# What should I charge?



## nate22 (Jul 12, 2010)

I own my own business and I make and sell bunk beds and loft beds. What I want to know is what would you charge for them. I make my beds out of pine right now and I typically pay between $100 to $150 in materials for them depending on the size. So I just want to know what you guys would charge and how much you would charge for labor. It usually takes between 50 to 80 hours or a week and a half to make one. I've been told that I don't charge enough for them. Any input you guys have would be helpfull.


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## nate22 (Jul 12, 2010)

Here are some more pics.


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## crank49 (Apr 7, 2010)

Pay yourself $25/hr X 60 hr = $1500 + $150 material = $1650
Then figure on doubling that for liability insurance.

Very nice looking work, by the way.


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## therookie (Aug 29, 2010)

That sounds about right. What were you charging nathan


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## Maggiepic (Aug 26, 2010)

You'll need to add your mark-up on the materials too. I add 10%, but I know some folks get more than that. I use to do 20% but had a few clients balk at this rate, maybe even lost a few jobs. No one has even hesitated about the 10%. Lose a little $ but gain more work.


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## cabs4less (Nov 2, 2010)

I have a thirty precent mark up on materials sometime more if the build is complicated now I do cabinets so that might be why i can do that but the customer never knows that they just now the total only but i am not hiding my rates but don't ask don't tell I would sell the painted ones for 2000 then more for the natural ones wit furniture check out a badcock or sears website and se what they are selling thiers for dont sell yours for this price because yours is hand built so its worth more but I know wit cabs its a hit or miss I have lost jobs becausse price to high but i have lost money because i bid to low.


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## HCC (Mar 1, 2010)

I charge $50.00 an hr for contractors, designers and architects that I work with on a regular basis and 65.00 for anyone else. This is just for my time then I add my materials in plus 15% because I picked them up, then I take 25% of the entire job and add that in as profit and overhead. so based on this they would cost 3965.63 if I was selling to a contractor and 5043.63 if I was selling to an individual. I'm sure most will think this is crazy expensive but thats my method and when I actually mangage to stick to it I make money.


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## TopamaxSurvivor (May 2, 2008)

When I started in the 80s i had info that said business overhead averages 15%, add that, plus 10% profit. Figures out to adding 26.5% instead of calculating the 15, adding it and then the 10 and adding it. YUiou baseline should at least include all materials and expendable plus labor at your rate.


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## nubby (Feb 6, 2009)

We make porch rockers, adirondack chairs and porch swings. For years I have just taken the price of materials and doubled it. I loose a few sales but we really have more business than we can keep up with. The items we make are very competitive what with all the plastic, and like items being made overseas by cheap labor. But still, I have more than the three of us can keep up with. I keep a rocker in my shop that was mass produced by a competetor that has a shop about 8 miles from here but has his rockers marketed at a local farm co-op as well as 2 furniture stores in town. The reason I have it in my shop….I have customers sit in it and then one of mine. Then I have them look at the way it is warping though made of oak. I've never had anyone walk out after that test without placing an order with me.
Maybe I should charge more than just doubling the materials cost.


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## tierraverde (Dec 1, 2009)

Nubby,
If you have more business than you can keep up with,.............raise your prices. LOL


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## rance (Sep 30, 2009)

........, then after you do all those fancy smanchy calculations, you compare that to what the market will bear. Unfortunately, sometimes it just doesn't pay to build a product. Keep in mind also that you are building them like you would 'custom furniture'. That makes the price go up again compared to a stock item. I'm a little surprised it takes so long to build one. Maybe look at reducing that factor.


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## TopamaxSurvivor (May 2, 2008)

Costs are not controllable for the most part. The costs with the % markups are fairly standard for businesses that make it. The control factor is your labor rate, but you cannot be a race to the bottom against the Chinese 'cause they will win. You are targeting a shrinking market in this economy in both attitude and disposable income. IMO, that market will continue to shrink for the foreseeable future. It will take at least 20 years for the turn. Things have to get a lot worse before enough people figure it out and put enough pressure in the right places to effect change. If you pay any attention to the media with G20 meeting starting in Korea, nobody is talking about the real issue.


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## LeeBarker (Aug 6, 2010)

You need to be realistic about your fixed costs-business license, insurance, taxes, power, heat, rent,tool maintenance and repair,all that stuff. Make a list, and make it real. Now calculate how many hours you work a month and divide. Now you know what it costs you PER HOUR to work. That must be paid. Add what you want to take home, and you've got an hourly rate.

I like all the input on materials markup. As an alternative to that, you can just factor in your time fetch it. Just be sure it's a real number.

I find your stuff interesting, apparently well and carefully built, and really inviting.

If these new, higher numbers cause you to catch your breath, consider a three-tier product line with a very basic unit at the bottom (designed to fit under a number at the high end of the competitors' prices) ; the one you really enjoy building the most in the middle, and the tedious, client-interactive custom model on top (premium price).

If this end of the business is a difficult process for you-the selling-make friends with a sales person who will coach you.


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## nate22 (Jul 12, 2010)

Thanks for all of your guys inputs. This information really helps. And I can tell you right now I am not chargering nearly enough for my beds. I know thats why I don't get the business like I should thats at least one reason. Right now I am charging anywhere between $350 to $500 for my beds. But that is going to change in the next couple of weeks. Another problem is I happen to live in one of the worst countys in the U.S. right now. The county I lived in got hit so bad from the recession that people moved away from the area just to find jobs. So nobody is really buying anything which is another reason I need to find a way to sell to diffrerent areas of the country. But I am not charging enough. And I had another business guy tell me one time that if one person doesn't buy one don't worry about it the next person will.


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## nate22 (Jul 12, 2010)

My next quesition is if I sell to stores how should I charge them. I have thought about tring to get my beds into stores but I'm not sure what to charge them.


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## alba (Jul 31, 2010)

Nathan,
great subject.
When supplying stores, it is not as much price as when.
Stores try to put off paying suppliers on delivery. Wanting 30, 60 or worse days to pay.
Only a point from someone who has learned that lesson. 

Jamie


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## dbray45 (Oct 19, 2010)

I have a few ideas and some lessons learned-
Department stores require a 400% markup-they pay $100.00 and retail is $400.00 as a rule and allow for sale pricing.
Specialty stores like to at least double their costs to deal with their overhead but quantities are lower.

Never propose to a store the same design you are selling to another. They want their own design, if you are willing to put their name and logo on it, all the better, ask for the decals.

Don't include what the store can add - mattress, cushions, etc… unless they ask you too.

To make one bed by itself takes a week and half (custom made).
To make 10 beds, by breaking down into components (10 ladders - 80 treads and 20 side pieces, 20 mattress frames, etc..) needs to be in less time, say a week for all ten beds. This is creating a model to be sold as a standard bed that a store can deal with. In doing this you will get cost effective and make the profit to grow.


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## dbray45 (Oct 19, 2010)

Oh, by the way-these are really nice beds.


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## TopamaxSurvivor (May 2, 2008)

I contract to a major corp. They automatically schedule payment for 3 yrs out when it is approved. They haven't taken that long yet.

Walmart, sells an item, restocks the shelf, and is near the reorder point again before they pay for the first one. The supplier is makng the 3rd one before he ever gets paid for the first. I read that in Morningstar i beleive. Friend of mine used to contract electrical to them. He told them to stick it. Didn't like their 180 ++ day pay system.


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## nate22 (Jul 12, 2010)

Thanks for all of the advice. It really helps me out. And it's always nice to hear from other people that they look nice. Specially from other woodworkers.


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## dbray45 (Oct 19, 2010)

My main customer was the federal govt. Its a funny this but their adds say that they help start 3,000 companies a year. The way they pay, they take out 3,500 companies a year. Managing the payables and receivables to any large company is the challenge. The interest that can accumolate is nothing to sneeze at - is a serious part of the overhead and is a part of your cost base. The minute that you buy something on a credit card, for a small business, your cost base just changed.

The first call - in sales - for large companies is not the purchasing department but to account payables. You find out how they they work, find out what paperwork they need to process your payments, find out what discount would entice them to pay at net 30 (this works), then you ask them who should you speak with in procurement-- if you can deal with their accounting mechanisms. Some will tell you this is backwards but if you are looking at a long term relationship, you need to know their game. You are not big enough to change them


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## TopamaxSurvivor (May 2, 2008)

That statement aobut the Fed gov't is absooutley true and correct. IMO, if you do not have the capital, staff and patience to put up with them, don't bother even thinking about doing bussiness there.


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## dbray45 (Oct 19, 2010)

Another thing that you really really need to do is talk to your bank about credit card merchant capabilities. When I shut down my company, the spending limit for one purchase was $2,500.00. I don't know what it is now. Either way, selling to individuals, small companies, and federal - you need this as a business tool. Make sure that you add the cost of accepting credit cards is added to the pricing.


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## Jack_T (Feb 6, 2010)

Have you thought of contacting interior designers and decorators and architects in the surrounding areas. People who hire these individuals usually have more disposable income. It may help you make more sales at significantly higher profit margins.


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