# Bidding a project



## krisrimes (Jun 17, 2011)

I build and sell outdoor furniture as a bit a side gig. I recently had a potential customer contact me about making a table and 4 chairs. The kicker is they want it made out of teak. It looks like the best I can come up with for materials would be $2000. How would you go about calcualting a price for this. This is a set that I do not normally make and am actually kind of nervous to be working with materials that are worth that much. I am just curious to see what you folks have to say.


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## HerbC (Jul 28, 2010)

1. Estimate how long you will take to build the set.
2. Double that time to come up with a total time estimate.
3. How much per hour do you think your time is worth?
4. Double that value to obtain a reasonable value for your time.
5. Multiply total time estimate and the reasonable value of your time per hour to calculate total labor charge.
6. Add together the $2,000 material cost for the teak; at least $200 for supplies such as stainless steel screws, glue, finish material; $200 to cover miscellaneous shop overhead (tool depreciation, utility, rental, etc); and the total labor charge.
7. Add 20% to the total for a minimal profit.

If they accept your bid, do a good job. When it's all done, give them a small discount if everything went well.

Good Luck!

Be Careful!

Herb


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## Loren (May 30, 2008)

A couple of months ago somebody approached
me with a plan for a platform bed - they thought
it would be nice in Walnut so I gave them a
ballpark figure… they were like "eek - how 
about Teak?".

Clients are often naive about material costs.

If you're looking at $2k for the wood *and* you
really want the experience, then give him a 
ballpark figure. That's what I do. If you want
the job I'd say ballpark it in the $3500-$4500 
range like this:

"Teak is a very durable but also costly wood and it's
very hard on the tools used to cut it and takes 
a lot of time to sand it smooth. Ballpark, you're
looking at $3500-4500. About half that is the
cost of the wood."

Then let the guy squirm… or not. Sometimes they
say - "ok" and you say, "ok - I'll make the drawings and
come up with a firm quote for you."


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## Charlie5791 (Feb 21, 2012)

And then get a deposit equal to the cost of materials.


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## krisrimes (Jun 17, 2011)

I did tell them that a ballpark is going to be $4000. I have no idea what they are going to say to that, it is for a company and the woman I am dealing with said she had to run it through their corporate office, so I guess we will see. I did tell them that there were other less costly options out there such as white oak or cedar. I guess it is a waiting game at this point. Charlie, there is no way I would do this without a deposite. I learned that one the hard way.


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## Buckethead (Apr 14, 2013)

Herb lays it out nicely. And then double that. It isn't that you're trying to gouge the customer, but I can assure you, if you think you bid a job high enough to buy a boat when you're done, you'll have enough for groceries, but no boat. The good news, you already have experience building outdoor furniture. Your time estimate will be more accurate. Mistakes Made using Teak are more costly than mistakes made using treated pine or cedar. Still… It's just wood.


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## krisrimes (Jun 17, 2011)

Buckethead, That is the biggest thing that I am worried about, messing up a piece of wood that costs $100 would be a painful pill to swallow.


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## Tennessee (Jul 8, 2011)

I think Herb about has it nailed. I wouldn't double the price. My going rate is about $20 an hour plus materials, tool wear, taxes, insurance. I only add about 10% to the materials, generally. But I am not in a shop so I have no rent. I try to be fair. You also have to realize that unless you get to hand pick the teak, you will probably be doing a higher percentage of wood loss than you might initially think. Nice to think you will end up with a lot of chunks to do little things, bad that you will spend a lot of time trying to maximize the wood usage.


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## SnowyRiver (Nov 14, 2008)

I agree with Herb too. If they accept the high bid, and you come in way under that, you can always tell them that it didnt take quite as long as you expected or the materials were a bit less than you had quoted, and give them a discount which always makes a customer feel good. I have done my share of work and ended up practically doing the job for nothing because of a low bid. Also, there are costs for gas to drive and get what you need, electricity for your shop, wear and tear on your equipment, and shipping materials and costs, etc so it sometimes costs much more than you would think to build something.


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## joeyinsouthaustin (Sep 22, 2012)

*Paul* I have seen your work… your should charge $35 an hour and %35 on materials.

Never judge what you think some one will pay.. Only judge what YOU are worth. And carefully think of how much time, gas, and effort goes into high end materials. I routinely add %30 waste, and then a %35 markup to mahogany, teak, ipe (more for this one) re-claimed antique woods etc.

If you second guess this it can affect the word of mouth reputation. You may not want to pay 4000 to 6000 for a patio set, but I stick to my guns about my worth, and still get surprised sometimes. Some people like to flaunt there money, and would like to brag how much they paid for there locally sourced, custom built furniture. Check out the "light trellis" on my projects page. It was well into the 5 figure range… and worth every penny. The hardest lesson learned is taking that leap of what you are worth, and what people will pay.


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## DrDirt (Feb 26, 2008)

Good Plan with the Ballpark -

For timing - plan some additional time, and tool wear. Teak is hard on router bits, and also realy Requires a lot of predrilling.

Joey has it right - - what is your time worth to do this. If you low ball it, and have to struggle - you will hate your time spent in the shop FIGHTING to get things to come together and make little to nothing.

But do a good job - disgruntled corporate types can make life miserable. Regardless of your struggles - you will be held to the delivery date. This lady has her neck stuck out too, as you can be assured some beancounter has shown her a catalog with something "similar" for 2995 + free shipping delivered in 3 days.


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## shawnmasterson (Jan 24, 2013)

how ever you price it be firm "this is the price take it or leave it"


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## SquintyPolock (Mar 16, 2013)

The lowest bidder is the bidder that missed some detail while estimating. But, that's OK, you will figure it out and do fine as long as you are getting paid your worth.


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## firefighterontheside (Apr 26, 2013)

While I know that I could make more money per hour if I would do as suggested and double this and that and give a high price and see if they bite, but I am more comfortable giving an estimate range that way they know what the high could be. When you come in under estimate they are happy. If you come in over, you remind them that it was only an estimate. I feel better making my twenty dollars per hour for sure and not risk making nothing while trying to make 50.


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## renners (Apr 9, 2010)

Look at alternative species like iroko or afromosia if you can get them. Teak is prohibiitivley expensive here so iroko is used instead. It's freely available and about the same cost as maple. Submit a price for teak and a substitute.


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## 1thumb (Jun 30, 2012)

a good rule of 1thumb is double materials if work on site, quadruple iif in your shop. Plus, you'll burn up blades and bits on that material


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## krisrimes (Jun 17, 2011)

So far I have not heard a word back from her. I am sure that I chased them off with the price. Oh well, such is life. I appreciate all of the feedback. I have been going with 4 times the material cost for most projects here lately and it seems to work out well for the most part. Firefighterontheside, when you send in a bid, do you keep track of your hours and then set your final price based on the number of hours worked? I usually give the customer a firm price after I guess as to how long it will take me. I don't know why, but I never considered adjusting my price down after the job was done.


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## firefighterontheside (Apr 26, 2013)

Yes that is what I do. I usually give a fairly wide range. On my last job I estimated 50 to 60 hours for construction. I came in at about 48 hours. I went ahead and charged the 50 hours. We both came out happy. I could see adjusting the price down as long as you made what you needed to. It's a great way to get repeat business. I wouldn't worry about the fact that you didn't hear back yet. Likely they are checking other prices and will either come back to you or buy nothing when they realize that teak is in fact expensive. I had some nightstands on Craigslist to sell because my client disappeared and I was stuck with them. Another buyer said they wanted them and also wanted me to build some dressers. On the day they were supposed to come and get the stands, they called and said they didn't have the money and they had found someone who could make the dressers cheaper. I'm glad I didn't do business with them. Really, you can't afford the three hundred for nightstands, but you're gonna tell me I'm too expensive for the dressers which were much more. Obviously they have no idea what things should cost and can't manage their money. That's my soapbox.


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## agallant (Jul 1, 2010)

Dont forget to get in writing exactly what you are doing for them. Scope creep is a PITA.


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## waho6o9 (May 6, 2011)

+1 for agallant


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## krisrimes (Jun 17, 2011)

I have had quite a range of experience with people on craigslist. Some want to drag out a purchase with 1000 emails to buy something as simple as a picnic table, while others send me an email and then come a couple of days later to pick up their item. Luckily for me I have only had one person that asked for a table I don't normally stock bail on me. Everyone else that was a no show I just turned around and sold to the next one to come along.


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## krisrimes (Jun 17, 2011)

While bidding another project, I came up with more questions. I like the idea of 4 times the material cost for projects. It seems very quick and easy to do. Where I start to question this method is when there is a huge difference in the cost of materials. I was asked to come up with some different prices for Mahogany, Cedar, and Cypress. There is obviously a big difference between the cost of Cypress and Mahogany. For the chair that I am building, I can buy the lumber for right around $25 in cypress. Mahogany was more like $75. Just based on this alone, the mahogany chair comes out way more expensive for the same amount of work. Are there situations where some of you who use the 4 times material cost might reconsider their pricing?


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## joeyinsouthaustin (Sep 22, 2012)

I estimate my labor and materials separately. Add a percentage markup to material based on it's cost, and estimate your hours separately. The markup covers the risk and hassle of materials of differing value etc. I always add that markup after shipping costs and tax. That would allow you to justify the difference.


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## huff (May 28, 2009)

Krisrimes,

Another way you can price your work is using a shop labor rate; you still need to figure your material cost and your time you will have invested in designing, building, finishing and delivery (if applicable).

Your shop labor rate is based on how much it cost you to operate your business per hour. This rate is determined on figuring all your fixed overhead, your administrative overhead, your wages you would like to pay yourself per hour and profit. Profit can be figured seperately on each job if you want to have percentage of profit vary from one job to another.

Once you know how much it cost you per hour to operate your business so you can pay all your overhead, pay for all your administrative overhead, pay yourself and make a profit, then you can figure out how much you need to charge for that job.

Total number of hours to design, build, finish and deliver a particular project times your hourly shop labor rate will equal your total labor charge. Add your material cost to your total labor charge and you should have a fair price.

It's up to you to figure your hours correctly as it is to figure your materials correctly. You should always allow a little extra time of unexpected circumstances and the same for materials, but keep it within reason and you should be fine.

When you get the job and finish, you should be able to pay for all the materials, all your bills (overhead and administrative), pay yourself and actually show a profit. If you start trying to price it for less, then you will only be taking money out of your pocket or you won't be able to pay all the bills for your business.

There's a lot to figure out when it comes to knowing what it cost to treat your business as a business, but if you take the time and learn exactly what it cost you to operate your shop as a business, you will be able to price your work and make a fair profit.

Good luck


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