What's the Best Way to Track Material Costs and Margins for Handmade Products
The best way to track material costs and margins for handmade products is to record what every material and component actually costs you, attach those costs to each product you make, and then match that against what you sold it for. Do that consistently and the margin is just subtraction — no guessing, no surprises when you look at your numbers at the end of the month.
Start with the material cost, not the sale price
Most makers price from a gut feeling about what the item should sell for, then never check whether the materials and components actually cost less than that. Flip it: write down what goes into one unit — thread, clasps, packaging, the fabric by the yard divided into how many pieces you cut from it. That number is your starting point, not the price tag.
Why a notebook or a general spreadsheet falls apart
A spreadsheet works until you have more than a handful of products, each with different material combinations, and an Etsy order history you have to manually re-type. The usual failure point is not the math — it's the copying. People stop updating the sheet because entering every order by hand takes longer than making the product.
Import the order file Etsy already gives you
Etsy generates a CSV order file you can download from your shop. Instead of retyping each sale, Makerledger lets you import that file directly, so the sales side of your margin calculation is already there — you don't rebuild it by hand for every order.
Attach real costs to each product, once
In Makerledger you enter what your materials cost and what goes into each product one time per product, not per sale. Once that's set, every imported order against that product carries its cost automatically, and the margin — sale price minus material cost — is calculated, not estimated.
Read the margin per sale, not just per month
A monthly profit number hides which products are actually worth your time and which ones are barely covering materials. Tracking cost and margin per sale, per product, shows you exactly which items are pulling their weight and which ones are costing you more in materials than you priced for.
Keep the documentation your tax authority expects
In Norway, Skatteetaten expects a business to be able to document its actual costs and income if that income is reported as business activity — bookkeeping rules sit in the Norwegian Bookkeeping Act (bokføringsloven). If you sell from another country, check your own tax authority's record-keeping requirements, because they differ by jurisdiction. Tracking material cost per product as you go gives you that documentation without reconstructing it later.
Frequently asked questions
What's the best way to track material costs and margins for handmade products?
Record the material cost per product once, import your sales data instead of retyping it, and let the margin — sale price minus material cost — calculate itself for every order.
Do I need accounting software to track material costs for handmade products?
No. You need a place to log what each product costs to make and a way to match that against what it sold for. Makerledger does this without requiring general accounting knowledge.
How do I track margins on Etsy sales specifically?
Download the order file Etsy provides from your shop settings, import it into Makerledger, and it's matched against the material costs you've already entered per product.
What counts as a material cost for a handmade product?
Everything that goes directly into the item you ship: raw materials, components, packaging used for that specific product. It does not include your time, which is a separate number worth tracking but calculated differently.
Do I need to keep this cost tracking for tax purposes?
That depends on your jurisdiction. In Norway, documentation of actual business costs is expected under the Bookkeeping Act if you report business income to Skatteetaten. Check the record-keeping rules where you sell and are taxed.
More guides
Other things we made
Fix, convert and time subtitle files without uploading them.
practicebook — a music practice log that outlives its app.
tickbook — a habit tracker with no cap and no account.
One shared year-view of who's off, priced per company instead of per head.