I've been selling my handmade jewelry on Etsy at Naomi's Designs and MayaGirl Creations for about two years now and often get questions about how a prospective seller should price his or her items. The simple answer: it depends.
I don't have a hard and fast formula for how I come up with my prices. I generally charge according to the cost of materials, labor involved and also take into account the price of similar items on the site. So far, this seems to work for me as I've managed to keep my items priced reasonably while still making a profit -- though some people have advised me to charge a bit higher than I am right now.
I've started to do that with some items. My recently-listed enamel and copper wire wrapped Fire And Ice necklace took WEEKS to make and expensive materials were used. Therefore, I've listed it for $100. It's pretty expensive, but it's a one-of-a-kind piece and I can't just give it away for $10; not after all of the work I've put into it. The same goes for my copper wire wrapped Nefertiti's Kiss necklace, which I list for $50.
On the other hand, I charge $15 for my classic silver wire wrapped infinity ring. The materials aren't too expensive and it's fairly easy to make, so the cost is about right. When I add Swarovski crystals to make a birthstone infinity ring, I bump up the price to $18 to accont for the additional materials. I also charge $18 for some of my wire wrapped lava stone necklaces that incorporate crystals.
When you price your items, don't lowball too much. You want people to be able to afford your work, but you also have to remember that your work has value! Jewellery stores aren't afraid to charge hundreds of dollars for small pieces. Handmade items are very special and most people will understand and appreciate this.