: £3.20
- Waste at 5%: £0.16
- Labour: 30 minutes at £15/hour = £7.50
- Packaging: £0.90
- Overheads: £1.00
Total = £3.20 + £0.16 + £7.50 + £0.90 + £1.00 = £12.76
Material costs alone were £3.20, about a quarter of the true cost.
The hourly rate here is an example. Pick one that works for you. For reference, the UK National Living Wage for workers aged 21 and over is £12.71 an hour from April 2026 (gov.uk). Rates change each April, so check the current figure.
Try it with your own numbers in the free CraftMargin calculator. It works without an account.