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How to price my woodworking (and sell it) #1: How to price your woodworking to make a profit (and sell it)

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Blog entry by huff posted 05-30-2013 10:25 PM 12253 reads 73 times favorited 22 comments Add to Favorites Watch
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How to price my woodworking?
(And sell it) Part 1

So where do you begin to answer such a simple question; or is it that simple?

I’ve heard this question asked so many times and I’ve heard so many one liner’s for an answer:
• “Know your market”
• “You can only sell it for what the market will bear”.
• “I sell it for enough to support my hobby”
• “It’s just a hobby, so what does it matter as long as you at least cover your material cost”.
• Cost of materials x 2.
• Cost of materials x 3.
• Cost of materials x 4.
• $150/lineal foot (or whatever price per lineal foot)
• “I don’t sell my woodworking”, I just make stuff for my friends and family.

So, if you’ve been in sales and all these one liner’s make sense to you, or you’re comfortable with how you price your woodworking then no need to read on, but if you have no sales or marketing experience but would like to understand how to price your woodworking and then be able to sell it, I hope my series will give you some insight on pricing and selling your woodworking.

PRICING is going to be different for every woodworker so there will be no magic answer here and I’m sure I’ll step on some toes before it’s over, so take everything I share with you with a grain of salt, use what information you think will help you and disregard the rest if you don’t agree.

Woodworkers range from everything from an occasional hobbyist to the full time Professional woodworker that depends on it for their living and everything in between! It’s all those in-between areas that seem to have the biggest problem deciding how they should price their woodworking.

The true hobbyist doesn’t “sell” their woodworking, or if they do, they charge enough to cover materials to build something for a friend or family member. So it doesn’t matter what they charge and they usually don’t worry about it.

One the other end of the scale, the full time professional knows that pricing his or her work is a major factor in operating their business, so most professionals already have a system for pricing in place. But don’t kid yourself; I’ve seen a lot of so called professionals that don’t have a clue on how to price their work and make a profit. (That’s why so many go out of business or find another career).

And then there’s all the other woodworkers in between that slide up or down the scale; they may be the hobbyist that really does want to make a little profit when they sell some of their work or the woodworker that is trying to start a small side line woodworking business and sell his woodworking while still keeping his regular job, but would like to make enough to make it worth while giving up nights and week-ends trying to have a business.

Maybe you really want to start your own woodworking business so you could go full time and replace your regular job with doing woodworking for a living.

First, you’ll have to decide where you fall on the scale of what you expect from selling your woodworking and from there you can begin to find your comfort zone.

You can take all the formulas in the world that could help you price your woodworking and they won’t do you a bit of good if when you’re finished you’re not comfortable with the price you have to quote to your customer.

Most people only want to sell in their “comfort zone”, which means, most want to be nothing more than an order taker, a cashier, and simply go to the bank and deposit money, but not really having to “sell” our product, so we tend to price accordingly. We just want people to walk up and buy our product (everyone!).

So how do we get around this, or deal with this “comfort zone”? How do we get comfortable with the pricing of our woodworking? Everyone deals with it in different ways or uses different excuses, but the easiest way is to know all the facts instead of trying to price things from others opinions or simply guessing on what might be a good price. There’s no one simple answer to pricing or selling your woodworking. There are so many things that can affect how we price our work or how and who we can sell our woodworking to that
I would like to take the time and write a complete series on how to help you understand and find your comfort zone for both pricing your woodworking and also how you can sell it. (Pricing and selling go hand in hand).

This may be too long and boring for some to follow along, but I will try to break it down into sections that you can decide if that topic is of interest or not.

We have a tendency to pick the easiest way to price our work and really don’t have a clue if we actually make a profit or even if it was worth the time and effort to do the project. We’re more concerned if the customer will buy our work then if we actually make a profit when we do.

When all is said and done and the sale is completed, that’s when we look at the sale and try to justify in our minds that it was a good price we sold it for and if we made a profit. We end up making excuses why we sold it for what we did or why we couldn’t sell it, but not really truly understanding why we ended up pricing it the way we did.

That’s why we don’t like to compete with places like Wal-Mart, Ikea, the big box stores and the like. Watch the average consumer (yourself included) when you walk into a store like that, you find what you’re looking for, you put it in your shopping cart, and off you go to the cash register to pay for it. That’s what we want everyone to do with “our” products, unfortunately it usually doesn’t work that way for the average woodworker.

My whole career for the past 45 years has been in sales and the last 27 years of that as a full time professional woodworker where I had to determine the selling price, be able to sell it and make a living doing so.

In one sense I was lucky, I didn’t start as a hobbyist and then try to figure out how to make it a career, but instead I jumped in with both feet and it was either sink or swim as a woodworking business. (It forces you to take things a little more seriously).

I was fortunate that my wife had a good job and that took care of a lot of the household expenses, but the business was totally a sink or swim situation. It was totally up to me to figure out how to market, price and sell my work!

After a few years in business I realized I was cheating myself and my woodworking because I was still allowing the household budget to cover my butt when I didn’t make enough to cover all the expenses involved with running a woodworking business.

It really opened my eyes when my wife was diagnosed with terminal cancer and was no longer able to work. We became a one income family with a ton of medical bills and a child ready to go to collage. There were no more safety nets, it was going to be either make a profit with woodworking or find someway else to make a living.

All said and done; I’ve enjoyed a wonderful 27 year career as a professional woodworker and wouldn’t have changed it for any other. I’m as passionate about my woodworking today as I was when I started.

So I have very little patience when I hear someone whine and complain because they can’t make any money doing woodworking.

Pricing your work, knowing how to market your work and getting out there and selling your work all have to go hand in hand.

I realize most woodworker’s don’t have a background in sales or even comfortable selling at all, so I hope I will be able to give you some food for thought that may help you price your work, be able to actually make a profit and sell your work for the price you should.

If you’re sitting here reading this and saying yeh, yeh, yeh, that’s all fine and dandy; he has lots of experience in selling, but what’s that got to do with pricing my woodworking? It’s simple; pricing and selling go hand and hand.

There’s a fine line between pricing your work where you can make a profit but still sell it, and pricing your work so you really don’t have a problem selling it, but you don’t make any money doing so.

So, with that being said, here are a few things I would like to cover in my upcoming series so you will be able to figure a price for your woodworking and then how to actually sell it.

• I want you to understand why you’re pricing your woodworking the way you are and how that may affect your final price.

• Truly understand what your total cost is to build a project to sell (how can you price your product if you have no idea what it cost you to build it? (I’m not talking just material cost).

• Understand what your product is and how will it fit in the market place. (Is there even a market for it)? Just because you build it, doesn’t mean they will come.

• Understand who will buy your product. (One important thing to remember, not everyone shops at Walmart.)

• Understand how to reach those that will buy your product
.
• You may have to actually “Sell” your product!

I hope I’ve created enough curiosity and interest that you will follow along the next few series to see if I can help you with your pricing (and selling) of your woodworking.

Check back tomorrow for part 2.

-- John @ http://www.thehuffordfurnituregroup.com



22 comments so far

View Karson's profile

Karson

35035 posts in 3868 days


#1 posted 05-30-2013 10:53 PM

John: Looks like this will be very informative.

Thanks for taking on this touchy subject.

-- I've been blessed with a father who liked to tinker in wood, and a wife who lets me tinker in wood. Southern Delaware soon moving to Virginia karsonwm@gmail.com †

View Puzzleman's profile

Puzzleman

411 posts in 2411 days


#2 posted 05-30-2013 11:00 PM

Looking forward to the rest of the series. Hopefully people will read it.
I’m sure that I will learn some things.

-- Jim Beachler, Chief Puzzler, http://www.hollowwoodworks.com

View grfrazee's profile

grfrazee

385 posts in 1607 days


#3 posted 05-30-2013 11:01 PM

You bring up a lot of good points here.

I’m one of those that tends to sell my work for the material cost x3. This is something I picked up from my dad, as that’s what he generally sells his stuff for (we both do it as a hobby and sell occasionally to coworkers or friends of friends).

That said, I never expect to make as much selling WW projects as I do in my full-time job. One example is a set of maple legs for a friend’s foosball table. The material cost was about $15, and when I told her $50 for the set, she ended up handing my three $20 bills and said to keep it. I would estimate that the project took me a good 6-7 hours, so my time was valued at about minimum wage.

In our “buy it cheap” culture, few people want to spend money on quality products, so finding an acceptable selling point should be hashed out before even starting a project. This is why I try to make the project to suit a client instead of making something and then trying to sell it to some random consumer. Sure, you may get less work, but if you’re not counting on a steady income, that’s not necessarily a bad thing.

-- -=Pride is not a sin=-

View Jorge G.'s profile

Jorge G.

1537 posts in 1942 days


#4 posted 05-30-2013 11:17 PM

Looks like a good read….

-- To surrender a dream leaves life as it is — and not as it could be.

View firefighterontheside's profile (online now)

firefighterontheside

13522 posts in 1324 days


#5 posted 05-30-2013 11:40 PM

I’m interested. My goal is to make nice stuff for people, save them some money over pottery barn and make a good amount for myself at the same time.

-- Bill M. "People change, walnut doesn't" by Gene.

View Buckethead's profile

Buckethead

3140 posts in 1336 days


#6 posted 05-30-2013 11:42 PM

I like that you warn readers that you might “step on some toes”.

Engaging in commerce is stepping on toes. Goods and services providers seek to make money. How much?... More.

Buyers and clients want goods and services at a price. What price? ... Less.

We can all be cordial, and play our own side of the field, while not doing a disservice to our counterparties. But we must accept the reality that we want to earn more, and they want to pay less.

Of course there are “name your price” jobs, but those are few and far between, and many we won’t get to recognize as such until after the fact. Too late. :-)

Be fair to yourself, and be fair to your clients.

A favorite line from the movie “The Joy Luck Club” is this: “You not know what you worth”.

Always a big mistake, in life and commerce.

-- Support woodworking hand models. Buy me a sawstop.

View Monte Pittman's profile

Monte Pittman

22045 posts in 1805 days


#7 posted 05-31-2013 12:59 AM

This is always an interesting topic and one I struggle with constantly.

-- Mother Nature created it, I just assemble it.

View DaleM's profile

DaleM

952 posts in 2851 days


#8 posted 05-31-2013 02:16 AM

Thanks for tackling this John. This is clearly the toughest part of a woodworking business or even a hobby side-job.

-- Dale Manning, Carthage, NY

View OggieOglethorpe's profile

OggieOglethorpe

1213 posts in 1577 days


#9 posted 05-31-2013 02:24 AM

“I’m one of those that tends to sell my work for the material cost x3. This is something I picked up from my dad, as that’s what he generally sells his stuff for (we both do it as a hobby and sell occasionally to coworkers or friends of friends).”

And it’s a silly way to do things.

Think of two copies of the same basic 16w x 24h x 12d wall hanging shelf… One is MDF, primed, edges filled, and painted. The other is rare figured cherry, with a fast, sprayed lacquer finish…

You’d probably spend far more time getting the MDF to look decent, yet the item would sell for far less.

The only way to sell anything with a profit motive is get a realistic rate for the time expended, then add materials, hopefully with a markup that covers the costs of obtaining and carrying the materials. Remember, the materials didn’t beam into your shop, you probably spent time selecting, ordering, and/or picking them up. If you can’t get the price you need to cover your expenses and make a profit, the job is not commercially viable, and shouldn’t be done.

If you’re not interested in a profit, you’re doing favors, so who cares? Favors are good deeds, and have nothing at all to do with pricing work.

View doordude's profile

doordude

1085 posts in 2450 days


#10 posted 05-31-2013 05:48 AM

John, i hope you have the guts and ability to step on some toe’s; and continue thru part two.
i’m pulling for ya!

View huff's profile

huff

2828 posts in 2752 days


#11 posted 05-31-2013 11:29 AM

Thanks for the encouraging words. I’ll post part two in a little while so hope most everyone will follow along.

Jim (Puzzleman); I respect your opinion on marketing and sales more then anyone, so I’m flattered that you are reading this. I hope you will follow along and follow up on anything I missed.

I have 5 parts to this series, so we have a long way to go ( unless I need to add more before it’s over) lol.

I’m sure I’ll be stepping on toes, but that’s exactly what it took for me to take a second look on how I was pricing my work and knowing if I was making a profit. I’m not trying to insult or make anyone mad, but I do have a tendency to be blunt at times.

Barry; I had to laugh when I read your post this morning because what you mentioned about covering all your time when doing a project is exactly what I was thinking about what I might need to mention and stress a little more in my blog.

We have a habit of only thinking of the actual build time and never take into consideration the time spent going to get lumber, stopping to pick-up hardware, finishes or time spent on the computer ordering things. Down time in the shop because we can’t do anything else because we’re waiting for a finish to dry or picking up and putting things away so we can start another project and most importantly, the time spent marketing and selling our products.

And I really like your comment on; If you’re not interested in a profit, then you’re doing favors….........and favors are good deeds. You’re right, that has nothing to do with pricing our work. We need to keep those seperate. Well said.

-- John @ http://www.thehuffordfurnituregroup.com

View jimmyb's profile

jimmyb

185 posts in 1359 days


#12 posted 05-31-2013 12:04 PM

One of the problems I have with pricing per hour is that on a new project we will be slower the first time through (learning curve) then later when we make the same thing quicker after a dozen times. Also the in-experienced WW would be slower than the more experienced.

This would then lead to the inexperienced WW making more money then the master??? No he would have to figure less per hour then the master WW to offset his / her lack of experience. If you were charging straight per hour the first prototype would cost a fortune. Now you have to estimate the true cost of future products based on an estimated time to build. I think 3x or 4x or 5x is just a quick way of trying to estimate ALL costs into one formula.

The 3 times cost is a typical retail markup. What fascinates me is that we would markup a $100 item to $300 (3x or 300% mark up) and then offer a 50% discount and still make a 50% profit. Of course this is called Mark Up and then there is Gross Profit Margin.

If I had a $100 cost item and wanted to maintain a 30% GPM I would sell it for $142 (100 divided by .7 or 30% of the sales price is now profit $142×30% = $42 rounding pennies of course). This one we used in the distribution / industrial field and of course was supposed to cover ALL expense or costs of doing business. Was confusing to me in the beginning but made sense after a while.

I guess we are all looking for a simple formula to help us sell our WW products.

-- Jim, Tinley Park, IL http://jbuda.net

View krisrimes's profile

krisrimes

111 posts in 2002 days


#13 posted 05-31-2013 12:05 PM

Thanks for taking the time to type this out. Looking forward to following it.

View huff's profile

huff

2828 posts in 2752 days


#14 posted 05-31-2013 01:07 PM

Jim,

You make a valid point, it does take longer to make a proto type then it will after we work out all the bugs, make templates and jigs and get more experienced and efficient with our woodworking.

If you are planning on building multiple items of the same you have the advantage of building that proto-type and having time to study to determine if you could build it in less time if you had better tools, templates to simplify the tasks, jigs to make it easier and faster and of course the learning curve.

Trust me; 99% of all beginning woodworkers leave out plenty of hours they figure is their learning curve and don’t charge for it.

I realized after 27 years working full time as a professional woodworker, I improved my build time for most projects, but unless you become an assembly line, mass-producing something and invest in the equipment to be able to do so, then you can only produce so much in an 8 hour day no matter how much experience you have.

Custom work is always the hardest for a beginning woodworker. Number one, you’ve never built it before so you have no idea how long it will take, second; you may not have experience in that particular type woodworking at the time and have to learn a new technique or something, and third; you have to quote a price without knowing for sure the material cost or the number of hours it will take.

Like I said in my blog; if you’re comfortable with how you price, it’s all good. There’s no magic answer to how we should price our work.

I hope you will continue to follow along.

Good luck and thanks for posting.

-- John @ http://www.thehuffordfurnituregroup.com

View OggieOglethorpe's profile

OggieOglethorpe

1213 posts in 1577 days


#15 posted 05-31-2013 02:37 PM

“Trust me; 99% of all beginning woodworkers leave out plenty of hours they figure is their learning curve and don’t charge for it.”

Not just beginners….

I once heard Steve Latta share a story about back in the day when he was employed in a shop (Irion?) that made extremely fine custom items, like $80k armoires, they spent a decent number of unbillable, and possibly unpaid, learning hours figuring out how to make certain parts.

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