How to Price Handmade Candles: True Cost Formula (2025)

Last updated: January 2026

Most candle makers underprice their products by 40% or more. They calculate material costs, add a small markup, and wonder why they're working 60-hour weeks for less than minimum wage.

This guide shows you the true cost formula that professional candle businesses use—covering materials, labor, overhead, and actual profit margins. Price your candles to build a real business, not an expensive hobby.

In this guide:

The #1 pricing mistake most beginners make
The true cost formula (Materials + Labor + Overhead + Fees)
Step-by-step calculations for each cost category
Keystone pricing method for wholesale and retail
Channel-specific pricing (Etsy, markets, wholesale)
How to lower your costs without sacrificing quality

The #1 Pricing Mistake

Here's how most beginners price candles:

Wax ($2) + Jar ($1.50) + Fragrance ($1) + Wick ($0.20) = $4.70 cost
$4.70 × 2 = $9.40 selling price

What's missing:

Your labor (making, pouring, curing, labeling, packing)
Overhead (electricity, internet, software, insurance)
Shipping supplies (boxes, tissue, tape)
Platform fees (Etsy, Stripe, PayPal)
Returns and damages
Actual profit margin

That "$9.40 candle" probably costs you $8-10 to make and sell. You're working for free.

The True Cost Formula

Here's what your pricing actually needs to cover:

True Cost = Materials + Labor + Overhead + Fees
Wholesale Price = True Cost × 2
Retail Price = Wholesale Price × 2

This is called keystone pricing—a standard retail practice dating back to the early 20th century that gives retailers a 50% gross margin at each level.

Let's break down each component.

Step 1: Calculate Material Costs

List every physical item that goes into (or with) the candle:

Item	Example Cost
Wax (per candle)	$2.00
Fragrance oil	$1.20
Container/jar	$1.50
Wick	$0.15
Wick sticker	$0.05
Warning label	$0.10
Lid	$0.50
Box/packaging	$0.75
Tissue paper	$0.15
Thank you card	$0.10
Branded sticker	$0.15

Total materials: $6.65

Don't Forget Hidden Material Costs

Dye blocks (divide by uses)
Wick centering tools (divide by lifespan)
Testing candles (materials for failed batches)
Samples you give away

Add 5-10% to material costs for waste and testing.

Step 2: Calculate Labor Costs

Your time has value. Pay yourself a real wage.

Pick an Hourly Rate

Experience Level	Suggested Hourly Rate
Beginner	$15-20/hour
Experienced	$20-30/hour
Expert/Artisan	$30-50/hour

Industry data shows craft professionals typically charge $12-25/hour, but many experts recommend $20+ as a sustainable baseline for a profitable business.

Track Time Per Candle

Time each step of your process:

Task	Time (minutes)
Setup and prep	5
Melting wax	2
Adding fragrance and pouring	3
Setting wicks	2
Cooling/curing (passive, don't count)	0
Trimming wick	1
Cleaning vessel	2
Labeling	2
Quality check	1
Packaging	3
Total active time	21 minutes

Labor cost per candle at $20/hour: 21 minutes ÷ 60 × $20 = $7.00

Batch Efficiency

Making candles in batches dramatically reduces per-candle labor:

Batch Size	Minutes per Candle	Labor at $20/hr
1 candle	25-30 min	$8.33-$10.00
6 candles	15-20 min	$5.00-$6.67
12 candles	12-15 min	$4.00-$5.00
24 candles	10-12 min	$3.33-$4.00

This is why scaling production matters.

Step 3: Calculate Overhead

Overhead is everything you pay whether you make candles or not:

Monthly Expense	Example Cost
Studio/workspace	$200
Electricity	$50
Internet	$60
Software (Etsy, email, design)	$50
Insurance	$40
Website hosting	$20
Storage	$30
Monthly total	$450

Allocate Overhead Per Candle

If you make 150 candles per month: $450 ÷ 150 = $3.00 overhead per candle

Note: Low volume = high overhead per unit. This is why hobby sellers struggle—their overhead allocation is massive.

Step 4: Account for Fees

Every sale has transaction costs. Here are 2025 Etsy fees:

Fee Type	Amount
Etsy listing fee	$0.20 per listing
Etsy transaction fee	6.5% of sale price
Payment processing	3% + $0.25
Offsite Ads (if applicable)	12-15% (for sellers over $10K/year)

For a $24 candle on Etsy:

Transaction fee: $1.56
Payment processing: $0.97
Listing: $0.20
Total fees: $2.73 (about 11% of sale price)

Add fees to your cost calculation OR build them into overhead.

Putting It Together: True Cost Per Candle

Let's calculate for an 8 oz soy candle:

Category	Cost
Materials	$6.65
Labor (15 min at $20/hr)	$5.00
Overhead ($450/mo ÷ 150 candles)	$3.00
Fees (~10% of price, estimate)	$2.40
True Cost	$17.05

This candle costs you $17.05 to make and sell.

If you're selling it for $18, you're making $0.95 profit—before taxes.

Pricing for Profit: The Keystone Method

Keystone pricing is a standard retail practice where each level of the supply chain doubles the price. This ensures healthy margins at every step.

Wholesale Price = True Cost × 2

$17.05 × 2 = $34.10 wholesale price

This builds in profit margin AND room for wholesale accounts.

Retail Price = Wholesale × 2

$34.10 × 2 = $68.20 retail price

"Wait, $68 for a candle?"

This is where reality hits. If your true costs are high, you have two choices:

Reduce costs (cheaper materials, more efficient production, lower overhead)
Position as premium (better branding, higher-end markets, luxury customers)

You cannot ignore the math.

Realistic Pricing Tiers

Candle Size	Budget Brand	Mid-Market	Premium/Luxury
4 oz	$8-12	$12-18	$18-28
8 oz	$14-20	$22-32	$32-48
12 oz	$18-26	$28-42	$42-65
16 oz	$22-32	$34-52	$52-80

Where you price depends on:

Your true costs
Your brand positioning
Your target customer
Your sales channel

Pricing for Different Channels

Etsy/Online Direct

You keep the most margin
Factor in shipping costs (charge separately or build in)
Fees eat 10-15%

Target: Full retail price

Craft Fairs and Markets

Booth fees range widely: $25 for small local fairs up to $800+ for major events like Renegade Craft
Your time: Full day + setup
Customers expect fair prices

Target: 80-100% of retail

Wholesale (Boutiques, Gift Shops)

Buyers expect 50% off retail (keystone markup)
Volume orders reduce your per-unit labor
Must be profitable at wholesale price

Target: 50% of retail (your wholesale price)

Consignment

Shops typically take 40-60% of retail price
You carry inventory risk
Often not worth it unless retail price is high enough

Target: Only if your retail price supports a 40-60% shop fee and still leaves profit

The Minimum Viable Price Formula

If you can't hit the full keystone markup, here's the minimum:

Minimum Price = True Cost × 1.5

At 50% margin:

$17.05 × 1.5 = $25.58 minimum price

Below this, you're not building a business—you're subsidizing your customers' candle habit.

How to Lower Your True Cost

Reduce Material Costs

Strategy	Potential Savings
Buy wax in bulk (50+ lbs)	10-20% on wax
Buy jars by the case	15-30% on containers
Source lids separately	Often cheaper than "sets"
Find fragrance sales	Stock up on bestsellers
Simplify packaging	$0.50-1.00 per candle

Reduce Labor Time

Strategy	Time Saved
Batch production (24+ at once)	30-50% per candle
Pre-wick containers	Eliminates a step
Template for labels	Faster application
Assembly line process	Reduces context switching

Reduce Overhead

Strategy	Potential Savings
Work from home vs. studio	$200-500/month
Share studio space	50% of rent
Annual software subscriptions	15-20% vs monthly
Increase volume	Same overhead, more candles

Pricing Psychology Tips

Use Charm Pricing (End in 9)

Research from MIT and University of Chicago found that prices ending in 9 can increase sales by 24-35%. A $39 price point actually outsold $34 in controlled studies.

$27 or $29 converts better than $30 (feels like a deal)

Bundle Products

3 votives for $24 vs $9 each (moves more inventory and increases average order value)

Anchor with Premium

Show your $65 candle first, then the $32 looks reasonable

Free Shipping Threshold

Research shows 58% of shoppers add more items to hit free shipping thresholds. Set yours 15-25% above your current average order value.

"Free shipping at $75" increases average order value significantly

Frequently Asked Questions

How much profit should I make per candle?

Aim for at least 50% profit margin on retail sales (your True Cost × 2). Professional candle businesses typically target 50-70% margins to cover growth, marketing, and unexpected costs.

Why are my candles priced so much higher than store brands?

Big retailers have massive volume advantages, overseas manufacturing, and buying power you can't match. Don't compete on price—compete on quality, uniqueness, and customer experience.

Should I charge separately for shipping?

It depends on your strategy. 66% of consumers expect free shipping, but 80% will meet a minimum threshold. Test building shipping into prices vs. free shipping thresholds to see what converts better for your customers.

How do I know if my prices are too high?

If your candles aren't selling, test different price points. But often the problem isn't price—it's positioning. A $40 candle needs premium branding, professional photography, and a clear value proposition.

What if the market won't pay my prices?

You have three options: reduce costs, reposition as premium, or accept that this particular product won't be profitable. The math must work.

Stop Guessing at Your Costs

Tracking material costs, labor, and overhead across dozens of products gets complicated fast. Small errors compound into major margin problems.

PetalMade automatically calculates:

True cost per product
Material costs as supplier prices change
Labor allocation by batch size
Profit margins by sales channel
Fragrance load calculations

Know your real numbers before you set prices.

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No credit card required. See your true costs in minutes.

Key Takeaways

True cost = Materials + Labor + Overhead + Fees (not just materials)
Pay yourself a real hourly rate ($15-30/hour minimum)
Wholesale price = True cost × 2 (standard keystone markup)
Retail price = Wholesale × 2 (room for wholesale AND profit)
If you can't hit keystone, reduce costs or go premium
Batch production dramatically lowers per-unit labor
Track everything—guessing leads to underpricing

The Hard Truth

If your true cost per candle is $15 and the market won't pay $30+, you have a business model problem—not a pricing problem.

Either find ways to lower costs, reposition as premium, or accept that this product won't be profitable.

The math doesn't lie.

Ready to know your exact cost per candle?

PetalMade handles the math so you can focus on creating candles customers love.