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Am I undercharging?

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Forum topic by GregP posted 11-16-2010 07:37 PM 2683 views 2 times favorited 37 replies Add to Favorites Watch
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GregP

154 posts in 1542 days


11-16-2010 07:37 PM

I’ve been charging what I believe to be reasonable, fair prices, however I’m currently backed up for nearly 2 years. Which leads me to believe I’m charging too little; anyways here’s some of my work and the prices that I’ve charged for them. Let me know what you think, too high? too low? about right?

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Oak bed, charged $500.

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Alder table made too look like walnut, charged $50

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Custom oak desk for computer, charged $100 (got 25% tip)

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Custom folded horn loudspeaker, charged $50 (driver was provided)

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Cherry bathroom cabinets, charged $1600

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Cherry display case, charged $1500 (Part of the wood and the glass was provided by the buyer)

Sorry if I overloaded with the pictures, I’m just trying to get a better understanding of where to price things. on a somewhat related note, although I’ve never been commissioned to make a high end item I have made some for myself. Out of curiosity and for future reference what would be a fair price for the following items, each took about 3 months of very hard work.

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-- Greg P, Washington State, http://heirloomfurniture.weebly.com/


37 replies so far

View cabs4less's profile

cabs4less

235 posts in 1428 days


#1 posted 11-16-2010 07:43 PM

if you are backed up then yes you are under charging furniture i do not know about its rates but the bath cabinets were way to low i built a popluar set kinda like those painted and glazed finish for 2000.00 do you have an hourly rate figured up yet

ps if you are trying to make a living off this then (with no offense intended) you need to get faster than 3 months or no one will be able to afford you

-- As Best I Can

View dbray45's profile

dbray45

2512 posts in 1442 days


#2 posted 11-16-2010 08:17 PM

Depends upon your situation, customer base, location, and – what you are willing to get.

I had a friend that was a dbase plus programer (dates me doesn’t it) who relocated. In the small city where he came from, he charged $50 an hour. When he relocated to the Washington DC area, he started marketing himself at the $50 and hour and couldn’t get any business. We discussed what he was doing and I told him to select 4 businesses that he hadn’t spoken with and tell them that his fees were $150 an hour, accelerated programing was $175 an hour (this included 3 hours evening work 4 nights a week).

In one week he had 2 months worth of work at the $175 rate. He could not get any work at $50 because people were not taking him seriously in the new market place.

Moral of the story – depends on where you are. Put different rates and pieces for sale in different markets and test the waters. If it sells at the higher price, keep pieces for that market and have other pieces for different markets. I also learned that you can lose a valued customer pricing too low as well as too high. Having fun yet ???

-- David in Damascus, MD

View stixman's profile

stixman

47 posts in 1861 days


#3 posted 11-16-2010 08:27 PM

Greg,
I had the same decision to make as you are now facing.

I carve snakes on walking sticks http://www.kywalkingstick.com Kentucky Walking Sticks. I first charged only $150 for each walking stick. Later increased the price to $200. Now each Carved Snake Walking Stick cost $250. I sell fewer walking sticks, but I make about the same money.

Good Luck,

-- http://www.kywalkingcane.com

View lilredweldingrod's profile

lilredweldingrod

2495 posts in 1772 days


#4 posted 11-16-2010 09:09 PM

Greg,
I would say you are low, way low. Setting the price on any contract, written or a hand shake, is a negotiation. Start high and you can lower the price a bit to get the work, but if you start low you can not raise the price.
As for the furniture, you do excellent work, but you are a bit slow. Remember that your speed will increase with experience, so strive for accuracy and quality and the rest will take care of it self over time.
Another thing is for the high end furniture, browse a high end store and see what they are charging and look at the quality of their product. Open doors, pull out drawers and look at how these compare to yours. The prices are right there for you to see. This will give you an idea where to place your prices.
If you are to cheap, people will think your product is cheap as well.
Hope this helps you. Rand

View Derek Lyons's profile

Derek Lyons

584 posts in 2233 days


#5 posted 11-16-2010 09:30 PM

You have a mix of high and low there I think. In particular, you’re undercharging on the smaller pieces. The table, desk, and loudspeaker all are at about half (or less) of what I’d expect to pay.

-- Derek, Bremerton WA --

View ZeroThreeQuarter's profile

ZeroThreeQuarter

120 posts in 1723 days


#6 posted 11-16-2010 09:40 PM

greg, i think the wording that tips the scales in one direction or the other was the “however I’m currently backed up for nearly 2 years.”

if you’re REALLY backed up for two years, then yeah, you’re charging way to low. Being backed up is nice, cause it means you’re busy and not searching for the work, but being backed up too long also means they may go elsewhere and be willing to pay more just to get it sooner.

Two years is a LONG time for people to wait for something they’re looking to get sooner.

With that said, theres a quote someone once said “if you’re comfortable with the price that you’re charging, then it’s too low”

Personally, I’d rather be too high and haggle down, then hope that the client will pay me a bonus. The analogy I use is this: a plumber will NEVER come to your house, charge “X” per hour for work and have you say “you know, you’re doing a good job.. here’s a raise” Just like an employee has to ask for a raise, you have to ask for more. The client won’t just give more money cause they feel like it, they’ll give it if they’re ok with a higher price..

that said, time to raise the prices my friend!

-- Your mind, much like a parachute, works best when open.

View ZeroThreeQuarter's profile

ZeroThreeQuarter

120 posts in 1723 days


#7 posted 11-16-2010 09:40 PM

meant to add:
Greg – I guess that answers the questions that I’d sent you some time ago about woodworking in Spokane :)

-- Your mind, much like a parachute, works best when open.

View Puzzleman's profile

Puzzleman

336 posts in 1609 days


#8 posted 11-17-2010 01:34 AM

I will say that your pricing is too low. I agree with the above in that if you are backed up for two years and people will wait that long, you are not charging enough. Raise your pricing till you get to the point where you are looking for work, then lower down just a little. By raising your pricing you will make more money doing less work.

Why is your pricing where it is? Have you done time studies do determine the amount you are making per hour? This is an important part of the business. If you are backed up for two years but only making $10/hr, is it worth it? Determine how much what you making per hour and you will know if your prices are too low.

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

View rhett's profile

rhett

699 posts in 2333 days


#9 posted 11-17-2010 01:58 AM

Yes, your prices are too low.

You will find that getting out of the “budget woodworker” catagory will be harder than you think. Raising your price is more difficult than lowering it. Looks like you do good work, get paid what your worth.

-- It's only wood.

View matt garcia's profile

matt garcia

1831 posts in 2337 days


#10 posted 11-17-2010 03:33 AM

??? People always tell me what I want it too much, so I wouldn’t know!!

-- Matt Garcia Wannabe Period Furniture Maker, Houston TX

View ShopDogs's profile

ShopDogs

228 posts in 2022 days


#11 posted 11-17-2010 06:15 AM

Greg,
I have to agree with what has been posted above. The prices for the small pieces are too low.

I price my projects 3 different ways usually. a fixed price—turn key. or cost of materials x 4. or cost of materials plus hourly rate. There is rarely more than 3 or 4 % difference between them. Some clients are just more comfortable with one way than another.

My hourly rate is $65 for me and $30 for my assistant. We are accurate and fast. So far every client has come back for a least a second project, so the prices must be acceptable to all concerned

Next week I will post the fotos of an office suite of furniture we built in the last 4 weeks. Granted, we put in some long hours, but I charged almost $18,000 for the four pieces. It tickled the client and it was a good job for me.

Your work is outstanding, Greg. Make sure you are getting what it is worth.
Michael

-- ShopDogs, Tulsa, OK The tools aren't the problem-It's the organic interface!

View Jack_T's profile

Jack_T

621 posts in 1697 days


#12 posted 11-17-2010 06:34 PM

The clearest sign that you are way undercharging is that a client gave twenty five percent more than you charged him.

You need to establish a pricing formula as has been mentioned above. In doing so do not forget to include all of you costs both the patent and latent ones. The patent costs are the obvious ones such as your materials including such items as paper and ink for your plans, wood, clue, screws, finish etc.). The latent costs are the hidden ones. These include such items as your time spent designing the project and drawing your plans, your time spent in manufacturing the item, your time spent in making the sale and delivering and installing the item, depreciation of your tools (the wear and tear on your tools in making the item), the electricity and oil/gas used in your shop while manufacturing the item, telephone and marketing expenses etc. Make sure you capture every single expense.

Having a two year backlog is not necessarily a good thing. If your clients have actually placed binding orders with you for an agreed upon price, you have assumed all of the economic risk for the transaction. If your costs go up you lose profits.

Your work looks very good, I think you should raise your prices.

-- Jack T, John 3:16 "For God so loved the world that he gave his only Son, so that everyone who believes in him might not perish but might have eternal life."

View Gator's profile

Gator

377 posts in 2341 days


#13 posted 11-17-2010 09:51 PM

Greg,
I have an excel spreadsheet that I use to determine how much you should charge for each project. It is full of formulas, you just enter the information as far as material and time. It is not an exact science, but gives you a very good idea as to where you should be, by calculating all your time as well as material and markup.. I would be more than happry to send you a copy to play with and taylor to suit your needs if you would like.. just email me and I will send it ?
It appears as if you are getting paid for material and most of your time, but you are likely depreciating your equipment at your own expense.

Gator

-- Master designer of precision sawdust and one of a kind slivers.

View RexMcKinnon's profile

RexMcKinnon

2593 posts in 1861 days


#14 posted 11-17-2010 10:18 PM

I am not a pro woodworker but as a buyer I would say those prices are great. If I was shopping for some of the things you built I would not expect to see these prices unless they were total junk. Which your stuff is obviously not. I say you could double most of your prices and if someone complains then tell them. Go to the big box stores and buy from them and you will get what you pay for. No solid wood, no grain matching, no custom fitting, and everyting falling apart in a few years. A reasonable person will agree with you and then try to knock your price down a little and you should give them a little bit. They walk away thinking they got a deal on a quality piece of furniture and you can eat.

I can’t see how you made any money of that table and desk once you calculate, wood, finishing supplies, wear on tools, consumables…

You can say that you are just doing the small projects to be nice, maybe they were for friends and family but these are costing you a lot becasue you are probably losing money and they are not helping you clear your 2 year back log.

I would say slowly start raising your prices and when you hit the point where some customers start walking away you are where you want to be. You don’t have to sell something to every person that walks through your door.

-- If all you have is a hammer, everything looks like a nail!

View GregP's profile

GregP

154 posts in 1542 days


#15 posted 11-18-2010 07:35 AM

Thank you so much for all the help guys, it’s an issue I was a little uncomfortable bringing up to be honest. I also never meant to insinuate that all those pieces took 3 months just the last 3 which had a bit of carving and I did in my spare time I doubt it would take that amount of time if I was doing it for a customer.

I have been using a calculation for my prices, however it’s a simple Material cost+ $10/h which I’m beginning to think is way too low for an hourly rate (perhaps I should raise it to $20 or more?) and I didn’t take into consideration the wear and tear on my tools or any of the other little expenses because it’s honestly just not something I ever thought about. It also never occurred to me that a low price could actually hurt the perception of my products value. Luckily I haven’t advertised my prices publicly yet because I haven’t really had to look for sales. I always forget this is a skilled craft and feel like I’m being greedy if I charge what I consider to be a lot so I guess that’s something I need to work on getting over.

anyway, I really appreciate all your input and support, I kind of fell in to this business before I got all the details worked out and it really helps to have someplace to get good info about the business, and gator I’d love to see your excel spreadsheet.

-- Greg P, Washington State, http://heirloomfurniture.weebly.com/

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