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How to price my woodworking (and sell it) #6: Correcting mistake to Summary

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Blog entry by huff posted 06-02-2013 07:50 PM 3122 reads 11 times favorited 15 comments Add to Favorites Watch
« Part 5: Summary Part 6 of How to price my woodworking (and sell it) series no next part

I’m not sure what happened when I posted my summary, but part of it got left out, so here it is.

What should you expect your % of closure be in selling your work?

Another words, if you talk to 100 serious customers, how many do you think you should be able to sell your products to? Here’s one way to look at it and break it down so you may not feel so bad if you don’t get a sale every time you talk to a perspective customer.

The first thing I would like to clear up right now is; if you’re closing 80% to 90% of your sales now and you’re just getting started in your business, don’t flatter yourself, your not that good, it’s just your prices are too low.

I’ve heard of guys that have only been in business for a couple years tell me they have a two year waiting list of customers. The only thing that tells me is they are giving their work away and every one is getting in line.

Realistically, you should loose at least 25% of your sales because you’re too high priced and let me repeat that; at least 25% because you’re too high priced! I know that sounds ridiculous, but if you’re not, then you’re trying to beat the price of every cheap piece of crap on the market. If you’re not getting a “gulp” factor now and then from a perspective customer, then you must be too low priced.

You have to also realize that another 10% of your perspective customers aren’t going to buy from you no matter what the price is. They may be talking to you about your product, but they just want information, they want conversation, they want to tell you how you should price your work or how you should build it, but they have no intention of buying anything. (This percentage can actually be a lot higher depending on how you’re marketing your product).

You can count on another 10% that simply won’t like what you’re selling. Don’t be offended; remember, you can’t be everything to everyone all the time.
And the last percentage is one that you have to learn about with time; that is, there is probably 10% you don’t want to sell to. There’s an old saying that applies to so many things but simply put; “there’s always that 10%”! They’re jerks, there’s no satisfying them, and you’re better off not even trying to deal with them. You know the type! Learn to stay clear of them, don’t waste your time. That also may sound blunt, but trust me, over the years you will learn about that type customer and they will never be worth the sale.

Let’s add up the percentages:

25% =your price is too high (what I call the Gulp factor)!
10% = won’t buy, no matter what your price is! ( you can easily add another 10% to that at time.)
10% = simply don’t like your product for whatever reason
10% = you don’t want to sell to! 55% = Total; that means if your closure rate is 45%, that would actually be a really great closure rate, but to be realistic for the average woodworker it will be more like 25-30% or less.

And why do I say that? Simple; the one percentage I did not include in that formula is YOU. You alone can have the biggest effect on the percent of sales you close. Now I’m talking more about sales instead of prices, but again, they go hand in hand.

All these percentages are flexible, but we have a tendency to only think of price for a reason someone doesn’t buy from us and immediately feel we need to lower our price. So before you jump the gun and over react because someone doesn’t buy from you, make sure you look at all the reasons they might not have bought from you.

So that was the part of the summary I left out earlier and hope this will also help.

I keep thinking of things I should cover, but now it starts leaning more towards Sales and Marketing so we’ll end for now.

Feel free to drop me a line if you have questions or I’ll be glad to discuss here with an open forum for anyone that’s interested.

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



15 comments so far

View shipwright's profile (online now)

shipwright

7163 posts in 2258 days


#1 posted 06-02-2013 11:13 PM

Thanks John.
You should edit the last one to include this correction.
Great blog.

-- Paul M ..............If God wanted us to have fiberglass boats he would have given us fibreglass trees. http://thecanadianschooloffrenchmarquetry.com/

View huff's profile

huff

2828 posts in 2745 days


#2 posted 06-02-2013 11:59 PM

Thanks Paul,

Didn’t realize I could edit the summary after it had been posted so long. I was having a terrible time getting it to post at all for quite awhile. Not sure if it was on my end or Lumber Jocks, but I finally made it.

I really appreciate your comments because you’re another one of the L.J’s that I truly enjoy and respect what you have to say on any thread.

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

View gfadvm's profile

gfadvm

14940 posts in 2150 days


#3 posted 06-03-2013 12:56 AM

I’m holding my breath waiting for the sales and marketing installment.

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

View huff's profile

huff

2828 posts in 2745 days


#4 posted 06-03-2013 11:33 AM

gfadvm,

You’ll probably have to take a breath or two. lol But thanks for the encouragement.

I was very uncomfortable with selling in the beginning, but found ways to overcome it and now selling seems to be the easiest part of my woodworking.

I’ll start putting together some thoughts and see what I can come up with for another series.

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

View Buckethead's profile

Buckethead

3140 posts in 1329 days


#5 posted 06-03-2013 11:49 AM

I have followed this blog through, and it is among my favorites. This might be my favorite installment of the series.

I love talking about value.

It is a subjective topic, as value is always subjective. Two identical pieces will have two different values. Value is based upon what a buyer and seller agree.

I absolutely agree that you should be turning business away due to your prices being a tad too high. There is no shame in starting low to get your foot in the door, but once in the building, you need to have enough capital to grow, improve, diversify, and keep the darling wife in a respectable pair of shoes. All important factors. You won’t get there by underbidding the competition in order to gain work.

I have seen labor brokers aka pimps, make quite a bit of money using the undercutting model, but all the crafts persons down the line are unable to progress. It becomes a master/servant relationship. AVOID. Better to be hungry for a week than for the rest of your life.

I also think your proportions are correct. Losing about 1 in 4 jobs to higher pricing seems about right. To lose more by raising prices will actually earn you less money, whereas the same occurs when you underbid.

If you don’t like working, overbid… If you like working free… Be the cheapest guy in your field.

All of this requires experience.

It’s scary out there…. Not really. I lied. Who wants more competition? Lol!

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

View Kaleb the Swede's profile

Kaleb the Swede

1727 posts in 1429 days


#6 posted 06-03-2013 12:09 PM

Mr. Hufford,

Just wanted to say thanks for all of these. I printed them out and have been rereading them and making notes. This information has been a huge eye opener for me. Maybe one day down the road after I get more practice take as many classes as possible and read all I can, I can do this on the side. But I wanted to thank you in advance

-- Just trying to build something beautiful

View huff's profile

huff

2828 posts in 2745 days


#7 posted 06-03-2013 01:21 PM

keep the darling wife in a respectable pair of shoes.

I have seen labor brokers aka pimps

It becomes a master/servant relationship. AVOID. Better to be hungry for a week than for the rest of your life.

If you don’t like working, overbid… If you like working free… Be the cheapest guy in your field.

Buckethead;

I like your way with words.

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

View huff's profile

huff

2828 posts in 2745 days


#8 posted 06-03-2013 01:29 PM

Kaleb,

Thanks. I’m glad you feel there is some information there that may help you down the road.

I wish I could take credit for all the information, but this has all been passed down to me by other successful woodworkers and businessmen that I found to be very helpful in my business.

I just wanted to share it with other woodworkers with the hope that it would help someone.

You, my friend, made it all worth the time and effort.

BTW; Please call me John or Huff…...........Mr. Hufford was my Dad. LOL (He was really old)

If you have any questions feel free to drop me a line. Be glad to help if I can. (that goes for everyone).

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

View Roger's profile

Roger

19865 posts in 2264 days


#9 posted 06-06-2013 11:38 AM

Excellent series John. I’m glad we don’t have to pay you fer all this info… LOL Tis well appreciated

-- Roger from KY. Work/Play/Travel Safe. Keep your dust collector fed. Kentuk55@yahoo.com

View huff's profile

huff

2828 posts in 2745 days


#10 posted 06-06-2013 11:57 AM

Thanks Roger,

I would like to write a series on Sales and Marketing also. I’m working on the outline now, but it will take me awhile to compile everything.

I enjoy sharing with others, I just have to be careful not to talk them to death! lol

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

View Chad256's profile

Chad256

131 posts in 1346 days


#11 posted 06-07-2013 09:02 PM

Thank you very much for your “free” assistance. You sold yourself short…you could sell this! lol But thank you for helping us out. I love the LJ community because everyone is here to help out the new guy(me). I got on looking to ask some of these very same questions because as I make things whether they are gifts of not I never really know what to charge. I’m working on a project now that I very quickly realized I WAY UNDERBID it. No big deal, the customer get a great deal and I learned in the process and thats what got me looking for just what you wrote. My hat is off to you sir and thank you again…I may be bothering you some in the near future as I attempt to make money from my new-found love of woodworking!

-- -- Chad -- T&C Woodworks

View huff's profile

huff

2828 posts in 2745 days


#12 posted 06-07-2013 10:42 PM

Chad,

Feel free to drop me a line if you have any questions.

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

View Zelbar's profile

Zelbar

74 posts in 3001 days


#13 posted 09-20-2013 07:18 PM

Thanks for all the great information John

I would like to add a couple of things I have found and that have worked for us. I know a lot of you are looking to sell small items on mass. John comes from a point of view of selling custom built items and his advise is great and it applies to all areas of sales. I too sell custom builds but also have a steady business selling smaller items. I find this gives me a regular weekly income but also allows me to make a lot more contacts for my larger or custom built pieces.

So the couple of things I wanted to add for you on mass producers are

Sell something useful

Be different than your competition and find the right market for you

Don’t sell too cheap

First the sell something useful. When we first started this my wife said “Don’t sell dust collectors” We have taken this to heart and with few exception try to build things that people will use on a regular basis. People have an easier time justifying spending $200 on a cutting board they will use everyday than $200 on a wood sculpture to sit on the mantel. It has worked for us a least.

We wanted to be different, the other people at the market were selling items made from pine or barn boards (not that there is anything wrong with that) we took a different direction and made items from woods like Walnut, Cherry and Exotics. It set us apart from the other woodworkers. People could see the difference and it was not long before we were not only greatly outselling the other woodworkers but also selling items for a lot more money each. You do not need to be the cheapest. People will pay for good quality. Even if you are selling the same items as some of the other vendors, do it better and you can charge more. This also comes down to where you sell. Find a venue where people are looking for the types of items you have. In the beginning we tested a number of different markets before settling on some that where the general consumer fit with our line up of products. If you selling items for $10.00 each maybe the local flea market would be great but if your selling items for $200 your sales at that same flea market may be disappointing. Find the market for you. Flea markets, Farmers Markets, Wholesale, Craft Fairs, Galleries, etc.

Lastly Price.

Just because your calculations come up with a price does not mean you have to sell at that price, you CAN sell it for more than that!

I have a new small item that takes .27 bf of wood. I do them in a variety of woods but if I take the most expensive wood I use on them is $7.00 BF. So $1.89 cost for one of these. Right off the bat I double the price of my wood to cover for waste. Off cuts I can’t use, bad parts of the board, screw ups, etc, plus some profit so I figure my cost to be $3.78 for wood. Doing them in batches it takes 20 minutes to cut, shape, sand and finish one of these. At my shop labour rate of $50.00/hour that means $16.50 for labour. Add them together and you get $20.28 each. I started out selling them at $25.00 apiece. They are selling great so I just raised the price to $30.00 each. Over the next month or two I will evaluate how they sell and if it is justified I will raise the price again. If the opposite were true and I found I could only sell these at under my material and shop labour rate I would give them up as a lost cause and find something else more profitable to make with my time

I have done this in the past with items. When first started selling woodworking part time years ago my friends and family were my testing bed. I would build a prototype and ask them what they thought, what changes I should make and what price would they pay for it. While I got some great suggestions on changes, don’t ask them what they would pay unless they are exactly your market. On that first item they said no more than $80.00. For the exact same piece today I sell them for twice that much, I sell lots, and I am looking at raising the price again. I just found people that had more money than them to sell to. Also in that time I have found better wood suppliers, and streamlined the building so my cost of building one has gone down, profits have gone up.

Thanks again John for the post. Going to go read your one on Marketing now.

-- With more power you can make toothpicks faster

View huff's profile

huff

2828 posts in 2745 days


#14 posted 09-20-2013 10:56 PM

Zelbar,

So well put! Most woodworkers are so afraid to charge a fair price for their work and take the time to find the right market to sell it at, that they never realize they may be able to sell for a lot higher prices.

I did exactly what you have done and that was to try a market and if my work sold “too” easy, it was definitely time to raise my prices.

Thanks for the comments and it’s a great help for others like yourself, with success in selling to share your ideas that have worked for you. So many woodworkers struggle with pricing and selling their work and it’s nice to get input from others.

Thanks again,
John

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

View Roger's profile

Roger

19865 posts in 2264 days


#15 posted 07-11-2015 11:35 PM

Thank you as well Zelbar. Appreciate your added input.

-- Roger from KY. Work/Play/Travel Safe. Keep your dust collector fed. Kentuk55@yahoo.com

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