How to Set Prices for Your Custom Party Favors: A Guide for Business Owners

How to Set Prices for Your Custom Party Favors: A Guide for Business Owners

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

  • Cost of Paper: $0.15 * 1 (sheet per bag) * 12 (bags) = $1.80
  • Cost of Ink: $0.12 * 1 (print per bag) * 12 (bags) = $1.44
  • Cost of Adhesive: $0.02 * 12 (bags) = $0.24
  • Cost of Chips: $0.35 * 12 (bags) = $4.20

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 Labor/Design Fee:

To account for your time spent designing and assembling add a flat labor/design fee.

Labor/Design Fee = (1 hour * $25) = $25.00 (for the entire order)


Step 3: Calculate Total Cost:

Total Cost = $1.80 + $1.44 + $0.24 + $4.20 + $25.00 = $32.68

Factor in Profit Margin:

General, a healthy profit margin typically ranges from 15% to 30% or more.

For this example we'er going to set a profit margin of 30%.

$32.68 * 0.30 = $9.80, so $9.80 will be the profit price.

Step 5: Determine Final Sale Price:

Final Sale Price = Total Cost + Profit Margin = $32.68 + $9.80 = $42.48

Therefore, the sale price (Before Third-Party Market Fees) is $42.48 provides a free Etsy fee and profit calculator. This tool can help you accurately price your custom orders and ensure a healthy profit margin.

Pricing your custom party favors correctly is one of the most important aspects of running a successful business. By setting fair prices, you can attract customers, cover your costs, and make a profit. Here are some additional tips to keep in mind when pricing your custom party favors:

  • Consider offering volume discounts for larger orders. This can incentivize customers to place larger orders, and it can also help you move more inventory at once.
  • Be transparent with your pricing. Make sure your customers understand what they are paying for and why. To do this, you can break down your pricing into categories, such as material costs, labor costs, and design fees.
  • Keep an eye on your competition. If you notice that other businesses are offering similar products at lower prices, you may need to adjust your pricing accordingly.
  • Don't forget about shipping costs. If you are selling your custom party favors online, you will need to factor in the cost of shipping when calculating your prices.

By following these tips and using the pricing formula outlined in the original content, you can set fair prices for your custom party favors that will help you succeed as a business owner. 

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!


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