Well this isn't real specific, but this is how I look at it.
Imagine that after you sell this vest, the guy comes back and says, "Wow! That was great - I need 1,000 more. How quick can you get 'em done?" Now imagine you have to make 1,000 of those suckers. Suddenly your overhead is going to start to matter. After all, staying where you do is not free. (Even if you still live with your mom and dad you should at least be paying rent!) Your power and heat are not free. Your food to keep yourself alive to do this is not free. Clothes are not free. And so on.
You have to come up with a price that helps to pay for all of that, and that is high enough you don't end up being a person who simply hands the money from the customer to the guy who sells food (or shoes, or heat, or electricity etc.). If you can't make a profit you'll go out of business, and that is no help to anyone.
For those who say, "But I don't do this for a living!" Well, maybe not NOW you don't - ! If the guy actually *does* come back and ask you for 1,000, you might just be in business - but you won't be for long if you have not thought about all this stuff. The customer will not be happy if you radically change the price upwards AFTER he has already bought from you. You can always come down!