I've just finished making my own labels to sew into my bags - they are made from 20mm cotton tape and t-shirt transfer paper!
I'm really pleased with the results as I have been able to design and edit them on my computer using Photoshop and then print in reverse, using the highest quality on the printer, and then after letting the paper dry for 5 minutes just iron straight on to the cotton tape - it's as easy as that. And, I've printed 40 labels onto one sheet of A4 paper - what a money saver!!
The label is designed to be folded and sewn into the inside of my bags, and has my logo, my Etsy Store website address and copyright details. Oh yes, the transfer paper I used has sparkles in it, that's what the dark specks in the photo are that you can see - they look really lovely in the light!