# how much



## bhuddah (Mar 28, 2008)

For those of you who make woodworking projects and charge for them, what is your formula for deciding what to charge your customer? I've been told that I consistently undercharge for what I make. How do you decide what your time is worth, hourly, kind of project, number of items???


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## wpreman (Mar 27, 2008)

That's a great question! I've wondered that myself. I look forward to reading the feedback you receive.


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## rikkor (Oct 17, 2007)

As a hobbiest, I am "free will offering" and if I am unsatisfied I don't deal with that person again.


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## motthunter (Dec 31, 2007)

i figure my time, add material cost and then add a profit margin.


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## Tangle (Jul 21, 2007)

I think I've given my formula three different times. It's here somewhere.


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## JoeDusel (Mar 9, 2008)

I use two software tools to generate prices for my cabinet jobs. I first design the project with eCabinet Systems software. This not only gives me the design drawings, renderings, cut lists and nest diagrams; but it also gives me a very good estimate for all of the board stock, moldings, sheet materials and hardware that the job requires.

I then plug the materials cost into a spreadsheet where I have various tasks setup. The tasks include everything I can think of from design time to installation. I tend to break things down into dozens of tasks. Here is some of my list - design, purchasing materials, milling, door installation, sanding, line boring, edgebanding, etc. Every time I come up with a new task I just add it to the mix. If there is no time for a particular task I put in 0. I also have it setup to use an hourly rate field, a sales tax field (when necessary), a profit field and an overhead field. Once I input all of my numbers it spits out the job cost.

I find this to be reasonably accurate for me. Of course, it's best for you to keep a log of how much time it takes you to do various tasks so that your numbers will be getting closer all the time.

Take care,

Joe


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## GaryK (Jun 25, 2007)

Check out the book PRICING YOUR WORK by Ramsey.


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## ATWilliams (Mar 4, 2008)

Gary, I have that book as well, good book.

I've been in business for a while, and tried a ton of different methods,, the one I use now, is Total time and materials, includeing travel and gas times 2.5 - 3.5 depending on the detail of the piece. Since I do a lot of inlay work , and only one of a kind pieces, I was unable to you use an off the shelf program so I created job tracking sheets similar to Joe above that track every thing in detail, in order to keep accurate records and price all jobs evenly.
Actually, after you have done this for a lot of projects, it makes it easy to give folks " Ball park" figures on the fly … hope this helps …


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## Cameron (Mar 16, 2008)

My dad makes cabinets for a living in a shop in his garage, and I think his general formula is usually materials times 5. If it's something with carving or something else that takes far more time, I am sure he accounts for that, but he's been doing it for about 30 years, and it seems to have worked for him.


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## DanYo (Jun 30, 2007)

as a hobbiest, I'm happy to make what ever I can. more then minimum wage I hope and enough to keep me wanting to make more.


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## Slacker (Apr 7, 2008)

I am just beginning my next career as a woodworker, and I have given some thought to this. For the time being, I will remain strictly small time, doing jobs for friends of friends, and so on. I have a job that pays the bills and then some, so I can afford to do woodwork for a small profit while I work it all out.

I could bill by time and materials, but I think that most clients would like to have a reasonably accurate estimate of the job at hand.

I could do the stopwatch thing and measure how long it takes to do this and do that, but that would drive me up the walls in no time at all. It would be a full time job to measure all these times, and I am not that disciplined.

So here is what I have come up with. Simply estimate the cost of materials (the wood), burden it at 25% to cover costs of obtaining the materials and to cover reasonable hardware costs (screws, nails, glue), and multiply it by a factor depending on what you think the client can or is willing to pay, or the difficulty of the project.

Say the client wants a bookcase. I recently built one for my roommate (gratis), and he covered all the materials. The dimension was 32"w x 42" h x 14" d. He paid $125 for oak-veneered plywood and some oak sticks, stain, poly, etc. Using the formula, I would have charged $156.25 for materials ($125 times 1.25). The factor for this project could have been 1.75X (because of the ease of the project), so the cost I might have charged a person who asked for this bookcase would have been $156.25 * 1.75, or about $275. As it turns out, I think I spent 6 hours building the thing, so had I charged for the bookcase, I would have made $20 an hour, more or less.

So, now you have to ask yourself… is $275 too much for a solid wood bookcase? And adjust the price accordingly. Anyhow, this is just a concept that I have not put to the test. For the time being, I dont rely on woodworking to make a living, so I adjust the formula price to what I think is doable.


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## AdMarkGuy (Jan 1, 2008)

Studies show the majority of small business owners undercharge for products they sell or attempt to sell ….If you are trying to sell your products, you must be a business man first and a woodworker second - do NOT let the woodworker talk the business man out of setting prices. While it is nice to sell a project--you are in business to make money--Save your ego for after the sale.

REMEMBER: Van Gough died broke and penniless as has many a "starving artist"

The Artist Builds the Product, The Businessman Sells It, The Entreprenuer Conquers The Market--You must wear all three of these hats.

The only way to determine your best price is to test YOUR market.

You test by offering a variety of different price points, you will get objective data to work with. You'll be able to see what people actually do, as opposed to what you think they will do. In other words, testing takes subjectivity out of the equation.

Pricing is set by the market - "what will YOUR target market/customer pay for your products. Studies show the majority of sole proprietors undercharge for their products- they forget many items which contibute to their cost---overhead (shop electricity, where and tear on equipment, scrap lumber, their time for picking up materials, their time for planning the project etc). They simply look at cost of materials used their time spent and use a "non-descript" markup ….WRONG!

There is one fundamental guideline to testing prices: Keep charging more and more until you reach the point at which people "walk away" (balk). That highest price may not be the best price for you to choose. But you should at least know what the highest acceptable price for your product may be, and then step down to find the PRICE POINT - that will establish market value, regardless of your computed costs--

Any price over your full burdened cost is considered profit - any below is a loss -no one stays in business for long by selling at a loss.

Start with testing, then follow with analysis

It's impossible to be sure about the best price point for a product or service without first testing a variety of options. And, as mentioned, it makes sense to find out how high you can push that price.

Then, as with all testing, it's important to study the results in detail before jumping to conclusions too quickly.

CREATE your Product's Value to your prospective customer - craftsmanship, design and unique appearness along with quality of materials used - Value Proposition !

Wishing you GOOD Luck in your business.


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## lew (Feb 13, 2008)

bhuddah,

Check this link-

At the bottom of the first page is a forum for "Projct Cost Estimator"

Lew


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## FloridaNoCypress (Apr 12, 2008)

It's likely to depend on the type of work you do. Period repros, because of the compleity and the premium placed on accuracy and goodness-of-fit, is something of a high-risk proposition, so you will want to charge more for the piece. This may also be true for one-of-a-kind custom job, even if it is a set of dining chairs; you will want to charge more for the piece or set.

It seems what will keep my prices within range is to get a bunch of furniture catalogs from several different local sources to see what's charged for major cabinet pieces (such as dressers, headboards/footboards, entertainment centers, etc.), minor cabinet pieces (nightstands, end tables, wine racks, etc). Try to get your catalogs from places you know sell quality pieces, not the termite barf you may find at, say, Pier 1 Imports or World Market or Sauders (sic?).

If you're thinking e-Bay, go to where furniture and other pieces (again quality, not sawdust putty) are sold. Try to see what the final bid was.

Use Sketchup to design some comparable pieces. Develop a materials and cutting list so you can do some semblance of a material cost estimate. Keep in mind you'll want to find some wood wholesalers (not retailers) in your area. I found out in my area at least (SW Florida), neither Lumber Liquidators nor Cox Lumber will do. So I gotta keep looking, but since I'm starting with pretty small pieces and maybe outdoor stuff, like benches and tables as well as plant stands, Big Blue or Big Orange will have to do for awhile.

If you're a one-person shop, there are a few things you probably don't need. One is all that corporate paperwork headache, not to mention any kind of franchise fees and unemployment taxes you'll have to pay to the state department of revenue. Basically, incorporation is for those nuts who have lost all perspective and decided that they like the headaches of meeting payrolls, making significant invesmnts in machinery and tools, finding enough room to put all that stuff (and it ain't the garage or basement or backyard shed), carrying insurance of all kinds, and keeping the bankers happy, usually by opening up a merchant account package where they charge you at least $10 a month for you to have a checking account, etc., etc., etc. Your head pounding yet?

In short, ask yourself, are you a hobbyist whose products have garnered questions about "Where'd you get that piece? Oh, you made it? My God! How much will you sell it for?" Or are you a full-time professional who just happens to like what you do for a living?

if the former, then your price should be something like 2.5 to 3.5 times the cost of materials and supplies (glue, replacement blades and bits, fasteners, hardware, and finish [which I suggest you buy by the smallest unit available, pints or quarts, for that job only). The only finish I'd buy by the gallon is SealCoat.

If the latter, then it's time to break out the calculators and call in a real hardcore controller-company accountant-industiial engineer type. Believe me (since I was a company accountant) you will not find that kind of person at your local CPA. Look in the yellow pages, under "business consultants". Call every single one of them, because most of them can't do what you're asking for. But you will run into one or two that can. Another good source of real good business consultants is SCORE - Service Corps of Retired Executives. You might find your gem there, for a reasonable fee.

In the past, there have been several different ways to run a professional woodshop. Some succeeded. Some failed. There was, if memory serves me right, the Roycroft community, which was based on some incredibly idealistic model which did not fit in with the larger culture. Again, if memory serves me righ, Charles Limbert ran a shop in Grand Rapids, Michigan. And the Stickley Bros. tried to do their pieces wth hand tools, but found the demand so far outstripped their ability to keep up with hand tools, they had to switch over to machine tools.

Message? Perspective is the key. Good luck.


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## Al_Killian (Feb 15, 2008)

FloridaNoCypress, Incorperating is a good way to protect yourself. If someone sues yoou they can only get the contants of your bussiness if you are inc.. For me I do alot of refinishing and try to average around $20 hour. This only part-time and not my bread and butter.


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## FloridaNoCypress (Apr 12, 2008)

Al - Re: incorporating to limit liability to contents of business: Suppose you are the sole shareholder of the business - and that is allowed here in Florida. Other states say you have to have at least three persons as incorporators. There have been product liability cases or negligence which went beyond the "protective veil" of the corporate form. That's why, whether you are a corporation, you still want to carry that full package of insurance, which includes E&O (errors and ommission) and general liability insurance. And if you meet payroll, workers comp insurance is required under most state laws. As a small business under any form, even if incorporated, if you have to float a loan with the bank, the loan officer will want to see your personal finances as well as your business finances, especially if you are the only shareholder. As with anything you do, you need to understand where the risks are, and work on reducing them by what you do, not by any papers you carry to limit possible liability. That's why to me, incorporation is a "growth instrument", not an "income protection insturment".


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## Dusty56 (Apr 20, 2008)

I am a one man band and all of my work is CUSTOM MADE. I often travel to seek out just the right pieces of wood to "impress" my customers with their "one of a kind " projects….and I also often forget to think of my time "shopping" as valuable time that should be added to the cost of their projects….searching online or thru catalogs for unique hardware is another example of time lost…I also have very limited shop space and have to move some machines in order to use the next machine….hmmm, should I charge that time to the projects or not ? Pretty much , in the end , I try to make at least as much as the materials cost x 3 and then try to figure out how much time I really have into the project with out actually using a stopwatch on myself. : ) Being a hobbiest , I can afford to adjust the prices as to my customers' wealth , but I never short change myself on the materials….my time spent is negotiable and part of my pay is the delight I see in my customers faces when I present them with their projects ; ) I still can't believe that anybody would want to give me money for my creations ! hahahaa 
Sorry for being so long winded without giving you a clear answer to your question , but after 10+ years of this hobby , it's the best I can do….Probably the best answer is for you to 'test the waters' and see what your market will bear for your projects. If you told me ten years ago that someone would give me $180 for one of my cutting boards , I would have died laughing ! I also made a Shaker style Cherry end table that I was hesitating asking $80 for and I brought it to my local hardwood supplier / custom millwork shop to ask their opinion…I was told if I didn't ask $500 dollars for it , I would be cheating myself ! I was totally nervous when I brought it to my customer and had every excuse ready as to why I was charging so much for it… They wrote me out a check for $600 because they loved the finish on it so much and were going to give it to their daughter for a house warming present. TEST THE WATERS ; )


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## OttawaP (Mar 13, 2008)

I've seen a lot of posts like this over the years and it never fails to stun me with the general "material costs times a #". With all do respect, this is a recipe for disaster. Ask yourself this question, " how much money needs to be in the business account in 8 months an 17 days..exactly". If you can't do a proper cash flow forecast then you are either very lucky so far or heading for a fall.
I highly recomend the book "Markup and Profit - a contractors guide" by Micheal Stone. It is the perfect how to price book. You'll be surprised how much you actually have to charge to make a decent living. You may lose some work but the work you'll get you be properly paid for. Better to work 12 projects at full pop than 20 at 50%. 
10 years as a general contractor I've never lost a dime on any job, and I'm making more money now that I've read the book. Do yourself a favour and get it.


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## Taigert (Nov 20, 2007)

Marc the wood whisperer had a link on his web site with a template for MS Excell that is really interesting on how to come up with a price based upon your time and material and the many other items you need to concider to cover you overhead. It sort of provides you with a check list.
After reading all these post there are two very different camps here one is the guy who is using his wood work to put food on the table. Woodworking is his sole source of income. Then there is the woodworker you does it just for love of working with wood. If they happen to cover the cost of material and a couple of bucks for there effort they are happy. These are two totaly different animals you can't compare a dog and a cat and say their the same thing.
If your going to do this and make a living at it you can't look at it as covering your material and twenty bucks an hour for your time. This formula wont even work if your working out of your garage at home. Doing it that way is a sure fired road to failure.
As Bill said it the woodworker can't be the one making the financial decision, you have to put on the business mans hat and think like a pro.

Good luck to all who are sweating to make a buck at this game.


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## NY_Rocking_Chairs (Jul 20, 2008)

As a hobby business, I figure my material cost, make a good estimate on time and charge $50 an hour. That figure includes all the comsumables like glue, sand-paper, etc. Even then I am sometimes told I undercharged.

Again, this is a hobby business and I do about one or two projects a month, working with and for some local galleries.

Working with galleries creates a whole other aspect as well. My cost creates the wholesale price, which is then considered 60% of retail, so the gallery marks it up even higher. I have no shortage of work and am even starting to get requested at some of the galleries for custom pieces, so this seems to be sustainable for the time being.


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