Etsy pricing should include materials, production labor, packaging, shipping materials, transaction fees, payment processing, listing renewals, optional ads, refunds, overhead, and target profit. A product can look profitable before platform and payment fees, then land below target margin after the sale.
Start with the cost to make one sellable unit. If you create in batches, divide materials and labor by the units that can actually be sold. Add packaging, labels, inserts, shipping supplies, and any average ad spend or marketplace promotion cost per order.
A practical Etsy formula is: materials + labor + packaging + shipping-related costs + overhead per order + marketplace/payment fees + target net profit. If you offer free shipping, include that cost before comparing your price to similar listings.
Next iteration candidate: build a dedicated Etsy calculator with listing fee, transaction fee, payment fee, offsite ad fee, shipping, and free-shipping scenarios.