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Just made a delivery and I am wondering how I did

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Forum topic by krisrimes posted 405 days ago 1425 views 0 times favorited 28 replies Add to Favorites Watch
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krisrimes

99 posts in 1131 days


405 days ago

So I would like your opinions on how I did with this deal. I was contacted through craigslist about some bar stools I had listed. When I got in touch with them, they had already decided they did not want to go with what I usually make because they looked too rustic. In all fairness I have made a couple of deals with local establishments for these bar stools, but I don’t particularly care for them either. I asked them if they would be willing to let me come up with an alternative. They liked what I came up with and ended up ordering 24 of them from me. When I originally started this deal, I figured it would take me 2 hours per chair to get them done. I know that my time was way over that, but I honestly did not track them. My total cost for materials was roughly $640 and I charged the customer $115 per chair, which included delivery about an hour and a half away. The way I came up with what to charge was using the 4 to 5 times the material cost. I put the number somewhere in the middle and shot the quote off. I also paid my brother $10 an hour to help me and the last time I looked, I owed him for 30 hours. Some of my $640 cost was clamps and router bits that I needed to do the job, so I don’t really know what to think about that. I figured them into the cost per chair, but now I have them to use on future projects. I read somewhere on here to factor these types of things in, but I didn’t factor in the cost of the saws I used to cut the wood with or the routers I used. Anyway, I figure that I walked away when all was said and done with somewhere around $1800 for 2 weeks of weekend and evening work. I feel like I did well, but I am still learning how to estimate jobs. I hope no one is offended by the fact that I used the numbers in here, I guess I am just looking for ways to improve and I wanted to be open about how I did it. Thanks for any insight.


28 replies so far

View firefighterontheside's profile

firefighterontheside

3231 posts in 453 days


#1 posted 405 days ago

Personally I would not charge for tools that I needed to buy for a job. I figure that by taking a job on I am saying that I can do the job and am fully equipped to do it. If not I buy that tool out of my own money. Although I certainly can see some sort of charge for facility costs such as wear on tools, electricity, etc. I always keep track of my time because I feel like its the only way for me to learn to bid projects based on as estimate of my time.

-- Bill M. I love my job as a firefighter, but nothing gives me the satisfaction of running my hand over a project that I have built and just finished sanding.

View SteveKnnn's profile

SteveKnnn

66 posts in 485 days


#2 posted 405 days ago

Whether to charge for new tooling (bits etc) I think depends on the likelihood of using it again. A new saw blade, no; a 1/2” straight router bit no; a unique profiling bit that you need for one job only -yes.

-- Steve in Richmond, VA

View ZiggyZ's profile

ZiggyZ

51 posts in 981 days


#3 posted 405 days ago

I started a part time built in cabinet biz several years ago and still make (luckily) small mistakes when estimating. It takes time to get it right and there is always a learning curve when doing new projects especially. I typically charge for materials + my time + enough to cover electricity and consumables for my projects (blades/bits, etc).

I will charge for specialty router bits or other similar accessory that I will not be able to use in the future such as an odd profile or one that will be unusable at the end. Otherwise, I charge a percentage for such items and always inform my customers in these situations.

I find that my jobs are successful when my customers and myself are happy with the project and I’ve made enough to make it worth my while. $1800 is all relative. That may not be enough for a full timer but for people like you and I who do it part time, perhaps it is. If you enjoy it and are happy with the money you received for the time you put in, then good for you!

We all get better with estimating as we go based on experience. Keep up the work and things will become clearer to you.

View pintodeluxe's profile

pintodeluxe

3264 posts in 1410 days


#4 posted 405 days ago

All that matters is an acceptable price and good work for your customer.
I think you did just fine.

-- Willie, Washington "If You Choose Not To Decide, You Still Have Made a Choice" - Rush

View OnlyJustME's profile

OnlyJustME

1562 posts in 973 days


#5 posted 405 days ago

I don’t make $1800 in 2 weeks at a full time job. I think you did good.

-- In the end, when your life flashes before your eyes, will you like what you see?

View Puzzleman's profile

Puzzleman

327 posts in 1540 days


#6 posted 405 days ago

For more information on pricing, check out Huff’s blog on pricing. quite detailed and insightful.

As far as your numbers go, I suggest tracking all of the hours you spend on a project. This includes non-shop hours as well. This includes getting materials, discussing with customer and delivery time (there and back). If you are not tracking hours used, they have a tendency to creep way up there without being aware of it. I learned this the hard way. Don’t need anything fancy. A basic spreadsheet or lined paper will work.

Congratulations selling another idea to the customers when they didn’t like what they initially came for.

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

View firefighterontheside's profile

firefighterontheside

3231 posts in 453 days


#7 posted 405 days ago

Good point, Puzzleman, I don’t charge for time spent at my kitchen table making scaled drawings of something I’m about to build. I usually do that in the evening when I would otherwise just be wasting my time watching TV, but if I were to want to support my family doing woodworking I could not afford that free time. I don’t always charge for my time for shopping, but I always add fuel costs which can add up for me as nothing is close. I don’t add anything for things like electricity or wear on tools, but I need to. I’ve been thinking about making that charge a percentage of hours spent in the shop.

-- Bill M. I love my job as a firefighter, but nothing gives me the satisfaction of running my hand over a project that I have built and just finished sanding.

View Greg's profile

Greg

281 posts in 1470 days


#8 posted 405 days ago

I am finding this post very interesting. Thanks for posting it! My 2 cents-I don’t charge for drawings/design either as that is part of my allure, plus, I can use that for future sales while sharpening my abilities in design, customer, service, and woodworking. In other words, I am somewhat learning on the job, and count that as cost of doing biz. Maybe others don’t see it that way, but it works for me, and it makes me happy!

-- You don't have a custom made heirloom fly fishing Net? http://www.Sierra-Nets.com

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Puzzleman

327 posts in 1540 days


#9 posted 405 days ago

Huff has a 5 part blog discussing the very things you are talking about. The series will help you determine an easy way to figure your costs and expenses. This results in an easy way to bid on jobs profitably.

Here is a link to his blogs. Huff Bloghttp://lumberjocks.com/huff/blog

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

View huff's profile

huff

2780 posts in 1881 days


#10 posted 405 days ago

Krisrimes,

As a hobbyist, it sounds like you did good walking away with nearly $1,800 for a couple weeks working nights and week-ends and it sounds like you are very comfortable with your pricing and final figures and that’s all that matters.

If you’re happy with your pricing and final figures, then it doesn’t matter what anyone else thinks, but if you have some doubts then there may be a few questions you need to ask yourself.

Will you price your next job using the exact same formula and does that give you the confidence to sell your work knowing how you came up with your quote and you will make money?

Materials; Did you have an accurate total of your material cost or was that based on the receipts you had when you finished the job and not figuring in the materials that you may of already had on hand like glue, screws, sandpaper, filler, finish or anything else you didn’t buy.

BTW; clamps and router bits and any other tools should be figured into profit (profit is how a business is able to maintain, upgrade and grow). How you figure that in doesn’t matter, so I think you did fine doing it the way you did for this job.

Time; This is where I don’t think you’re being very honest with yourself. Even after the job is complete, you seem to have no idea the total number of hours invested.

Tracking your time on every job is crucial. Not only can you honestly know if you made any money on the job you just completed, but it will help you figure time for jobs in the future.

Did you consider the time for marketing, talking and selling the customer, the time spent redesigning your original bar stool to the one they wanted? Did you figure the time you spent going to get materials, the time spent doing a cut list, the time spent getting more tools and supplies, (whether going to get them or spending time ordering them)? Did you have to make more than one trip for materials or finishes?

You stated that the last you checked, you owed your brother-in-law for 30 hours. Was that the total and accurate time or did he feel sorry for you and didn’t keep track of all his hours the same as you not keeping track of yours?

Did you figure delivery time? 1 ½ hours each way, plus the time it took to unload, talk with the customer, get paid and drive home?

Did you figure any time for clean up, shop and tool care?

Did you figure any expense for operating your vehicle? If you delivered your 24 bar stools in your Prism, then I’m sure it didn’t take much gas, but I would guess that you used something a little bigger and not quite as good on gas.

I’m not trying to be harsh or sarcastic, but facts are facts and if you really want to know how to price then base your pricing on facts. Everything else is just pulling figures out of your butt crack………and if that makes you feel good, then that is how you should price.


Here’s where the business has to separate from the hobbyist.

Liability insurance; Have you considered what would happen if your brother-in-law cut his fingers off while helping you and couldn’t work for 2 or 3 weeks? Would he still love you and be glad to sit home and not get paid or maybe even lose his job? What about product liability? You’re building bar stools and selling them to a business establishment, so what happens if a 250 pound “Bubba” comes in and flops down on one of your stools and rocks back on two legs and it collapses and he’s rushed to the local hospital to have a broken rung removed from this butt cheek?

Sure the establishment has liability insurance and will probably be covered when Bubba sues them, but what do you think the insurance company will look at? YOU; you’re the manufacturer that built the faulty stool. Can you afford an attorney to defend you and prove that it was Bubba’s fault and not because you built an unsafe stool?

Insurance is not cheap, but it’s a necessity if you are in business, (not unless you’re willing to loose your home and anything else you may own)

Last but not least; are you going to claim that $2,760 as income? You may consider that as a hobby, but you may have a harder time convincing the IRS selling 24 bar stools to a business establishment and advertising on the inter-net that it’s just a hobby. And it may be even a harder sell to your State Dept. of Revenue if you live in a state that has a sales tax and you sell 24 pieces of furniture without collecting sales tax. (Just things to consider in the future if you really are selling your furniture)

I know a lot of woodworkers operate that way and get away with it and I’m sure they will all come to your rescue if you every get audited and have to pay back taxes, penalties and fines or you get sued and about to loose everything you own.

I’m not trying to scare you, but operating a business is a lot more than just throwing a price out to someone and walking away with $1,800 and thinking that was a lot of profit for a couple weeks of working nights and week-ends.

Again, if you’re a hobbyist, then it doesn’t matter! Anything other than a hobbyist is something else and only you can decide what works for you.

Like I said in my series on pricing; there’s no golden answer. (Just food for thought).

Good luck.

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

View huff's profile

huff

2780 posts in 1881 days


#11 posted 405 days ago

Jim,

Thanks for the reference to my blog, I was writing the same time as you were posting. I’m not trying to start an arguement with anyone, but just want to help woodworkers figure pricing if they are not doing it just as a hobby.

Jim, I’m working on a series on marketing and sales and could sure use some of your help. Interested?

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

View krisrimes's profile

krisrimes

99 posts in 1131 days


#12 posted 405 days ago

I appreciate all of the comments so far. I will not get offended by anything that gets said in this post. The reason I put it all out there for the world to see is because I wanted opinions. I know that in the end, I just have to be happy with the deal and it doesn’t matter what anyone else thinks. I am in the process of setting up an LLC to cover my butt and yes, I will be claiming the money made on my taxes. I know that I screwed the pooch by not keeping track of my hours. I did consider all of the material costs including what I had on hand. I am kind of with Greg on some of the time aspect. Yes I had to come up with an alternate design for the barstool, but now I have another product to offer. I had all the intenetion in the world of keeping good track of the hours I spent on this, the problem that I ran into was a time crunch. The establishment gave me a deadline that had to be met. After working my day job, I would come home and go out to the shop and work until 11 or so and by then I was wiped out. I guess there is always next time.

View huff's profile

huff

2780 posts in 1881 days


#13 posted 405 days ago

krisrimes,

You’re on the right track. Since you only worked a couple weeks on this particular project, you may be able to sit down and think back on each day and remember pretty close on how many hours you worked on the project.

Your wife and brother-in-law can probably help also. My wife keeps better time of my hours in the shop then I do (especially if it’s after hours). lol

It will really be helpful to know when it’s time to price another project.

When I first started my business, I actually kept a time card on each project I was working on so I could not only keep track of my overall time but also how long it took me to do certain phases of a build or finishing. At first it was a pain in the butt, but it came second nature after a little while and ended up doing it for the first couple years I was in business. It really helped me understand where all my hours where going.

Good luck and keep up the good work.

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

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cabmaker

1282 posts in 1405 days


#14 posted 404 days ago

Kris, you asked how you did on this Job. It doesn’t sound like you netted 1800 on this two week job but there would certainly be nothing wrong with that.

To know how you really did one needs to ask , did the customer get what they paid for or a little more ?

Is the customer happy, and are you happy with your performance ?

Will the customer be spreading the good news about you ?

Get all that in order then we can talk about the money.

JB

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krisrimes

99 posts in 1131 days


#15 posted 404 days ago

JB – that is a good point. They did mention that if this went well, they may be looking to replace some chairs they have at a different section of the property. I guess that I will have to wait and see what they decide to do about that. I would hope that they are satisfied with what they got.

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