The fair market value you put on should be what you would sell them at a craft expo for assuming you purchased all materials to complete. Do not discount due to fabrics being donated, gifted, scraps, etc.
if the winner puts the item on their taxes as a donation the charity will subtract the fair market value from the amount bid as the amount donated for charitible purposes.
i do lots of charity fundraising for groups and this is one of the toughest parts, determining fair market value. Two tickets to Hong Kong are easy to identify the fair market value. Hand made things are a whole different ballgame. We had a starving artist donate a piece once and he said the value was oodles more than the average price of any piece he had ever done. It was like, duuuuuude. What are you thinking? You do charcoals at the market for 20$. And you want to claim this portrait of Elton John is worth 2k$. Uhhhhh no. Sure you get to claim it as a donation to a charity on your taxes but duuuude.....