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How to price my woodworking (and sell it) #2: How to price your woodworking to make a profit (and sell it)

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Blog entry by huff posted 05-31-2013 12:27 PM 5995 reads 7 times favorited 17 comments Add to Favorites Watch
« Part 1: How to price your woodworking to make a profit (and sell it) Part 2 of How to price my woodworking (and sell it) series Part 3: How to price my woodworking (Knowing what it cost to build a project) »

How to price my woodworking?
(And sell it) Part 2

Know your market!

So let’s start with why you’re pricing your woodworking the way you are now. If you’re a hobbyist and you don’t sell your work or you really don’t care how much you make when you do, then there is no reason to read further.

If you’re comfortable with how you price your work or you’re a professional and you already have a system for pricing in place and you like how things are going, then there is no reason to read further.

But if you fall some where in between on that scale I talked about in the first series, then let’s get started to see if I can help you with pricing.

It really doesn’t matter what your background experience is or what you do for a career or how much experience you have in sales. You need to have a starting point and that should be to know what you’re building and what it is you actually plan on selling. So what do I mean by that?

Here’s a question I hear a lot from woodworkers ask; I love woodworking and I want to sell some of my work. What sells?

That’s such a loaded question and there’s no golden answer, no one liner that’s going to help you on that one! What one woodworker may be able to build and sell, another woodworker wouldn’t stand a snowball’s chance in hell of selling! Sorry to be so blunt, but now that I’ve got your attention, let’s clarify that a little.

Just because I can design and sell $5,000 home entertainment centers, doesn’t mean every woodworker out there would or should or could, and just because another woodworker can design and sell $50,000 kitchen cabinets and make a living at it doesn’t mean every woodworker could or should or would and again, if a woodworker can design and sell birdhouses and make a profit at it, doesn’t mean I could or should or would.

You have to “start” with what you have the capabilities to build, what tools and your shop will allow you to build, what you would “like” to build and what you think you would be able to sell once you built it.

The only other thing I want to say about your woodworking before we move on to actually pricing and selling your work is; you better build a quality product! Just because you built it, or you hand crafted it, doesn’t automatically mean that it’s better then anything out there in the stores already for sale. Be honest with yourself, if you’re offering nothing more than some ho-hum product and expecting to be able to sell it for a great profit, then you’re starting out behind the 8 ball from the get-go.

Once you decide what you would like to build and sell, then you have to find a market for it. Here’s where so many woodworkers make a fatal mistake when they start the process of pricing their work.

Let’s see if I can put this in perspective; say you build a beautiful jewelry box. It’s made with some expensive exotic wood with elegant design features and flawless finish. You have hours and hours invested in making this box and you take it to your local flea market or country craft fair to sell it. Nobody there is looking for a $400 jewelry box, so you automatically figure you must have it priced too high.
Hello!!!!
That’s known as knowing your market; or in this particular case; it‘s not knowing your market. So instead of finding a market you could sell your jewelry box at, you start thinking about how low of a price you need so you can sell it. You forget about how much it cost or how many hours invested in building it, but focus more on “what the market will bear” and you start pricing your work based on that.

It should not have as much to do with “what the market will bear”, as it has to do with finding the right market for what you build and want to sell.

And it doesn’t matter what you build, whether its bird houses or kitchen cabinets, if you don’t find the right market you will end up letting the wrong factors determine how you price your work.

That’s why we get hung up with customers buying at Wal-Mart, Ikea, Harbor Freight, Lowe’s and the like. We somehow think that “everyone” shops at these places and we have to price our work accordingly or we will never be able to sell our products.

If that’s the customer base you want to sell to, then yes, you will have to figure out how to price your woodworking to compete with their prices………And good luck with that!

Two very important things to remember when it comes to worrying about whether you should or could compete with stores like that.

First; they have the luxury of choice in deciding who they buy their products from and how much they are willing to pay for that product so they can retail it to the average customer. Even if they buy cheap crap from overseas, they are looking for one thing and that’s “price point”! They’re looking for the masses to purchase their products, so price will have to be low………….real low. Quality, Service or even where it’s built or by whom it’s built doesn’t have much to do with it.

Second; if you had the luxury of selling thousands upon thousands of a single item, you could probably find a way to build it and sell it at a lower price. If you had the thousands of outlets to show and sell your products, you could probably sell a lot more at a lower price.

You have to realize this is not the market you should try to compete in and that’s not the average customer base you are going to sell to. If you allow yourself to go down that path, then you have to allow those factors to determine your pricing.

As a woodworker; being your own manufacturer, having to sell just a few items at a time and having to rely on more then just a low price, you have to find a different market all together. It’s a much smaller market and you have to actually work harder to find that customer.

I know most of you will say you already knew that, but I also know that most of you will still think about those stores and worry about their pricing when it comes to trying to price and sell your work; Right?

When I first started my business, one of the things I really enjoyed designing and building was home entertainment centers. That was almost 30 years ago and most of the styles were Armoire type cabinets. (Before wide screen TV’s). Even though there were no Ikea or Rooms-to-Go type stores around at that time, Sears and all your local furniture stores carried that type (mass-produced) entertainment centers and most sold for around $399.95 or less. How in the heck could I compete with that?

I can still remember the first time I came home and told my wife I had sold an entertainment center for over a $1,000.00. It was exciting and I had to realize that just because I was a one man shop, located in a small town in a farming community, not everyone bought their furniture from Sears. I could find customers that where looking to have a piece of furniture custom built and willing to pay for it.

I had to find my market and grow from there. It took time, but I realized that some customers where able and willing to pay $5,000, $10,000 or even $25,000 to have a custom made home entertainment center for their home.

Here’s my point; you can’t sell that type furniture in a Wal-Mart parking lot, or at a flea market or on Craig’s list. I had to find a market for my type woodworking and a price I could afford to build and sell them for and not allow others to dictate my price. I wanted to design, build and sell $1,000.00 entertainment centers for $1,000.00 and not build $1,000.00 entertainment centers to sell at $399.95 because that’s all the market will bear or that’s where I allowed my “comfort zone” to be.

Guess what; I found my real comfort zone was designing, building and selling $5,000 to $10,000 entertainment centers. I quit worrying about the customers that bought their furniture at Sears or the local furniture stores and started thinking about where the rest of the customers shopped for their furniture.

Here’s another example of finding your market. John is also a Lumber Jock and I asked his permission to use his business as an example in my book, so I’m sure he won’t mind me sharing his story here. Let’s talk birdhouses for a moment. Now there is a product you can find in Wal-Mart, Lowe’s, Home Depot and any home and garden shop across the nation. Talk about pricing! How in the heck could you ever build a birdhouse and compete with Wal-Mart or the others? Simple, don’t try competing with them, see if they can compete with you.

Check these birdhouses out!

Do you really think John worries about what Walmart or the lawn and garden departments from the big box stores sell their birdhouse for? I know this is extreme, but I wanted to make a point. The lowest price is not always the answer, but knowing your market and targeting it can work at any price. (Your product has to match your market).

Please visit John @ www.extremebirdhouse.com. He’s a true craftsman and knows how to market his product.

THANKS AGAIN JOHN!

Let’s continue on tomorrow.

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



17 comments so far

View CessnaPilotBarry's profile

CessnaPilotBarry

890 posts in 764 days


#1 posted 05-31-2013 02:40 PM

Outstanding write-up!

-- It's all good, if it's wood...

View DS's profile

DS

2131 posts in 1074 days


#2 posted 05-31-2013 03:04 PM

This is a very good write up.

It is my experience, though, that making a profit is more about how you ‘buy’ your product than how you ‘sell’ your product.

By ‘buy’ I mean what it costs you to produce your product. It becomes a math game based on percentages at that point. Once you’ve found the market you want to be in, determine the most cost effective way to ‘buy’ your product. Sometimes that means investing in equipment or specialized tooling that makes the job more cost effective per unit.

Case in point, I supplied a small jewelry item to a wholesale distributer a few years ago that wanted a less than $1 entry point. Based on my first attempt to fill his order, this was not possible. My produced cost was nearly $1.

Then I found three different companies with the specialized capabilities to produce different facets of the job using specialized equipment. I was able to offer my client a $0.47 price point with a cost basis of $0.12. I turned a very tidy profit on his initial 200,000 piece order.

Had I not been able to find a better way to ‘buy’, I could not have ‘sold’ at a profit.

-- "Hard work is not defined by the difficulty of the task as much as a person's desire to perform it.", DS251

View Karson's profile

Karson

34876 posts in 3054 days


#3 posted 05-31-2013 03:26 PM

John:
Some great points.

-- I've been blessed with a father who liked to tinker in wood, and a wife who lets me tinker in wood. Southern Delaware karson_morrison@bigfoot.com †

View Joe Lyddon's profile

Joe Lyddon

7718 posts in 2706 days


#4 posted 05-31-2013 03:41 PM

John,

Thank you!

You really took it from Ground Zero in a very scientific, logical manner…

Great Job!

-- Have Fun! Joe Lyddon - Alta Loma, CA USA - Home: http://www.WoodworkStuff.net ... My Small Gallery: http://www.ncwoodworker.net/pp/showgallery.php?ppuser=1389&cat=500"

View BritBoxmaker's profile

BritBoxmaker

4369 posts in 1690 days


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

Honest, straightforward, sense.

Thanks for this, John.

-- Martyn -- Boxologist, Pattern Juggler and Candyman of the visually challenging. http://www.theartofboxes.com

View nancyann's profile

nancyann

106 posts in 547 days


#6 posted 05-31-2013 04:53 PM

Just read your blog, it’s as if you knew me and what I was selling my crafts for! Thanks for the insight, I’ll will be looking for that other market from now on.

-- Nancy Antley

View a1Jim's profile

a1Jim

112087 posts in 2231 days


#7 posted 05-31-2013 04:57 PM

Thanks John this should be of considerable help for folks that ask how to price their products.

-- http://artisticwoodstudio.com Custom furniture

View madts's profile

madts

1261 posts in 994 days


#8 posted 05-31-2013 05:01 PM

Very good blog. Thanks.

-- Thor and Odin are still the greatest of Gods.

View Rick M.'s profile

Rick M.

3961 posts in 1034 days


#9 posted 05-31-2013 08:51 PM

Excellent article. I work in another industry and am often asked by people wanting to break in… ‘how much should they charge?’ And I give them the same answer about knowing your market and oddly it is people already in the industry who are most resistant to this advice. Some get this idea in their head that it doesn’t matter what anyone else charges… you simply add up your costs, tack on your target profit and people will line up at your door. Of course if your product is exceptionally high quality, unique, and you have contacts with money and a reputation then by all means, charge whatever you want. But for the average guy selling average stuff, there is going to be a reasonable pricing range and you’ll need to be in it.

-- |Statistics show that 100% of people bitten by a snake were close to it.|

View CessnaPilotBarry's profile

CessnaPilotBarry

890 posts in 764 days


#10 posted 05-31-2013 11:48 PM

“Some get this idea in their head that it doesn’t matter what anyone else charges… you simply add up your costs, tack on your target profit and people will line up at your door. Of course if your product is exceptionally high quality, unique, and you have contacts with money and a reputation then by all means, charge whatever you want. But for the average guy selling average stuff, there is going to be a reasonable pricing range and you’ll need to be in it.”

Exactly…

And if you can’t get in that range, you need to find out why your production costs are too high to leave a profit, and reduce them, or find a way to get customers to perceive your product as worth the extra cost.

-- It's all good, if it's wood...

View kajunkraft's profile

kajunkraft

98 posts in 864 days


#11 posted 06-01-2013 01:15 AM

Thank you for this very good article.

I do attempt to sell much of my woodworking production. I am able to very accurately calculate my cost of materials, which is a rather small amount of what becomes the actual selling price. The difference between the cost and selling price is a figure that equates to what I have “earned” for my time. Of course I also try to allocate a certain amount for “shop overhead”, which means everything from electricity, sandpaper, etc. Which leaves me even less for my “time”. So the question becomes, “What is my time worth”?

Would really like to hear from any of y’all as to what you think our time should be worth.

View gfadvm's profile

gfadvm

10866 posts in 1344 days


#12 posted 06-01-2013 01:40 AM

Thanks for doing this blog. I really need all the help I can get as I haven’t had any luck selling my boxes at all. Just haven’t found the right venue I guess.

-- " I'll try to be nicer, if you'll try to be smarter" gfadvm

View Monte Pittman's profile

Monte Pittman

14179 posts in 992 days


#13 posted 06-01-2013 02:50 AM

I constantly shop for the best prices on things that I need to buy. Even the things that I have a line on, I occasionally recheck to make sure that I am getting the best price. I am always trying to push products to higher markets. I am also trying to improve my products so that I feel justified in pushing the prices.

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

View huff's profile

huff

2804 posts in 1939 days


#14 posted 06-01-2013 03:49 AM

Kajunkraft,

That’s a really good question, but I guess that depends on each individual and what they feel they need to make to make it worth while.

If you have a full time job and only doing your woodworking business part-time in the evenings and days off, you may not feel the need to make as much per hours as the woodworker that is doing it full time and it’s their only income.

But never sell yourself short; for every hour you’re working in your shop (even part time) you are away from your family.

If you translate it to a full time job working 40 hrs. a week, 50 weeks a year, then if you pay yourself $10.00/hr, that will only amount to $20,000 year gross pay. Having to pay your own taxes, vacation time, sick time or health care doesn’t leave you much for a net pay.

Even at $20.00/hr. doesn’t translate to that much in today’s economy. But again, that has to be the decision for the woodworker and how much he has to rely on that income.

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

View huff's profile

huff

2804 posts in 1939 days


#15 posted 06-01-2013 04:00 AM

Monte,

That’s exactly how you should be doing it. We have to take it step by step until we find that Comfort Level that we can build and sell a product at a fair price and make a fair profit in doing so.

Constantly checking to keep material cost in line, always looking for better venues to market our product in and working on improving our product is how you will bring it all together. Sounds like you’re on the right track.

If you interact with your customers like you do here on Lumber Jocks, I know you’ll do really well in your business. Keep up the great work.

We may all be woodworkers, but we should never forget we’re in the “People” business. That’ s who buys our products!

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

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