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Determining prices

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Forum topic by Stewbot posted 07-14-2015 07:36 PM 1081 views 0 times favorited 8 replies Add to Favorites Watch
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Stewbot

195 posts in 551 days


07-14-2015 07:36 PM

For anybody who actively sells thier wood working projects, how do you price your items?

Do you bill your time plus materials? Determine each projects price based on its purpose, amount of detail involved and cost of material it takes to build? Simply make up a price dependent on each specific item with no specific system when doing so? Price it to what you think someone will pay?

-- Hoopty scoop?


8 replies so far

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darinS

678 posts in 2334 days


#1 posted 07-14-2015 10:34 PM

Pretty good blog series here to give you an idea.
http://lumberjocks.com/huff/blog/36271

And if you are curious about a little marketing…
http://lumberjocks.com/huff/blog/36598

-- They say many people die because of alcohol. They never realized how many of them are born because of it.

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Stewbot

195 posts in 551 days


#2 posted 07-14-2015 11:16 PM

Just the answer I was looking for, thanks.

-- Hoopty scoop?

View FellingStudio's profile

FellingStudio

93 posts in 1149 days


#3 posted 07-14-2015 11:55 PM

Huff’s blog is a good one.

Personally, the short and sweet version of my basic system is …

(1) Determine what your shop rate is … (= Your overhead [utilities and rent on your shop space + depreciation of your equipment] + your wage + business profit).

(2) Piece price is then the materials + time spent (estimated or actual) + shipping costs (if necessary) + applicable taxes.

(3) Adjust for the market as applicable. (Compare your work to what other folks in your area are charging, adjust the price up or down depending on the quality of your work, and how fast/much you are selling.) Never adjust to a point where you are giving your work away for free or for peanuts. Be fair, but somewhat ruthless when evaluating the quality of your work.

-- Jesse Felling - http://www.fellingstudio.com

View Puzzleman's profile

Puzzleman

411 posts in 2411 days


#4 posted 07-15-2015 07:49 PM

I agree with Huff and Felling Studio. Their info is great.
One point to remember is not to under sell your products. When determining your price, remember that is the minimum price you want to sell at. If your market commands a higher price, by all means do it and make more profit. If your market demands a lower price, you have a few options: 1. Don’t make the product anymore, if you can’t make a profit, it is silly to continue to sell it. 2. Change the materials to lower cost/quality materials.
3. Change your production methods to shorten the amount of time needed to make the product.
4. Sub-contract parts of the product line to save you time.

It may be hard at times, but track your time and materials for every project. Doing so will give you the numbers to plug into your formula. Then when you work faster than your numbers, it is a great feeling knowing that you are making more profit.

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

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Stewbot

195 posts in 551 days


#5 posted 07-15-2015 11:34 PM

Thanks for the advise, I really appreciate it. The Huff blog is a very good read with great tips to follow indeed. The manner in which I sell my projects (very basic stuff) is very casual and is simply for the sake of a little extra income. But with that said, I would like to try and take this aspect of what im doing more seriously and try to improve upon the factors involved. Again, thank you for the input.

-- Hoopty scoop?

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barringerfurniture

223 posts in 1179 days


#6 posted 08-29-2015 05:49 PM

When it comes down to it, I basically bill for time and materials. But the pricing system I’ve developed makes it a little more complicated than that.

My system breaks down a given piece into individual parts with price figures based on my hourly shop rate, then added together for a total milling cost. Then percentages of that cost are added for things like “assembly”, “cleanup, sanding and finish”, “tool setup, maintenance and sharpening”, misc. expendables like sandpaper glue, fasteners”. I add a 20% markup to all materials selected or transported by me rather than factoring that time into the cost by my hourly rate. I charge a delivery fee. I charge a design fee for any drawings. I’ll usually round down the number in the end to make it more attractive, while also looking at competition for a comparable product.

Basically, I do my best to charge for EVERYTHING while also providing a competitive price. Most importantly, everything is accounted for. If I wish to adjust after this, I at least know where to adjust and I also have a reliable and very detailed explanation if there are any questions.

I made pricing sheets that allow me do all this quickly with a calculator.

I’m sure some of you can point out flaws in this. Seems to land me in the ballpark just about every time though.

-- Scott Barringer, Sacramento, CA barringerfinefurniture.com

View Jim Finn's profile

Jim Finn

2417 posts in 2389 days


#7 posted 08-29-2015 07:24 PM

It all depends on what the consumer is willing to pay. If it is not enough for you, lower your costs or move on to a different product. Your last question, in the original post, is the answer.
” Price it to what you think someone will pay?”

-- "You may have your PHD but I have my GED and my DD 214"

View FellingStudio's profile

FellingStudio

93 posts in 1149 days


#8 posted 08-29-2015 07:30 PM

Scott brings up a good point that is often left out in these conversations. And, that is the hidden cost of “tool setup, maintenance, and sharpening.” Furthermore, there are other hidden costs in running a business that should go into your shop rate … things like marketing, billing, payroll, networking, and probably a hundred more things that tend to get overlooked when figuring out our shop rate.

-- Jesse Felling - http://www.fellingstudio.com

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