Most people comparing a handmade price to a factory price are comparing two different things and finding one expensive. Here is the arithmetic, so the comparison can at least be the right one.
Start with the hours
A thing made by hand takes a person a number of hours. Those hours are the cost, and they do not fall with volume — the hundredth one takes roughly as long as the first, which is precisely the opposite of how a factory works.
Divide a week's work by the number of finished pieces that week produced and you have the number the maker is actually working from. For anything detailed, that number surprises people.
Then the failures
The pieces that did not survive being made are part of the cost of the ones that did. A kiln load that cracked, a dye lot that came out wrong, a carving that split along a grain nobody could see. The maker absorbs all of it, and it has to be priced into what sells.
A factory has this too, measured and minimised. One person working by hand has a higher failure rate and no way to spread it across a hundred thousand units.
Then the materials
Often better than the factory equivalent, sometimes much better, and bought in quantities too small for any discount. The maker pays near retail for materials that a manufacturer buys by the tonne.
Then everything that is not making
Photographing, listing, answering questions, packing, going to the post office, doing the accounts. For a one-person operation this is a substantial share of the week, and none of it is making.
What you are actually paying for
Not uniqueness as a virtue. Something being one of a kind is not by itself worth money.
Skill that took years to acquire, in the sense that the thing is well made and will survive use.
Materials that were chosen rather than specified.
Decisions. A hundred small ones a factory would make differently because it has to make them at scale.
When handmade is not worth it
When it is not actually better. Handmade does not guarantee well made. A clumsy object made by hand is a clumsy object.
When you need many, identical. That is what manufacturing is for.
When "handmade" is doing the work in the listing and nothing else is. If the description tells you about the process and nothing about the object, ask about the object.
What to ask a maker
How long it takes. What it is made of. Whether it is one of a batch or the only one. Whether it can be repaired. Every one of those has a real answer, and makers generally like being asked.
Questions people ask
Why do two makers charge very different prices for similar work?
Hours, materials and failure rate differ enormously, and so does how much each is valuing their own time. The cheaper one is sometimes underpricing their work rather than offering a bargain.
Is a higher price a sign of better work?
No. It is a sign of a higher cost or a higher estimate of the market, and neither is quality. Judge the object.
Should I negotiate with a maker?
You can make an offer where one is invited. Just know that the margin on handmade work is usually thinner than it looks from outside.
More: the case for buying from one person, what is this worth, buying handmade work, handmade or resold.