Labor Rate

What an hour of your making time is actually worth — and the number most makers set too low.

A labor rate turns your time into a cost you can put in a price. It should cover the wage you want to take home plus the employer-style costs a wage really carries — self-employment tax, benefits you fund yourself, paid time you don't get, and the reality that only a fraction of your week is billable making-time. It is not the same as 'minimum wage feels fair'; it's the rate that makes your income and your business add up.

Why it matters

Unpaid or underpaid labor is the number-one reason handmade businesses quietly fail. Materials get counted because they hurt to buy; your hours don't, because they feel free. But they are the largest cost in almost every craft — a ceramic mug, a stitched wallet, a macramé hanging are mostly hours. Set the labor rate too low (or to zero) and you've built a business that can't pay you, no matter how much you sell. Setting this one number honestly reshapes every price you make.

How to calculate it

Start from the yearly income you want, add your yearly business costs, and divide by your realistically billable hours — not all 2,000 working hours, because admin, marketing, sourcing, and errands aren't billable. Many full-time makers bill only 40–60% of their working hours, which pushes the true rate well above a simple hourly wage.

Labor rate = (target income + business costs) ÷ billable hours per year

Example

You want $45,000 and have $8,000 of business costs, and you realistically bill 25 hours/week over 48 weeks (1,200 hours). Rate = ($53,000) ÷ 1,200 ≈ $44/hour. A 3-hour piece then carries $132 of labor — far above the '$15/hr feels okay' many makers use.

In practice

The most common lightbulb moment for makers is realizing a piece they sell for $40 contains two hours of work — which, at any honest rate, means they're paying the customer to take it. Once the labor rate is set deliberately, prices rise, and the ones that can't bear the rate get retired or redesigned.

Common mistakes

Charging materials but treating your hours as free because you enjoy the work.
Using a low 'hourly wage' instead of a rate that covers taxes, downtime, and non-billable hours.
Assuming every working hour is billable, which understates the rate by half.

How CrafterBy handles it

Set your labor rate once in CrafterBy and it flows into every product by the time each one takes — and the free Hourly Rate Calculator in Tools helps you find the number.

Price it right in minutes

Join the makers who finally know their numbers.

Start free