Commission Contract

[Bill Arnold]

I'm looking for an example of a simple contract to use for commissions. I've built a lot of stuff for LOML and a few things for friends, but may have an opportunity for a 'real' commission for one of my doctors. If you have a template you can share, please send it to me at bill@bbarnold.com.

Thank you in advance for your help.

[Bill Arnold]

...uses contracts, how do you protect yourself from someone placing an order, then backing out? I know some folks contract for half the quote up front and the balance on delivery. You must be using soem type of agreement.

:confused:

[Don Baer]

Bill,

When I had my own consulting business and had to tackle a large project I'd split it 4 ways.

30% up front
30% upon approval of design
30% upon delivery
10% in 10 days of completion.

This allowed me to get my costs Materials and labor) out of the way up front and most of my profit on delivery as well as gave the client some assurance that the delivered article was 100%
This was for a differant type of service then woodwork but I am sure that something like it would work in your case Maybe something like.

33% Up Front
33% on approval
33% on delivery

I hope this helps.

[Bartee Lamar]

Contracts are for people you do not trust.

Get the cost of the material up front. Do the work. Get paid for rest on delivery.

No matter what the contract says, if they are not going to pay, they are not going to pay. Lawyers are expensive and the emotional energy is just not worth any amount of money.

I do websites on the side and do not ask for anything up front. ( I have no material cost!!) After we agree the site is OK then they pay and I turn it on. Simple.

It also motivates me to get the job done :)

If I cannot do business that way then I really don't want to.

Just my .02 worth.......

...bartee....

[Robby Phelps]

Hey Bill,

Glad to hear about your commission. I do have a template I use that I made with excel. It has worked for me. I will email it to you. I do require %50 down to start any project and require the remaining balance upon delivery. I do this for EVERYONE. It is not an issue of whether I trust a person or not. I feel if they are committed to the project they should have no problem giving a deposit, that then confirms to me, they are in fact commited. I have never had a client even flinch at that. They seem to always understand. I know for some woodworking projects there is not a lot in the way of materials but when you start using really exotic figured woods then the initial cost of getting the materials can be quite staggering. :eek:

[Joe Unni]

Bill,

Great news that you may have the opportunity to get paid for what you enjoy. That's what I get to do every day!

It is also good to hear that you are concerned about protecting yourself. That's just good business. It helps to keep the honest people...honest.

When I first went out on my own I consulted with several small business owners. One common thread was that you should always get paid what you are worth and never...that's NEVER put yourself in a position to get burned.

In other words...

Work out what your materials will cost. Then mark them up - 5%-15% - whatever you're comfortable with. Why? It helps covers the cost of putting your quote together (including any research), andy drawings, time it takes to travel and pick out materials and then delivery of product.
Then to the best you can, figure out how many hours/days it will take you to complete the project.
Determine what hourly rate you would like to assign.
Calculate rate times hours
Add to materials.
Mark up again. This covers any overhead you may have and helps with the "oops" factor. If you goof - you eat it!
Write up your quote/proposal which includes asking for a deposit. I ask for 50% upon signing (secures a spot in schedule) and 50% upon delivery. Folks may jump at the price, but no one has every balked at these terms.
That's how I do it. I've got two different templates depending on the scope of the work. I've never had an issue with someone backing out. Email me and I'd be happy to send them along.

Good luck and have fun!

-joe

[Gail O'Rourke]

Hi Bill,

I do not do a contract but a receipt for deposit. I require 50% at the order date. Once I get the check, which can be 4 weeks after order, I send a Receipt for Deposit and Order Confirmation....it is basically a receipt out lining what they will owe at delivery plus their delivery time, which is usually 4-8 weeks from when the check is received. Then once I deliver, the invoice is for the remaining amount.

Hope that helps.

Gail

[Bill Arnold]

Thanks to all of you who sent me some examples of what you use. I'm sure I'll have more than enough information to proceed comfortably.

As to the 'trust' thing, if I have any question about whether someone will follow through, I'll bail from the project. I don't have to do commissions to proceed with my life, but it would be nice to make enough so the 'hobby' pays for itself. :)

[Keith Christopher]

I do something similar to Gail, however I do however itemize the list of materials the cost of which is non-refundable (with a note saying I keep any excess or scrap material - it's there for a reason long story). Well unless I really botch it all up like build a table when they wanted a bed or something. I also take into account wear and tear on tools, sand paper, electric costs, glue use, screws, brads. . . you get the idea. It's more than just time and lumber.

Keith

[Earl Kelly]

Bill, I never work off a contract. I get 50% deposit and balance on delivery. Sometimes I will do a 35%-35%-30% with a long standing customer. Basically, even with a contract, it's still a matter of trust. They trust you to build what they purchased and you trust them to pay the balance after you've delivered the piece.

If you feel uncertain, with a client, maybe you should fire them before you start. I also know there are people who delight in trying to receive products and services for nothing or at the least a major markdown. It's not a bad idea to check out your clients with others who have worked for them, you'll find out quickly what kind of person your dealing with.

[Dan Oliphant]

Bill,

I emailed you a template that should help out.

[Bill Arnold]

Thanks again to all of you. I've got what I need now. I appreciate the time all of you took to help me on this. Since I've only been at the higher level of woodworking for a short time, I find myself floundering a bit at times but you folks always come through. :D

[Dave Avery]

Bill,

Thought I'd address a common misconception mentioned herein. Cost should not determine price. Price and cost have, at best, a tenuous relationship. Said simply, if your cost (including overhead) is $500, but the market price for your work is $1500 - good for you. If the market price for your work is $500, you have a problem. So knowing your cost is only good for knowing how much profit you are (or are not) going to make, not how to price your product. The price for your product should be determined by what your client is willing to pay, not what it costs you to construct.. Hope this helps. Dave.

[Bill Fields]

Bill:


Amen to Dave Avery! The profit from your work pays your ovehead expenses and the opportunity for you to grow in skill and ability (tools).

Do not be afraid to put "profit" in your bid equation, but I would not define it as such. There are people out there who live to deny you a profit.

You sound like you can glean these propsects out earlier than later.

As to "templates", sounds like you have received some good suggestions.

I use Intuit's canned legal forms software frequently in my consulting biz.

I believe it's called-- It's Legal--some such.

Intuit/Parsons/Google

Are places to begin.

Best of Luck

BIll Fields

[Keith Christopher]

Bill,

Thought I'd address a common misconception mentioned herein. Cost should not determine price. Price and cost have, at best, a tenuous relationship. Said simply, if your cost (including overhead) is $500, but the market price for your work is $1500 - good for you. If the market price for your work is $500, you have a problem. So knowing your cost is only good for knowing how much profit you are (or are not) going to make, not how to price your product. The price for your product should be determined by what your client is willing to pay, not what it costs you to construct.. Hope this helps. Dave.

Dave,

I agree, my point was you need to insure you don't just think in terms of the lumber and labor. As stated in overhead as well.


Keith

[Michael Ballent]

Dave,

Very well said, one thing that I would also include into the mix is to also charge for the design time... I have been burnt in the past where I took time to design something provide an estimate only to find out that they were not even interested in the first place... (I should have known better, but I live and learn) I would recommend that they put up $50-100 initially for the design/consulting that is not refundable, if they accept it then it can be applied to the price. :D Kinda gets rid of the people that are not really serious in a craftsman's time/effort.


Bill,

Thought I'd address a common misconception mentioned herein. Cost should not determine price. Price and cost have, at best, a tenuous relationship. Said simply, if your cost (including overhead) is $500, but the market price for your work is $1500 - good for you. If the market price for your work is $500, you have a problem. So knowing your cost is only good for knowing how much profit you are (or are not) going to make, not how to price your product. The price for your product should be determined by what your client is willing to pay, not what it costs you to construct.. Hope this helps. Dave.

[Bill Arnold]

... Do not be afraid to put "profit" in your bid equation, but I would not define it as such. There are people out there who live to deny you a profit. ...Amen!

If I can't make at least a few bucks creating something for someone else, it not worth the effort. LOML has enough projects in mind to keep me busy for the next few years! :)

I pass my business card to everyone I can, but I concentrate on people like my doctors, etc. They are the ones who can afford and understand the value of custom furniture. The "K-Mart types" can go to whatever store they want and buy something off the shelf. I don't intend to do custom work for furniture store prices -- custom work has a value to it. Having said that, I'll find out later this morning whether my doctor is serious about this project when he hears the price range! :confused: :D

Regards,