How much should I charge to make this base board?

[keith micinski]

I have a client that wants 80 feet of a standard baseboard with an ogee top. The problem is it is 11/16ths thick and an odd height so I have to make it. I can get the bit for 50 and the wood I already have or won't be that much anyway. What do you guys use to figure out how much to charge per foot for mouldings. It is about as basic a profile as you can get so it really wont be that difficult to do I just have never charged anyone to make moulding before.

[Peter Quinn]

Time and materials plus tooling divided by the number of feet. I won't give a fixed price up front on custom molding work, just an estimate. How much labor do you have to put into making blanks ready to run? Plane, joint, straight line, sand, etc? Or buy S4S and go, just rip to width? Set up time can be significant depending on the complexity of the product. Thats in my price too.

Anyway, I do my best to figure how many passes will be involved, develop a realistic idea of how long each pass will take (i.e.: 15F/minute is running pretty quick in a small shop non molder situation) and you have to add time for picking up/putting down the stock, setting up the next piece, etc. Packaging (shrink wrap together etc), delivery? Thats all in the estimate.

I start the clock when I walk into the shop, I add the time it took to get the material if I had to go pick it up/out, I add in delivery if its a special trip, add the time it took to clean up.....every step it took to get the job done. I multiply the hours or fractions by my shop rate, divide by the lineal footage, thats it. I move pretty quick, I don't add in lunch, bathroom breaks, mistakes, etc. Usually comes in just a little bit more expensive than the borg, but my work is MUCH better than theirs!

End of the day, I find I'm happier working for me than working for free.

[Richard Coers]

Wood cost should be what it would cost to replace it. Tooling charge is full charge. If they balk because they have to pay full amount for the bit, let them keep it. You don't know the next time you will use it. Then add shop rate (that should include electricity, insurance, etc... If a millwork business had to custom make the molding, it would be a big charge, if they would make it at all.

[johnny means]

Should he charge them for a shiny new moulder simply because he hasn't invested in one yet? Tooling cost should be included in your general overhead. That is, unless it is really unusual.

[Mel Fulks]

What you say makes sense. But for the most part bosses are too cheap to buy steel.They will sell a job for which they know they don't have tooling,put the cost of tooling in the quote and then say "Cant you regrind some knives we already have ? " To which I always reply " I will not change existing tooling .It is too expensive to throw out the labor of making them to save a little money on steel. How can you lose when the customer pays for the knives and you keep them ?" The customer must pay for the tooling ,or woodworking as we have known it will vanish.

[Jerry Miner]

That's the way we do it. Equipment costs are part of general overhead. Tooling (cutters) for a custom job are charged to that job.

[Larry Edgerton]

Should he charge them for a shiny new moulder simply because he hasn't invested in one yet? Tooling cost should be included in your general overhead. That is, unless it is really unusual.

Really?

I have a simple question that I ask myself every time I do a job.

"Would I be doing this if I was not getting paid?"

That includes my time and my money, and I am not supplying time or steel for nothing. I'll go fishing instead.....

Larry

[John Lifer]

I'm not professional ww by any stretch, but in another industry I quoted costs to produce items. ALWAYS included our fixed costs, elect, insurance, all employee costs including mgmt costs. Materials costs including any tooling (shipping costs too). And small % for machines. At some point you will replace or at least have to repair that TS, BS etc, etc. Someone has to pay for it and if you are in business, it HAS to be the customer or you will starve or close. YES, in this case, customer pays for the bits and some small % of the total shop costs and that includes the building too! Being nice doesn't mean doing for free!

[Peter Quinn]

Should he charge them for a shiny new moulder simply because he hasn't invested in one yet? Tooling cost should be included in your general overhead. That is, unless it is really unusual.

To me this depends on the relationships and other factors involved. He said client. Good regular client, does a lot of business with me, tooling is something I want to own anyway, I may eat it. I'm doing lots of other work for the same job, I may absorb it. Small job with a unique cutter I would never likely use again, they can buy it and have it when I'm done, I can buy it and charge them, keep it for any future use, never charge the tooling charge again, they can go elsewhere to find free tooling. Lots of grey areas in business relationships. Now if he tried to charge them for a new router to spin the bit, no dice in my book. But if he needs to make a fence to run said bit, that's in.

[Richard Coers]

Should he charge them for a shiny new moulder simply because he hasn't invested in one yet? Tooling cost should be included in your general overhead. That is, unless it is really unusual.

How do you calculate your general overhead if you don't know what tooling will be used from day to day? Do you change your overhead with each job, or do you just throw in a guess at the beginning of the month for what tooling you may need?

[Don Jarvie]

The cost of the bit would just be included in the labor portion of the estimate. No reason to call it out. The estimate would be for materials and labor. I would give 1 price for the whole job unless the client wants a breakdown of labor and materials.

Don't be afraid of thinking your charging too much since this is custom work. 11/16 isn't off the shelf and neither will the moulding since it will be wider than off the shelf.

[Jeff Duncan]

I change for all of it and then some. Wood equals cost + a percentage, usually 15 - 20% depending on expected waste. Your already having the wood does not affect the price, you call up and get the current price and add for your time to get it or have it delivered....hence the markup! Custom knives or cutters are almost always part of the price and spelled out as such. If it's a really common profile you can use for other things you have a little flexibility with how you charge. Setup fee depending on the complexity of the setup....my basic setup is generally $75. Then you need to figure out your labor cost....I also don't like to estimate a job based on a specific volume. I figure out my costs and set it up in a lineal foot charge.

So a quote for custom baseboard would have a fixed knife cost, a fixed setup fee, and then a lineal foot cost for the profile. This method will allow you to make money on small molding runs. On larger runs you should lose the job to a molding outfit just about every time.....which is how you want it anyway! You can't compete with those guys. But for small runs you can make a few bucks by providing a fast turnaround!

Oh and lastly I completely agree with Mel on re-grinding knives....it's usually not worth it. First off now you've lost a profile you may need again. And secondly the amount of time in labor costs is going to eat away most if not all savings from having them ground for you.

good luck,
JeffD

[ian maybury]

There is another way to look at it. That's to consider what the market/going rate for that sort of work is.

The price of commercially available material in a similar size and profile is maybe a baseline from which to start.

It's not necessarily realistic to expect a single client to bear all of the costs of tooling that will be used for future work. Looking for them to do so may cause offence unless it's well justified - it's maybe the case if e.g. there are others than do that sort of work on an ongoing basis that the client should be directed to them. That it's just not a job you're properly in a position to do.

Against that if it's work that you're a realistic option for, but it's going to cost for tooling etc that you know you won't use then the job should probably carry it all.

Just one view, but good management practice suggests that you basically need to position to make profit at the market rate for the product/service whatever it is - that trying to buck the market by adding up your costs without reference to the market tends to lead to problems. Even if you can find a customer or two prepared to bite the bullet.

That doesn't mean you don't charge a premium for e.g. custom work. Just that it's wiser to give reasonable value/not advisable to try to buck the market for that specific sort of work.

ian

[Carl Beckett]

Ya - the general 'pricing' principles are that 'cost' is irrelevant.

You can only charge what you can get someone to pay.

And you should charge the max you can get them to pay.

Nowhere does cost come into pricing (until you start trying to determine if you can make money) - cost, and price are pretty independent and exclusive of each other. (and of course at the end of the day you have to tally up whether you made money - but if you have extracted maximum 'price' - and operated at minimum 'costs' - thats all you can do for those particular aspects).

Cost based estimating IS useful if you are in a commoditized industry with best in class benchmarks to compare against to determine price - since profit margins are somewhat equalized by competition. But even here... you can only charge as much as you can get a customer to pay, and if its not less than the competitor charges for the same product - unlikely you will be in business long.

In this specific example the customer may not have a lot of other choices - that is, there isnt a comparable competitive product. You have to determine how important it is to this customer that it all match. And charge them accordingly.

For a while my brother was repairing antiques. He was pretty good at it, and had a following. He decided he wanted to work less so started raising his rates.... guess what - demand went up! People were willing to pay ANYTHING to save grandmas old furniture....

[Jeff Duncan]

Ian I disagree....how do you compare custom to market rate??? Small runs of custom molding are always significantly more expensive than off-the-shelf. Unless I misunderstood and you mean comparing to the market rate of another shop producing the same custom molding? Otherwise the market rate for commercially run off-the-shelf molding is of little use for me when I price out molding. The fact that it's more expensive than what he can buy at the local supplier is not a bad thing at all. You just give them a choice of getting the exact product they want, or....the product that's close enough and fits their budget.

As far as tooling goes.....is it custom? If yes, then you 'MAY' use it again, but unless it's for more work from the same customer it's pretty unlikely. If it's not a custom profile but an off-the-shelf, then sure you have flexibility, but should still receive some compensation as the use is predominantly for that job. For instance if you run the molding and the bit/cutter/knife is now dull, you'll need to expend more cash in order to gain any further use from it.....so it's important to be compensated for tooling. If the client is insulted than they don't understand custom work and probably are not paying you what your worth anyway!

IME the average homeowner is not a good source for small molding runs. They're generally shocked to see what custom molding goes for and end up buying at the local box store instead. I rarely get to the point where I bid those as I qualify clients first. Most of the small molding runs come from contractors doing school or or other govt. building renovations where they need to match existing profiles. Other times if it is a homeowner, it's someone willing to spend the money on proper restoration and understands the costs that go with it.

In the case presented here I'd hazard a guess that the client wants the base to match, but doesn't understand what's required to do so. I'm thinking it will likely end up in one of 2 scenarios....1 the OP charges enough to cover all his costs and make a profit, and the homeowner is surprised, if not offended, by the cost....or 2, the OP subsidizes the work b/c he feels like he shouldn't charge so much for such a simple thing, but doesn't make anything on it either. I understand both situations and have BTDT....but these days I'd rather leave the doors locked and take my son fishing, than come to work and not make money:(

good luck,
jeffD

[Rich Riddle]

My practice is to be reasonable and fair to everyone involved in a transaction. Both parties should feel as though they are receiving a fair shake for the money. If you were being CHARGED for the same service at the same price, would you consider it a fair price for the work the person did for you? If not, you over charged. People have a way of realizing after the fact if someone took advantage of them. If a contractor does take advantage of them, research indicates this will lead the offended party to tell no less than twenty other people.

A realtor in this area had listed every house in the area. Then when a bank took ownership of a home, she decided to "redo" the home and she removed every item of good value in the home, expensive lights, copper sinks, etc. Not only did the bank have to settle for 45% of the asking price because of her "remodeling" but she has not received one listing in this area since the four years that she did this action. She used to have ten listings a year up here, she now has none. We still have lots of homes for sell, but every owner up here knows to steer clear of her. The few thousand she got from selling the items she gutted cost her hundreds of thousands in commission.

Acting penny wise might prove pound foolish in business.

[johnny means]

standard baseboard with an ogee top. I can get the bit for 50

The client it's not asking for a custom profile. This is something that any shop should have lying around and something that is more than likely to be used over and over again. If he can get tooling cost, great. But there is no reason why tooling cost for something like this should be included in the price the way material or labor would be.

In this case it may not make a lot of difference But when bidding larger jobs which may actually require a properly equipped shop, you won't get away with trying to get clients to pay for standard equipment.

[Jim Neeley]

In the end, you have to decide how much you want the job and how little you are prepared to work for. My approach would be either the setup-fee above or a fixed price for the first 50' and so much a foot thereafter. With a $50 bit, that would amount to an extra $1/ft for the first 50 ft. The customer may see the discount once setup is included and decide to get a little spare.

It all comes down to what makes it worth your time. If eating the bit isn't worth it for you, then you should put it in the price. If what they wanted was a borg-supplied molding I wouldn't try to compete. If its a custom run, then I would price it accordingly and, if I didn't get the job so be it. If I was starving and had no business, my opinion would be different.

Just my $0.02..

Jim

[ian maybury]

What I was trying to say Jeff was just that it's maybe best to try to price at ± (taking account of the specifics of the job) what is the going/market rate for the sort of work in question. If it's custom/non standard and has to produced in low volume on lower output type equipment, then it's clear it's got to cost more than the commercially available commodity version.

Against that as Rich says if in order to handle the job you have to charge way over what a shop doing that sort of work (similar design, similar quantities, using similar material) might reasonably need (e.g. you seek in an extreme and joking example to pay for a new shaper and bunch of tooling off the one job) to gear up for the job then (even if you can persuade them to pay) there's a high likelihood they will afterwards figure out they were overcharged. That if they had used X shop who would have just charged for a set of cutters, and for a bit of set up time they could have got it for half.

Which even from a purely self interest driven perspective (and it's not just about that) is probably not a good thing - in that the consequent bad feeling could very easily translate into real loss of future business from those they talk to about you. So much business in this game is referral based.

The one thing you can be fairly sure of is that the customer's starting point in thinking of a price will be whatever it costs in commercially available/commodity form - it's probably best to be able to justify whatever you charge above that in terms that stand up and sound reasonable...

ian

[Michael W. Clark]

I've always thought that cost and price were two separate items. If you are in this to make money, your objective is to maximize the price (while being honest with integrity) and also reduce your cost. If you can do these two things, you maximize profit. Obviously, as Ian says, there is a price that the market is willing to pay, but sometimes your price might be significantly higher due to current workload, perceived risk, timeframe required, etc. There are all kinds of reasons that one shop might give a high price, but that doesn't make it criminal or unethical. The buyer has the right to seek prices from other shops and compare.

At work, we get pricing from fabricators to manufacture our equipment. Sometimes one fabricator will be really high compared to the others, other times that same fabricator will be the low bid. We have learned which fabricators do certain equipment best and also know them well enough that when the price is out of line there is usually a reason. If they are always high, they don't get much work. We don't always go with the cheapest either. It is also about the quality, value added, and lead time.

If a shop is consistenly high or consistently lower than the competitors, they will soon figure it out. They will either have no sales or a shop full of jobs with no profit in them. If you are basing your entire existence on one job, then you probably won't be around very long anyway.

As for the realtor example, that seems more like stealing than over-pricing. I'm sure it gave the realtor a negative image and I'm not sure how they stayed out of jail. We had an appraisal done on our home for refinancing a few years ago. All the fixtures in the house were noted, down to the finish, type of countertops, type of floor, wall color, etc. It would be like the OP promising the baseboard described and delivering BORG MDF painted instead for the same price and shorting the buyer as well.

Mike

[Leo Graywacz]

I use a W&H molder and this is how I usually charge for custom moldings.

cost of materials plus 15%

75¢ per inch width up to 4" and then 25¢ up to the width of the molder.

Add in the price of the steel with no markup. You keep the steel.

[Rich Riddle]

I've always thought that cost and price were two separate items. If you are in this to make money, your objective is to maximize the price (while being honest with integrity) and also reduce your cost. If you can do these two things, you maximize profit. Mike

Mike

Maximizing profit is frequently short-sighted. Many businesses and even the government use this philosophy despite it being disproved years ago by economist. For instance, we know for a fact when the government raises taxes to a point, high income workers simply reduce production or stop until the taxes lower. Thus the increase in taxes has a reverse impact; it lowers the actually amount of money the government receives. After all, why work for free or nearly free? Economist discuss laws of diminishing returns, marginal utility, and economic equilibrium.

Despite all the formulas, most folks seem to understand the concept of fair. If you're not fair as a business person, you frequently won't make it long.

The realtor avoided charges because of a unique quandary by the way. The sale went through a relocation company which meant the true owner of the home only owned it for one day, the day of closing. That company would have had to press the charges and declined to do so since they were out-of-state. The realtor thought she understood how to make a quick few thousand, which she did. Unfortunately for her, it cost her far more than she made and more importantly revealed her as a thief. In the end Karma got her, and her personal home as well. She lived in the area and the bank took her home. Perhaps the lesson is don't take advantage of one of your neighbors.

[Jeff Duncan]

My practice is to be reasonable and fair to everyone involved in a transaction. Both parties should feel as though they are receiving a fair shake for the money. If you were being CHARGED for the same service at the same price, would you consider it a fair price for the work the person did for you? If not, you over charged.

Rich, that's an interesting way to look at it but I don't think it's relevant in custom work. Pricing work is about knowing your costs and charging enough to pay those costs and still make a profit. Whether or not they think it's fair is irrelevant, no matter what you charge it's likely going to seem high to some and low to others. I'm not selling milk or gas, I'm selling a cusotm product that costs what it costs. They can decide whether or not to buy it and they can get prices from several other shops which many smart shoppers do anyway. I've sent out many quotes that people found to be too expensive. I've also sent out plenty that people thought were comparatively cheap. In this business it's a fact that you can take any decent sized project and have 10 different shops price it out and vary by many thousands of dollars. The realtor example I just don't think applies to this conversation at all....apples to kiwi's IMHO;) Oh and FWIW I could never afford to hire myself....I think any work that I have to hire out is expensive....but I understand it as well.

Ian, I think we basically agree. There's no defining line on how much you can apply to tooling per size of job. I've seen bigger shops I worked for in the past be able to make large investments in equipment paid for by high profit jobs. The last shop I worked for was so busy prior to the economic turn that they started overbidding projects by tens of thousands of dollars instead of turning them down outright! Their reputation was so well established that people....(well businesses really, all commercial work), were willing to pay anyway. Which led to a lot of capital investment and of course a LOT of overtime for the employees! Of course that's the extreme and in this situation we are only considering the value of a $50 bit. There's truth in the argument that it's a standard bit a shop should have anyway....however I still believe the job should pay for most if not all of it. Now if he were trying to charge the client for the router and a router table also for such a small run, then I'd agree that it's crossed the line.

Regardless there's no right or wrong answer, it comes down to the OP charging enough so that he makes money and is not subsidizing a job for fear of overcharging, which is a practice that's led to many shops closing their doors.

JeffD

[Carl Beckett]

Some of the best business I ever 'won', was when my price was too high and the customer went to a competitor and the competitor failed for whatever reason.

Rich - I dont at all understand what you are trying to say here:

"For instance, we know for a fact when the government raises taxes to a point, high income workers simply reduce production or stop until the taxes lower. Thus the increase in taxes has a reverse impact; it lowers the actually amount of money the government receives. After all, why work for free or nearly free?"

Can you elaborate on this? I have built more than one successful business, and at the end of the day my profit DOES matter.... (and of course I want to be able to SUSTAIN this profit). Separation of Price and Cost is a very healthy way to do the analysis of each. (manufacturing engineers are TERRIBLE at setting market price.... for example)

I have also worked with workers in Sweden. As you know, there is a VERY high tax base at the higher levels (socialist system), and yet there are still people doing these jobs, and the government seems to still get their money. Perhaps you are suggesting a theoretical exercise where the tax portion is almost all of the income?

And in my experience, it isnt the tax base (or even income base) that gets people worked up - but rather its the RELATIVE tax or income to someone else. I did read a study once that suggested that the relative social measures were part of why basic growth of GDP (inflation) was a good thing. If I see my absolute wealth increasing, I am less worried about my neighbor.

For sure, if you are trying to compete on a commodity type product against a commodity supplier that is at scale..... its a no win imo.

[Michael W. Clark]

Mike

Maximizing profit is frequently short-sighted. Many businesses and even the government use this philosophy despite it being disproved years ago by economist. For instance, we know for a fact when the government raises taxes to a point, high income workers simply reduce production or stop until the taxes lower. Thus the increase in taxes has a reverse impact; it lowers the actually amount of money the government receives. After all, why work for free or nearly free? Economist discuss laws of diminishing returns, marginal utility, and economic equilibrium.

Despite all the formulas, most folks seem to understand the concept of fair. If you're not fair as a business person, you frequently won't make it long.

The realtor avoided charges because of a unique quandary by the way. The sale went through a relocation company which meant the true owner of the home only owned it for one day, the day of closing. That company would have had to press the charges and declined to do so since they were out-of-state. The realtor thought she understood how to make a quick few thousand, which she did. Unfortunately for her, it cost her far more than she made and more importantly revealed her as a thief. In the end Karma got her, and her personal home as well. She lived in the area and the bank took her home. Perhaps the lesson is don't take advantage of one of your neighbors.

Rich,
First, the government and realtor example are irrelavent to the discussion. Profit and government do not go together in the same sentence, paragraph, thread or discussion, IMO. The government's balance sheet is primarily based on the backs of our prosperity as taxpayers vs. their spending. The realtor example is disception and/or theft whether they were convicted or not. We have been relocated twice and with all the paperwork, inspections, agents, attorneys, etc. there is no way something like that would fly legally. The relocation company wants positive feedback as they work for the employer.

Second,
Custom work is a different ball game than commodity work. You have costs and mark-up plus profit equals sales price. You can affect the profit several ways. One way is to lower costs, another way is to increase price (not usually popular), another way is to offer extras and services that set you apart from your competition that may be desirable by the customer. My experience with custom work is that the customer knows what they want and they have a budget. The challenge is to find common ground agreeable to both. Maybe this is what you are referring to. This doesn't necessarily mean that I am going to lower my rate or %, but will likely lower the scope instead. In other words, I'm working for the same hourly rate, just fewer hours, less material costs, etc so the price is more in line with the budget. Kind of like the saying "champaign taste on a beer budget".

I'm not an advocate for pricing yourself out of business trying to get rich, but I'm not going to feel guilty for making a profit either. As a buyer, I would want to associate myself with financially healthy suppliers that are going to be around 5 years from now when I have another projec that I want to match, or that have the resources to correct any problems during installation.

It sounds like the OP is not in the business of making moldings or the question would not have been asked. If the moldings are low dollar compared to his main buisiness, then why would he sell his time at a lower rate just to be "fair" unless this is a favor to someone. Because it is not "fair" to him or the people he is providing for. Obviously. I'm blowing this out of proportion as one job probably doesn't mean that his family goes hungry, but enough low margin jobs could affect your financial stability.

The company I work for does a lot of custom engineered equipment. Some is standard low pressure carbon steel construction, some is high polish stainless ASME pressure vessel construction, 3A Dairy sanitary, etc. If I go to the fab shop that does high polish pressure vessels, and get pricing for the carbon steel low pressure equipment, their price is going to be too high. They are not being dishonest or misleading, but they are set up for the other type of equipment and they have to cover their costs. On the other hand, if I go to the non-ASME shop and ask for a pressure vessel, they are not going to be competitive with the ASME shop. They are going to have to sub-out that work and mark it up to me. Its not that they are being dishonest either, its a matter of costs + profit = sales price. The best price will come from the best fit of equipment scope, shop capability, backlog, etc.

[Rich Riddle]

Rich,

Custom work is a different ball game than commodity work. You have costs and mark-up plus profit equals sales price. You can affect the profit several ways. One way is to lower costs, another way is to increase price (not usually popular), another way is to offer extras and services that set you apart from your competition that may be desirable by the customer. My experience with custom work is that the customer knows what they want and they have a budget. The challenge is to find common ground agreeable to both. Maybe this is what you are referring to. This doesn't necessarily mean that I am going to lower my rate or %, but will likely lower the scope instead. In other words, I'm working for the same hourly rate, just fewer hours, less material costs, etc so the price is more in line with the budget. Kind of like the saying "champagne taste on a beer budget".

There is a huge difference between custom work and what this person wants to perform. This is simply running 80' of wood through a planer to remove 1/16" of an inch and cutting a simple profile. He's not making some elaborate or intricate piece of furniture requiring the skill of a true artisan or craftsman. That needs to be foremost in one's mind. How easy is it to make this and how many people could do it? One needs to set price according to the difficulty of the task. I would not expect to pay a janitor $30 an hour for example, though some people do. I work for myself these days and realize what it take to stay in business. You can't take advantage of even one customer yet you cannot afford to let one take advantage of you.

[Michael W. Clark]

There is a huge difference between custom work and what this person wants to perform. This is simply running 80' of wood through a planer to remove 1/16" of an inch and cutting a simple profile. He's not making some elaborate or intricate piece of furniture requiring the skill of a true artisan or craftsman. That needs to be foremost in one's mind. How easy is it to make this and how many people could do it? One needs to set price according to the difficulty of the task. I would not expect to pay a janitor $30 an hour for example, though some people do. I work for myself these days and realize what it take to stay in business. You can't take advantage of even one customer yet you cannot afford to let one take advantage of you.

I agree. The price has to do with the value added and skill level required. The less difficult, the less value added, the more competition (more people doing the same thing), thus the lower price.

[ian maybury]

That was more or less where I was coming from too Rich - the thought that millwork (even though it's custom) is still basically commodity work for which there is probably a defined market, and hence some sort of a going rate. Subject to the sort of variables you mention Michael - how well set up a supplier is to do the work, how busy, etc etc.

If you're doing something unique - because nobody else has the skills/experience/set-up or whatever then it becomes a bit more of a take it or leave it sort of deal - determined mostly by (a) how busy the service provider is, and (b) how much can reasonably be charged without causing offence.

Working for businesses is a little different in the latter regard - a private individual seems rather more likely to take offence at what they perceive to be over charging.

There's even markets where it's a huge mistake not to charge enough. When the client is looking for bragging rights, but doesn't intrinsically value the product then charging low isn't good. It's long been said for example in management consulting that it's important to charge high enough to generate respect...

There's quite a few variables in play in these situations, and inevitably we don't have full information when we decide how to proceed. One of the hardest things I think is to learn to here's no point in working for pennies - some of us are as a result of our own psychology very inclined to do this...

ian

[Mel Fulks]

I agree ,so many variables. The business of woodworking has changed so much. Years ago there were a lot of time and material jobs. Rare now. No matter how much they like your work your work on this job you still have to bid the next one. Somebody in the company has to spend a lot of time bidding. One reason for that is the loss of all the the stock stuff being made locally; before , we were making doors etc often,so when you made a custom job many parts could for it could just be machined right along with stock. I remember when you could tell a client you were not interested in custom work from them unless they bought everything from you! Who makes anything stock now? All I can tell you is that some guys have a real genius for knowing which customers to cultivate and which to refer to the competition. Don't know of anyway around spending a lot of time bidding to make money and just accepting you will not get but a certain percentage of those jobs.One guy told me recently he gets less than 25 percent of what he bids,but he does make money on those.

[Jeff Duncan]

Rich and Michael, I agree that generally speaking prices are related to skill level. However in these circumstances it's a little different. The OP is charging for a service and he cannot vary his price per the complexity of the job. For instance, if he's charging let's just say for argument $45 per hour, he cannot lower his costs b/c there's a guy around the corner who can perform this particular part of the job for $40 an hour. In my shop it doesn't matter if I have to plane 1/16" off of a molding for 8 hours, or build some very elaborate piece of furniture for those same 8 hours. My shop rate stays the same regardless of the complexity of my work, or what the guy down the road charges. My rent and utilities don't vary based on my work, nor does the gas I have to put in the truck get cheaper b/c I'm doing less complex work. So I cannot vary my hourly rate based on the complexity of work or even based on how many other guys out there could do it.

Once you start playing the game of, "I can't charge that much b/c it doesn't seem worth it", your on your way to losing money. I've done it, and so have many others and it doesn't work. I also believe in being fair with potential customers and clients and will tell them upfront if I think something is too costly. I get people stopping by all the time with little repair projects, and I tell them upfront that they're better off with a local handyman as he'll be much less expensive. But if they still decide they want me to fix it I give them a quote based on my hourly rate even if it's something so simple the average guy could do it in his garage! Doesn't matter, again you have costs and you need to make money at the end of the day. Here's a perfect example.....I'm working on a job now doing some kitchen work for a client. She asked me if I could also replace some locksets and hinges on passage doors in the kitchen and I explained to her that contractor would be cheaper. She didn't care she wanted me to do them anyway. So I ask you.....am I supposed to now lower my hourly rate b/c it's a job any handyman can do?

Mel, I've heard from a lot of guys in this business if your getting most of the jobs you bid....your underbidding. The percentages vary depending on who you talk to, and this economy has certainly affected the way a lot of us bid. However I've decided after 10+ years that I'm either going to make a fair pay, or sell the shop and find something less stressful to do. I've gradually been increasing my hourly rate and so far it hasn't impacted my being busy. We'll see how it turns out long term, but in the meantime I'm going to spend less time bidding and not worry as much about how competitive I am;)

good luck,
JeffD