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How to charge for your labor

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Blog entry by Frankie Talarico Jr. posted 05-11-2009 02:48 PM 901 reads 2 times favorited 6 comments Add to Favorites Watch

An article talking about different ways to charge for your labor. And ways to make your prices competetive to your competition. It’s a help for those having a hard time raisig their prices, and working for the minimum.

How to charge for your work

Bulk Woodshop supplies

-- Live by what you believe, not what they want you to believe.



6 comments so far

View a1Jim's profile

a1Jim

112104 posts in 2235 days


#1 posted 05-11-2009 05:38 PM

Thanks for sharing . Sometimes being competitive is not a good thing Ive had more than one occasion when customers want me to build quality work for less than factory box store Chinese built products. It doesn’t make sense to loose money to save that kind of customer. They will only want more of the same.

-- http://artisticwoodstudio.com Custom furniture

View Junji's profile

Junji

698 posts in 2039 days


#2 posted 05-12-2009 02:11 AM

Thank you, this was interesting story.

-- Junji Sugita from Japan, http://tetra.blog12.fc2.com/

View Russel's profile

Russel

2199 posts in 2596 days


#3 posted 05-12-2009 01:11 PM

Very interesting stuff. I am not a professional, though someday I hope to be good enough for people to pay for my work, so my exercise in pricing is just that, an exercise.

To determine shop costs I pro-rated my mortgage and utilities cost to a cost per square foot and then multiplied that by the size of my shop. I then took the replacement cost of my major tools and figured a 3 year life-cycle and divided that by 36 for a monthly cost. Then I took what I spend on consumables; glue, sandpaper and the like, per month and divided that by the number of hours I spend in the shop each month. Then I added them all together and divided that by my shop hours to give a total cost to run my shop for an hour, which for me is about $10. So, if I were to run my shop 8 hours a day, 5 days a week, it would cost me a little over $1,700 a month to run my shop.

For labor, I decided on a liveable hourly rate and then doubled it. The assumption (that I got from self-employment) is that I will only bill for half of my time because the other half will be spent in paper work, sales and the like. So, if I want to make $25 an hour, then my labor time costs $50 an hour.

What all this means is that for any given project, my price is ($10 shop + $50 labor) * hours + materials. As you can see, this could easily send the price of an individual piece skyrocketing, and I am nowhere near good enough to charge such prices. So it becomes important to cut the labor hours as much as possible by making multiples of any project and making up the cost in efficiency.

All in all, this exercise has shown me the value of good planning and layout so that if I ever get good enough to be a pro I’ll have an idea of what’s involved. Information, like you’ve posted, gives me more to consider and is very helpful in making intelligent decisions.

-- Working at Woodworking http://www.VillageLaneFurniture.com

View Frankie Talarico Jr.'s profile

Frankie Talarico Jr.

353 posts in 2014 days


#4 posted 05-12-2009 03:46 PM

Thanks everybody for the comments. I see I could’ve been a little more detailed… I was aiming at the hobbyists here, but I now see the need for an all around system. They are two different monsters. Home shops and pro shops. I thank you Russel for that inclusion, I’ll insert it into my article if you’ll grant me permission. I’ll link any website you want also to it for your time…........I love this website. It’s the best thing to happen to woodworkers yet!

-- Live by what you believe, not what they want you to believe.

View Russel's profile

Russel

2199 posts in 2596 days


#5 posted 05-12-2009 04:25 PM

Hey, if you think it’s useful, you’re free to put it where you like. I’m quite flattered that mention it.

-- Working at Woodworking http://www.VillageLaneFurniture.com

View Russel's profile

Russel

2199 posts in 2596 days


#6 posted 05-13-2009 12:46 AM

One of the things I learned as an independent consultant, is that you can never really make money selling time; it’s a limited commodity and can only be sold once. A manufactured product can be made more efficient and the time can be spread over multiple sales, thus making room for profit. Good planning and process improve viability.

That’s kinda where I’m at now with woodworking. Once I’m confident in my skills and quality I have to decide if the products I choose will make a viable business. Then, if not, why not. Is the product too intricate or is my process too inefficient.

So far this thread is helping me focus my thoughts … I need that.

-- Working at Woodworking http://www.VillageLaneFurniture.com

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