# Counting The Cost: Estimating Questions



## decoustudio (May 4, 2006)

I have struggled for many years to know, without much doubt, what a new project will cost to build. You know, the time, materials, overheads, etc. We all have different material costs depending on what material we use, and we all have different overhead costs. So, my real question has to do with figuring the labor costs of typical projects.

Since nearly everything I have ever built has been the first time I have tackled that specific type of project, I have struggled with how to use my meticulous notes from previous projects when looking at a new project.

For instance, how can I use my notes from a Maloof-Inspired rocking chair, to estimate the costs of building a splayed real mortise-tenon Dining Chair? In short, so far I haven't been able to do it.

For example, when I figured up the Dining Chair estimate for 6 chairs, my real times were longer than the estimate by 50%, and I "ate" the overage. I'd like to not repeat that experience again, if you know what I mean. I mentioned in other writings that my business skills are pretty poor, and this is an example of that.

To help the others to this end, I have typically listed the manhours I have spent building the various projects I have posted as this is usually the second question people ask me around here when they look at one my projects. The first question is, "how much does it cost?" The second question is usually, "how long did it take you?"

I have noticed that several of the other jocks will list the labor hours involved in their projects as well, and I use those thoughts when working on my new estimates, and so I appreciate it. I realize that all of us have different skills, and we all excel in different ways, we all have different working areas, different tools, and different levels of experience, but I know I can learn something from each of you, if you want to help.

So here is the bottom line: what information do you other jocks use to figure up the costs of doing a project (time and materials)? This is different than the other topic on "Pricing," which is what the customer pays for it.

thanks, look forward to hearing your thoughts,
Mark


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## scottb (Jul 21, 2006)

My wife's pretty smart with this one… whenever I tell her how long I think a project is going to take, she always doubles the estimate (in her head). Meanwhile, despite trying to hit my goal, more often than not she's right. Until I get more experience under my belt, I'm going to go with her estimates.

I've received this similar advice in customer-service related workshops, from college professors, and Scotty on Star Trek - Underpromise and overdeliver. Tell someone it is going to take twice as long, that way if you finish early the customer will be really impressed, (and/or happy to save a couple bucks) or you'll have a nice time cushion, without having to kill yourself to get things done.

That's my 2 cents on time… as for materials, I try to draw up as detailed plans as possible, checking different options to see how I can save on the cost end. I try to allow myself as little waste as possible (and cross my fingers that I don't screw something up beyond repair.) 
Several years back I found plans for a fire wood storage bin, all made from dimensional pine. The bill of materials called for several 10 foot lengths. Knowing this wouldn't fit in my car, and rather than tie it all on the roof, I drew up plans to see how it would fit on 8' lengths. I was surprised to see that I would have had the equivalent of 8+ feet of waste had I gone the 10' route. Not a huge cost savings for pine, but had this been a hardwood chest or something, the savings would have been considerable. Ever since then I've gone over the materials list carefully, and tend to doublecheck cutting diagrams for efficiency. Despite this I have accumulated a considerable amount of offcuts, most too good for the fire.

Yes, I know I should allow 10% or whatever for mistakes and such, and sometimes it works out that way, othertimes it makes more sense to economize a bit. I'm not impressed by some of the plans in magazines that call for a full sheet of some specialty plywood, only to use a fraction of it. In some cases there is no choice, in others, there are several plan "B" options no better or worse than the original. - Worst case, if I've scrimped on materials for a project and I come up short, or can't find what I need in my shed, then hopefully the extra time I've quoted will cover the extra materials, and I still come out ahead. (Not that I've done that many projects for hire yet… just quoted one this week though!)


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## jockmike2 (Oct 10, 2006)

sorry it took so long to answer Mark. but I had to do some research to talk at all about this because I'm used to pricing out carpentry work. I did find a good web site that has some free info. and of course you can order books. Http://woodworkdoctor.com has a lot of useful info, I read through it, I don't know if it answers your questions squarely, but you may find something useful. I have never sold any of my work yet I've given all away because I'm kinda afraid too.. you know, don't think its good enough or anyone wants it. Hope this has helped, mike


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## jockmike2 (Oct 10, 2006)

Another websight is the "woodmagazine" wood forum look under general woodworking dated 10/18/06 tiltled "Do wood working for a living" it's main point is once you start selling your work you cease becoming a woodworker and become a business man. Mike


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## bbrooks (Jan 3, 2007)

I read a couple of good books to help with pricing woodwork. The first - *How to start a Home-Based Craft Business* by Kenn Oberrecht. While mainly for craft type items, it gives a basis for estimating.

The second book - *The Woodworkers Guide to Pricing your Work* by Dan Ramsey. This provides some good guidelines for multiple types of work-crafts, furniture, etc. I remember the basic rule for furniture selling price was 4 times the cost of materials. Of course, if you have a specialized item, a good reputation for quality, a following, etc., you can charge a greater price.

Having said all of that, I am still working on getting a pricing formula right. If it was based on my hours to produce some of my projects, no one would ever buy them. So, I do a reasonability check - what would something like this sell for in a retail store or perhaps online. At least this gives me an idea if my price is way out of line.


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## MsDebbieP (Jan 4, 2007)

I have no clue as to what the costing factor is. I'll just throw this in, in case it gives you another idea which might generate another idea (and so on and so on)
For my photos, I used to take the cost of the film/developing and double it to provide for my time and then add another (=triple) to give me enough money to buy the next film/developing. Nothing fancy but then I wasn't a "professional professional" either


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## bbrooks (Jan 3, 2007)

Not too bad of a method Debbie. It sounds like it would cover all of your expenses and leave a profit. Not bad in my book.


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## rookster (Jan 14, 2007)

Hey Marc,

I haven't done much estimating on woodworking projects, but I have worked as a project manager in an environment where we quoted for work we hadn't done before. One of my co-workers at that job told me how he estimated project times (a method that was uncanny in accuracy and strangely similar to your wife's method). His formula: (x*2)+2 days where x is the time you think the project should take. So a four day project would be 10 days for completion and a 2 month project was 4 months 2 days. This method worked for him, and whenever you are working a project you haven't done before I'll bet it will work for you… And if it takes you less time, you can always deliver early and/or lower the final bill. That won't ever make a customer angry…


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## scottb (Jul 21, 2006)

Rookster - I like that formula, It seems just about right on those 1st time projects that come to mind.

I presume this was just for time, and materials were added in?


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## bbrooks (Jan 3, 2007)

That seems to be closer to how long my projects take. Or maybe the formula should be (x*2)+x. That would probably cover most jobs.


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## decoustudio (May 4, 2006)

It dawned on me yesterday when I was thinking about this topic, that we might be a little off focus by considering the selling price in this Forum Topic.

I was hoping in this topic to discuss how to estimate a project, the number of hours, board feet, etc. I was hoping to learn about what resources and experience the professional jocks have in terms of determining what the costs are associated with creating something from a dream on a piece of paper, or in our heads. I was hoping to hear what professional jocks do to break down the procedures of a project into an estimate of it's cost to build it.

Remember, If I just throw wild guesses at estimates of cost, then my pricing can run people off, and then I have nothing to sell.

I seem to only be accurate in estimating when I'm building something for a second, or third time. For instance, I have made a bunch of walking canes. I can tell almost by the exact hour how long something will take me to carve and finish based on someone's specifications. So, figuring up the Production Cost of making one of my signature style canes is easy now, but determining a Retail Price that someone will pay for it is something different.

Sure, I have a handle now on the Walking Cane Production Cost, but I don't have that experience on my furniture work, as each piece is different from the next. After building a Maloof-Inspired rocking chair, I have a good handle on how long something like that will take me to build again. But, how do I estimate another style chair, such as a Windsor?

I know we all deal with these issues when trying to stay in business, and so there has to be more to an educated guess than multiplication factors on material costs. At least, that is the type of thing I am trying to define for my work.

*To support my theory on Costing vs. Pricing having no relationship:*
Last week I saw a Nakashima small table on the Philadelphia Antique Roadshow #1 from this season's episodes. The current value was important to me to smile about, but what really pissed me off was the cost of the table at the time it was originally purchased in 1982. The owner stated that he bought the table for $200. This made me angry. Now, this was late in Mr. Nakashima's life, the height of his career, and he was overwhelmed with orders at the time. Why did he sell something so cheap? I don't know, but looking at the table, the work involved and the materials used, and I can't see how he could have made any profit at $200, even in 1982 dollars. There had to be something else at play, or the owner misrepresented the cost.

*Things I learned in MBA school:* 

Market Forces (Demand) drive selling prices. (period)
Labor cost, material cost, and overheads drive production costs (Supply). (period)
In a free market, selling price and production cost are not related, and do not necessarily have an intersection point. 
The only market-driven relationship between cost and sale price is the price we will not be willing to sell something for on a given day. Another day, things might be different.

*Here is the Part that "Professor Mark (me)" adds to that list:*

Life happens, and woodworking artists are no exception to this rule.

Sometimes I am willing to hold off on selling something at a price lower than I want, but another day, or another month, I might have happily considered the same price offer, or something even lower. So, this just supports my Professor's points that selling price and production costs are not related.

In some cases customers have asked me to build them something and then happily accepted the bill when it was complete. In those cases, I can charge less per hour in my estimating, as there is no risk to cover. At other times, they want to know exactly how much I will charge upfront. In some cases after the fact, they refused to pay the sales tax, as they said that it was their understanding that "it" was included. For that reason, I am more and more getting very specific about what is "in", or "out" of my pricing. However, dealing with retail issues and retail pricing is another topic.

Before I can tackle the Selling Price, I must first be able to estimate my Costs. So, what I am thinking is that we should continue the talk about Selling Price in the other Topic.

what are your thoughts?
Mark


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## Obi (Oct 19, 2006)

Well, Professor, this is actually how I do it. Customer wants a widget, he shows me a picture of the Widget he wants and the price that it sells for from Widgets-R-Us, the mass producer of widgets. I will tell him that I'll make the same widget, out of solid oak for the same price he's paying to the Widget Company plus what they'd charge for tax and shipping. He isn't getting it any cheaper but he IS getting a better hand-made Widget.

I usually don't do very well on the first one, because I've never made that particular Widget before. I should probably do a mock up but I don't have the time or the extra material.

I made about $300 on that DVD cabinet and it took me about 4 days. Not too bad for a rookie


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## dennis (Aug 3, 2006)

I have a record of time for different projects I have completed. Broken down into different processes. Milling, glue-up, face-frames, legs, tops, sanding, finish, hardware, drawers, ect. I can pretty accuratly guess my hours based on these. I suffer when I have to go into a design or learning mode. What should take an hour can stretch into days. My first table and chair set, 80 hours, my second 32 hours. Estimating material is easy compared to figuring labor.


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## bbrooks (Jan 3, 2007)

I agree with that Dennis. So far, none of my projects have been duplicates, so each one has taken a long time.

To Mark's point, I find estimating the labor for a new project to be somewhat difficult if I have not made the item before. However, I try to base it on the time it would take me to produce the item, including the learning time. If there are similarities between the new project and an old one, I have a better idea on the labor needed.

Even after all the estimating, I still have to look at the reasonable factor. My labor costs, even at a reduced rate, would make several of my projects too expensive for my customers. So, sometimes I have to just accept a set dollar amount for the labor and do what I can. If I ever get a reputation like Norm or Maloof or other giants, then I can probably get the labor dollars I should.


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## Greg3G (Mar 20, 2007)

Marc, I actually worked my way through college as an estimator for a company that installed laboratory casework and equipement for science labs in various institutions. When I started I broke down the tasks in to the smallest unit task, one base cabinet, one wall cabent etc. I then went to the current job sites and timed the three skill levels, aprentice, journeyman, and master (we were a union shop) What I found was that the apprentice took 2.5 times longer to install an average cabinet than the journeyman and the master only was 5 minute faster. As a result we used our labor times for the journey man.

I would recommend that you go into the shop with your wife and time yourself doing various task, joints, assembly, etc. But here is the important part, you must include your set up time on the equipment. Cutting tenons doesn't take long, it setting up for it that takes the time. When you have your average time, add up the various tasks involved in the job, making sure that you don't miss any. On a first time project you will be at an apprentice time so mulitply by 2.5. This has been the most scientific way I have found so far.


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## scottb (Jul 21, 2006)

hmmm… that's intereting Greg.

Practice some routine tasks, and time how long they tend to take, and you can apply that to any project. I'm going to look into that…. If I keep track (and continually review) how long it takes me to make different types of joints, and so on, I should be able to compare a cabinet to a table to a box… I like that. would take the guesswork out of "new" projects.


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## WayneC (Mar 8, 2007)

It is a good sound project estimating technique. I've used a similar approach in the software world. But I would still double your estimate or at least add some padding for the unexpected.


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## oscorner (Aug 7, 2006)

One thing I learned about estimating in the dirt business is that you will under bid 90% of the time and make money on your bid 10% of the time. Murphy's law"*if it can go wrong it will"* and others are impossible to factor into the true cost of time and material that it will take. It's like turning a blank of wood: it looks good when you mount it between centers; it still looks good after you turn it into a cylinder; the turning is becoming a master piece, then you get a catch and the master piece becomes a gift or maybe you can save it. Either way the time to make it has grown or the material is lost and your cost of material has increased. It's all trial and error to a point! The best you can do is over bid by a fair percentage( fair to you and to the one your giving the bid to). Stick to your bid, even if after the work is done you find you could charge less and still make money. This will keep you customer's trust. And if they are repeat customers give them a break on the bid of the next item if you made more money than you were comfortable with. Believe me it is hard to bid $500 to build a table and when done tell the customer they only owe you $300. Their first thought about you is that you were trying to rip them off, then that you don't know anything about woodworking and that's a reputation that will spread like wildfire. Sorry, I'm rambling. It's a hard row to hoe no matter how you look at it.


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## woodnut (Apr 22, 2007)

I just purchased a program called woodworkers estamate helper and I like it alot.The good part is it has a 15day trial version. I used it on one project and knew that I needed it hope this helps. I don't remember the link,but I did a google search for woodworking software and found it there.


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