Often the most difficult decision to make is what to charge for your crafts. There are a few schools of thought on this:
The first two are pretty easy to calculate. If the result is not realistic (and often, it's not), you must take the third option into account.
"Reasonable" is very subjective. It must be low enough that the customer feels it's not overpriced. It must be high enough that you feel you're getting a decent return on your investment of time and money.
You may have to do a bit of research to see what price the market will bear. What are other people charging for similar items? Are people buying at that price? I strongly recommend you do your research before you even begin to work on creating your items for sale.
If necessary, are you willing to price low enough to barely cover your materials in the hope that customers will then be drawn to purchase your other, more highly marked up items? You'll most likely adjust your asking price from time to time as you get a feel for the right price.
I must share this with you! I recall reading, in one of the newsgroups or mailing lists, about a situation that often crops up at craft fairs and the like. A customer will approach your display, look over your items, pick up or point to one that you're selling for, let's say five dollars. She'll then say to her companion in a stage whispher (that you and other customers are meant to overhear) something along the lines of "Get a load of this. Can you believe what she's charging? I could make one of these in 20 minutes for about a buck and a half".
Absolutely devestating, right? You can't really argue with her or lecture her in public and drive away the rest of your potential customers. Neither can you keep your mouth shut and let it ruin your day. So what to do? Here's what one quick thinker did. She replied, wearing an Oscar winning delighted facial expression, "Really? You can? Gosh, I can't. I'll take 200. Could you have them ready for me by next weekend?" Gotta love it... :)