Reply by Dan Krager

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Posted on Woodworking business programs?

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Dan Krager

3972 posts in 2204 days

#1 posted 01-05-2013 04:46 PM

Hello Dan.
A noble resolution for sure, and one I believe all woodworkers struggle with. The tracking tools of choice are as personal as anything can be and from what I’ve seen, no two are alike. Ill be happy to freely share what I use, but you might find it too cumbersome to start with. Here’s why. I use an “action based cost” (ABC) accounting method that I developed for myself primarily on spreadsheet. It can get very detailed, but what I’ve found is that the more discipline I apply to recording the detail, the better my estimates become. I’ve experienced accuracy of a $50 difference between estimate and actual on a $10,000 order, which is kinda rare. It’s at least predictable.
Here, in a nutshell, is how it works. Over time I have recorded the time it takes to do a process, like make a tenon joint. In a spreadsheet table I list all the processes with a production time and a setup time for each. This includes OH processes and each process is assigned an hourly value based on skill level. So shop clean up is rated as slave labor while estimating and design time are highly valued. In another table I list all the lumber prices by species. Anther table lists sheet good prices. I then use a multipage spreadsheet with sheets where I list all the processes to be used (some are automatic), all the lumber in finished sizes yielding BF to purchase including waste, number of sheets, etc. The result is summarized automatically on a cover sheet which presents the labor, material, and OH costs with a markup and a selling price. The detail sheets become cutting lists.
Like I said, the greatest weakness of this system is the discipline to keep recording the time detail. I use a shop log where I try to fill the detail at least twice a day before I forget what I did and how long it took. The motivation is greater accuracy, and the structure helps not to forget to charge for something that isn’t a direct cost. I then average in the new time factors quarterly, so as the system matures new ways of doing things updates the processes.
This could be adapted any way you have the skill and motivation to do so. There are lots of threads, here and on LinkedIn discussing this very question with opinions all over the place. I get a kick out of the loose style some admit to, as in sighting down the arm with thumb up and thumb to left…bingo! I have your price! I’m thinking the thumb sight is directed at the size of the buyers wallet! :)

-- Dan Krager, Olney IL One should always prefer the probable impossible to the improbable possible.

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