Struggling with pricing my work

[Matt Campbell]

I've made a walnut cabinet for a friend. It's 43" W x 38" H x 12" D. This is sized to fit over a hole in the wall below a window. How much would you charge? I'm accounting for 8 hours of labor. Materials only cost $56 since I already had most left over from another job. I had my price calculated; however, LOML decided it was a "ridiculous" amount to pay for a "tiny, little shelf". So what do you think? Below is a photo to help you make a decision. It's walnut with 1/4" walnut ply for the panels and the back, which obviously isn't in the picture. The top is yet to be attached.

http://i167.photobucket.com/albums/u126/bluesmanmatt/Mattsprojects008.jpg

[Jim Becker]

8 hours of work? Custom made? Just your labor shouldn't be any less than $200 and that's certainly not a real craftsman rate. IMHO, materials should be charged at "going rate", rather than highlighting the fact that some or all material was from "inventory". It still had a cost originally and will cost you to replace.

Something of that size from a well-known knock-down international furniture supplier would easily cost a hundred bucks and not even be made of solid wood...just veneers...and not be frame and panel, either.

$300

[Don Bullock]

Matt, I feel for you in your quandary. If it were me I would figure the material cost based on what I paid for it no matter if I had it laying around from another job. It's still material that is no longer available for other projects. I would add whatever amount to that to account for my time designing and working on the piece. While your wife may feel that you are charging too much, why should you be expected to take less than the piece is actually worth?

I have now made it clear to my wife, relatives and friends that I am not accepting projects from them partly because of situations like this. Many years ago my wife would volunteer me to make something for a friend or relatives or they would "expect" me to make things for them. I rarely got a chance to make the things I wanted to make. Most of the time I never received any money nor did the people truly appreciate my work. It just wasn't worth it so I stopped doing any woodworking. Now that I've started again I plan to make the things I want to make. That may or may not include items for other people. Some of my friends already aren't happy that I won't make things for them, but that's their problem not mine. I truly enjoy giving, but on my terms, not theirs.

Added --- I just saw Jim's post agree with all that he said. $300 should be a minimum price.

BTW --- The piece looks great. I hope you plan to post pictures of it when you're finished.

[Matt Campbell]

Thanks, guys. I should add that I'm doing this for a living now.

Can't wait to read more responses.

[Anthony Anderson]

Definitely DO NOT discount material just because they were in inventory, as Jim and Don said. In fact the materials should be marked up 15%-25%, as you will spend your time replacing/restocking materials. You must count your time in every aspect of your work, design, materials purchase, labor, heat/elec etc.,. $300 is a very fair price for the piece you built. The "friend" may feel otherwise. That is why it is important to calculate a materials list, and decide on an hourly rate, before the project/commision is accepted. That way there are no hard feelings by either party. The customer (friend or not) has a chance to decline, and you do not feel you have been taken advantage of when the client does not want to pay a fair price. The problem with woodworking for a living/occupation, is that most people, like Jim mentioned, are accustomed to buy the knock down furniture, and when a hand made piece cost more than 4 or 5 times as much, they immediately change their mind about having a custom piece made. And you should always charge for design, it can be refundable, or applied to the final price of the completed work, if the customer decides to go forward. Should the customer not want to pay a design fee, then you, more than likely, do not want that person for a customer/client. These are just my thoughts. Others will share more advice. It is best not to take on projects for family or friends, as Don mentioned. Regards, Bill

[David DeCristoforo]

First of all, be glad that you wife is not a customer but get used to that attitude because you are going to have to deal with it. Secondly. Never charge less for materials because they "were left over from another job"! You need to calculate your prices based on what you need to make to pay your bills and live on plus whatever profit (extra money you get to do what you want with) you are willing to accept. Then stick to your price. There will always be "another guy down the street" who will do it for less. Don't fall into that trap. Not if you want to keep doing this for a living.

[frank shic]

matt, start researching the going rates around your area FAST. get on woodweb.com and start reading everything you can find in their business and cabinetmaking forum on pricing. seriously consider doing kitchen cabinets to being with since that's where the big bucks are and if you pursue this road, you better get better tools and figure out the most efficient process possible ASAP. being idealistic about making a living off of building one-piece furniture is going to land you in the poor house real fast unless you're able to build good reproduction furniture and get the clients to pay for them. please don't risk your financial future or the security of your family! get a copy of true32 and read everything you can on their website especially anything that pertains to pricing. i don't want to rain on your parade but i've seen more than a couple of hobbyist-turned-pro that wound up closing their doors within a year on this forum and others. even the professional cabinetmakers are struggling at this time. please do the homework and research and consider hiring an accountant and formulating a SERIOUS business plan. pricing questions on these forums are MEANINGLESS because first of all, most of us are NOT professionals and second of all, it varies WIDELY depending on what part of the states you live in and who is buying your product. if you ever have a chance, just look at the pricing survey on the cabinetmakeronline.com web site and you will see tremendous variations in bids on various projects that are much more high-end than the one you've built.

[Matt Campbell]

Thanks for the replies. Originally I had priced it at about $550 which included a charge for the materials I already had on hand. After I talked with LOML, I decided on a price of about $430. I did make the mistake of starting and almost completing the project before I even told him the total price. I've learned a lot of "won't do that again's" here recently.

[Tom Veatch]

Doing it for a living, eh. Don't see how your burdened labor rate could be much below $40/hr. Add to that the total material cost - includes the price you paid for the material plus your time and expense to select, transport, warehouse, etc. and I don't see it coming in much below about $450. The fact you had some of the material in inventory is irrelevant. Those are still resources you expended in accomplishing the task.

My wife says the $450 figure may be conservative, depending on how it finishes out - doors, moldings, etc. - could go as much as $600 fully dressed.

[Steve Rozmiarek]

Thanks, guys. I should add that I'm doing this for a living now.

Can't wait to read more responses.

Matt, if you where doing this as a hobby, it's a subjective call, and $300 to $350 sounds right.

You are not though, so the price you need to charge is a calculation, not a guess, assuming that profit is the goal. Exactly what does it cost you to operate for a set period of time, say a year? I mean ALL costs associated with your business except the materials that actually go into the projects? Rent, utilities, insurance, maintenance on the building and tools, cost of the tools, even coffee. Now add to that the amount you want paid and the profit margin you want to make, and you have the start of a price. Divide this by the amount of hours you want to work per year, multiply times hours on this project, add in the cost of materials, and you have a basic starting price. Looking deeper, there are cycles, and you need to build savings for the lean times as well.

Interesting things happen on this next step, did you end up with a $1000 shelf? If so, the viabilty of your business is in question because the market likely will not bear this price level. If you have a $200 shelf, you are good to go.

Don't ever sell yourself short on pricing, or it will be expected again. Learn what you have to charge, and just do it. Good customers will be there, and you don't want the bargain hunters, as they are WAY more trouble then they are worth.

I know you probably already do this all, just saying it again for a point. :)


Good luck!

[Ben Franz]

The problem with learning your trade in the "school of hard knocks" is that, once you finally know how to do something, you're too old to do it anymore. DAMHIKT:eek:;):):eek:

[Steve Griffin]

Thanks for the replies. Originally I had priced it at about $550 which included a charge for the materials I already had on hand. After I talked with LOML, I decided on a price of about $430. I did make the mistake of starting and almost completing the project before I even told him the total price. I've learned a lot of "won't do that again's" here recently.

Managing customer expectations can take more skill than our woodworking does.

I always try to give them "5$ back"---estimate or bid a little high and then come in a little under and they think you are a hero. And they tell their friends.

Same goes for delivery times--come in a little earlier than you tell them.

Finally, never ever burn a bridge. Especially starting off, you cannot upset these clients-- Since you didn't agree on a price, you might not even be able to get your $430 out of them and still have them be happy. IF they complain at all, discount it to 350 or so and apologize for not giving a price sooner. They might just have some friends who they show off your fine work to who need a kitchen......

-Steve

(9 years with my own company and never advertised or been out of work...)

[Don Bullock]

Thanks for the replies. Originally I had priced it at about $550 which included a charge for the materials I already had on hand. After I talked with LOML, I decided on a price of about $430. I did make the mistake of starting and almost completing the project before I even told him the total price. I've learned a lot of "won't do that again's" here recently.

See what your friend says when you tell them your price (part of this predicament also has to do with your friendship with the "buyer"). You can then decide what you should do from there. Since this sounds like the first piece for your new business you may have to take a "loss" which may be deducted from income taxes (check with your tax advisor) and you have also learned from your "mistakes" on the deal.

[David Keller NC]

Thanks for the replies. Originally I had priced it at about $550 which included a charge for the materials I already had on hand. After I talked with LOML, I decided on a price of about $430. I did make the mistake of starting and almost completing the project before I even told him the total price. I've learned a lot of "won't do that again's" here recently.

Matt - there's an excellent book on this subject - "The Woodworker's Guide to Pricing Your Work"

http://www.amazon.com/Woodworker%C2%92s-Guide-Pricing-Popular-Woodworking/dp/1558707379/ref=sr_1_1?ie=UTF8&s=books&qid=1228490601&sr=1-1

It won't help you with "friends pricing", but it may save your goose when it comes to professional woodworking, and the price is low - about $15.

[Jay Brewer]

Hopefully if your doing this for a living, you have set a shop rate. I have learned when doing work for friends and family, if there isnt a price talked about before you start, they expect it for free, or next to free.

If you expect to get paid, it needs to be discussed before you start building, at least a ballpark figure to see how they react. I got tired of working for free, so I tell them to buy the material and come do the work, I will supply all the machinery, needless to say, they never show up.

[Paul B. Cresti]

Ok well here is my very jaded point of view about the full ww'g gig.....and I will be blunt only to show what I have learned so that you can benefit from it.

First mistake do not work for family and friends....at least do not expect to make money on doing work for them. Yes many people start this way in order to get their name out there but "making money" from that work should not be you prime reason for doing it. Depending on how good a friend ( I assuming family is close by association) the notion of dealing with them for monetary gain can be stressful....how much is too much??? will I insult them??? they want it by when ?? etc etc etc You need to learn when to walk away from a project or say no and in the case of dealing with friends/family this could get clouded.

Second mistake...all pricing upfront, proposal written out and then signed by both parties prior to any work starting. Proposal should include work to be done, material used, time line of delivery and all your rates if stuff should change and payment terms/schedules. Make sure you get at least some money upfront....I always collected 100% materials and a portion of my labor at signing.

Third mistake....figure out your hourly rate. This will take some head scratching. Decide what kind of lifestyle you want to live, what your bills are (home, health insurance, electric, car, etc....), what your will need to upkeep your equipment, etc....Then on top of that add a profit number. The other way is to determine an hourly rate then add a profit % after all is said and done.

fourth mistake....are you installing this? If you are then that is a completely different addtional amount which needs to be added on top of your project rate. If your plan on working in people's home do your self a big favor and get general Liability insurance...all you need is one screw to go into and electrical line or plumbing or nock down Auntie Mays Vase and you are dead!

fifth mistake....make sure your create a compnay to work under. This means an LLC or an INC. This will separate your private stuff form the business stuff...this also ties into the general liability stuff I was just talking about.....

sixth mistake....this is a business so get the ww'g out of your head....you need to make money so do not be afraid to ask of the rate / cost you need and most importantly learn to read your potential clients and laern when to say no and walk away...


There are so many other things to think about but I figure you must hate me by now so I will just go away........;)

[frank shic]

i was hoping paul would chime in - great advice from someone who knows! what are you doing these days, paul?

[Jeff Heil]

Paul definately is the voice of experience and has many great points. I would also stress the importance of getting a commission deposit. My commission deposit for custom furniture is 50%. Larger projects have a payment schedule as well. I don't order materials or hardware without a signed contract and deposit. A deposit covers my material costs and my contract also advises:

14) Job cancellation: Should the customer decide to cancel the job beyond 72 hours from the signing of his contract, a percentage of the deposit will be retained by XXX to cover the design, time, and materials up to the point when the job was cancelled.

This protects me from someone changing their mind once a project is started or I just spent hours selecting, planing and jointing boards for a project. Getting a deposit up front helps weed out customers that want to pick my brain and expertise for free and allows me to focus on the clients that are serious. I don't put a project in my production schedule without a deposit. I am scheduled out to June 2009 right now with projects I am excited about doing at a pace I am comfortable with. 16 hour days to meet deadlines get old.

I also firmly believe that if you get almost every job you bid, you pricing is too low.

[frank shic]

another sound piece of advice, jeff! another one i've heard is to charge a design fee. why not? you're burning time, aren't you? my favorite quote is from the book "the goal" in which the author states: the goal of any business is to make money NOW and in the FUTURE. don't set yourself up to fail, mike! good luck.

[Karl Brogger]

$192 for the box
$75.94 for the panelled ends.
$18.76 for Walnut upgrade
78.83 for the wood top
$100 for natural finish, add another $25 if stained, and another $50 if it has to be color matched.

I come up with $465.53 from my price list, (if I don't have to deliver it, or install it.)

[Karl Brogger]

Managing customer expectations can take more skill than our woodworking does.

or bid a little high and then come in a little under and they think you are a hero. And they tell their friends.

Same goes for delivery times--come in a little earlier than you tell them.


These are the two best pieces of advice in this thread IMO




(9 years with my own company and never advertised or been out of work...)

Almost 5 years on my own, didn't advertise until this year, turned up zero work. Things are horribly slow right now, like I need to go find another job slow.

[Dave Avery]

All,

I won't do this justice as slowly as I type, but here goes.

Price has NOTHING to do with cost. Price is what the market will bear - nothing more and nothing less. What the market will bear is determined by supply and demand.... short supply and/or high demand = high price (and vice versa). Supply and demand is determined by many things including the quality of your work, your reputation and notariety, the length of time you've been in business, etc. As an example, the exact same piece as above made by the OP would fetch X, by Norm or David Marks X times 2 or 3, by Becksvoort X times more - even assuming identical quality. Said simply, successful people charge as much money as they can while still creating a positive buying experience for the customer.

Cost determines how much profit you make - NOT YOUR PRICE. The trick is to find a way to make things that cost relatively little and bring a relatively higher price. I would suggest that the profit on the average table is much greater in percentage terms than the profit on the average chest of drawers. Why? People are generally unwilling to pay for all the incremental labor that goes into making a chest of drawers.

All this is perhaps less germane to the situation raised by the OP but is invaluable to someone who wants to make a living at this.

--Best of luck..... Dave.

[Don Bullock]

Hopefully if your doing this for a living, you have set a shop rate. I have learned when doing work for friends and family, if there isnt a price talked about before you start, they expect it for free, or next to free.

If you expect to get paid, it needs to be discussed before you start building, at least a ballpark figure to see how they react. I got tired of working for free, so I tell them to buy the material and come do the work, I will supply all the machinery, needless to say, they never show up.

Good idea Jay. I like the way you think.;):D

[John Michaels]

Here's the way I look at it. If I were to sell a piece of furniture at the local art gallery they take 40 percent. One of my tables that sells for $1000 ends up being $600 in my pocket. For friends that want a table I sell it to them for 60 percent of what they would pay at the gallery. I also have them pay for the wood up front with the understanding that if they back out I keep the wood. In the beginning I made a few things for friends at a ridiculously low price. I soon learned that I was spending way too much of my time for not enough pay. Just my 2 cents.

[paul dyar]

Working for friends or relatives is tuff. Most of them want you to do it for almost nothing. If it is something big and they know it will cost a lot they want you to do it. If it is something small, that you could make a little money on they will get someone else to do it. Same with working on autos.
Most people don’t know (or don’t care) the different between wood and laminated particleboard they can’t understand why you can’t build them some they seen in a store for the same price.
I read somewhere (years ago) to charge twice what the material cost for labor.
Friends are just relatives we chose for ourselves.
paul

[Ed Kilburn]

This may help a little, and has always been an inspiration for me. The Co names have been changed to protect the guilty LOL. Lee old friend of mine has an Iron works Co; we will call it ABC Iron works. Lee bid on a fire escape that was required by the city, and needed to be installed within 30 days. I was at Lee’s shop when customer came in, he had a quote from a competitor (XYZ Iron Works) for $2500, and it was $500 less then Lee’s bid. The customer was trying to get Lee to beat the price. Lee tells the customer “I don’t install $2500 fire escapes; XYZ sells $2500 fire escapes. So you must be at the wrong place, you need to go over and see XYZ Iron Works, you know”. The customer states that XYZ can’t do the job by the end of the month, but he would like Lee to do it for $2500. Lee then ask the customer to step out side his shop, once out side Lee points to his sign “Take a good look, XYZ is nowhere on that sign, that’s because this is ABC Iron Works you know. We build $3000 fire escapes, and we install them in 2 weeks, you know. Now if you want a $2500 fire escape you need to go to the place that has the XYZ sign over their door, you know”. By this time I couldn’t hold my laughter any longer and went to the restroom. We I returned the customer had left and there Lee stood, with a signed contract, and said, “Now that’s how you handle people that try to cut you bid, you know”. Anyone around York, PA that has dealt with Lee knows who I’m talking about, you know.

[Stephen Edwards]

“Now that’s how you handle people that try to cut you bid, you know”. Anyone around York, PA that has dealt with Lee knows who I’m talking about, you know.

Your friend sounds like my kinda guy! As a professional woodworker, you don't need to build a client base of people who are going to try to beat you down on price. In fact, you need just the opposite.

Many of the OT people here have also given you sound advice. Perhaps you'll have to chalk this project up to part of your "educational costs". This same situation has likely happened to most people who make a living as a woodworker when they were beginning to do so.

I'm blessed to have some friends who are also my customers. However, most of those friendships came about as a result of getting to know these folks while doing commissioned work for them.

I don't do woodworking full time for a living, it's a part time thing for me. I look at it like this: If I'm doing it for money, I'm going to make a good wage for my time and my investment in the shop and equipment or I don't take the job.

Recently, I did a job for a customer, two chests of drawers. When I gave them the bid the very first thing that I told them was that you can buy something close to the size that you want from a local furniture store for 1/3 the price that I'll charge to build it. I even told them the name and location of the store. I also told them that what they might buy there isn't something that I'd sign my name on.

Forget about competing with mass produced items. You can't do it. That also limits your customer base to people who want and who can afford to buy quality, custom work.

Best Wishes on your Journey!

[Seth Poorman]

Hopefully if your doing this for a living, you have set a shop rate. I have learned when doing work for friends and family, if there isnt a price talked about before you start, they expect it for free, or next to free.

If you expect to get paid, it needs to be discussed before you start building, at least a ballpark figure to see how they react. I got tired of working for free, so I tell them to buy the material and come do the work, I will supply all the machinery, needless to say, they never show up.

LoL , I know what you are saying..
I really dont do woodworking for a living...Yet...But I do on occasion do woodworking jobs.
I had a freind of a freind years ago who wanted a Stickley Tea cart and she had checked the furniture store that sold them and told me the price.
The Price was at that time around $2300.00. I told her that I would give her a quote in a day or so.
I did all the research on materials and even scaled the Tea cart and put it to a print. All hardware was top of the line (Solid Brass),and she wanted it in cherry.
To make long story short , I gave myself $10 / hr because I really wanted the Job and I thought it would be good experience to add to my Portfolio.
My T/M came out to be $1800, and when I told her that she had the acorns to tell me that I was totally out of hand on the price....:rolleyes:

[M. A. Espinoza]

There has been fantastic advice offered in this thread. What I'll offer depends on how close of a friend this person is.

I'll offer the suggestion of working out a barter if possible with your friend.

I absolutely try to avoid doing work for friends unless I accept at the outset that I won't be making money and just think of it as a gift basically. If there is a barter that I can make that I think is fair then that usually works out best, I try to keep money out of it.

If its only 8 hours and extra material I would just bite the bullet and chalk it up to a learning experience.

As I'm sure you've learned NEVER start work without an agreed price.

[Joe Chritz]

I would charge about $300.

Like Jim says, inventoried materials really can't be counted as free and you need a decent amount of labor cost.

I try to charge a fair labor rate, not what it really took me. :D That is mostly because I end up spending some time working on other stuff during the project and it is hard to keep track of the time spent. A half hour here and there on jigs, snow plowing, helping the kids on projects (they are finally coming out and working :D) and the like adds up in a hurry and at $40 an hour that can be a substantial amount.

If you are doing this for a living you need at least that $40 charge and that is all time on that project. Design, picking up materials, measurements, etc.

Joe

[Mike Gager]

biggest mistake you made is not giving an estimate before you began. most people have no clue how much wood and other supplies cost let alone the amount of time it takes to build something, even as simple as a small shelf

im thinking the guy thought he could get what he wanted for a few bucks, ill be really surprised if he goes for what you are asking

[Kevin Godshall]

I saw this exact cabinet (custom sized) at Walmart.......... no wait, they didn't have it.

It was at Lowe's ......... no, not there.

Kmart?

Seems like if I'm looking for quality, style, and custom sizing, I need to go to someone who has the pride and ability to do it. When I need my car fixed, I ante up the $50 per hour rate and don't say much about the parts that are doubled in price.

For me, it's getting into the mentality that customers are coming to me for a reason. They know what they want, and if I'm honest and upfront with them about costing, they can make an informed decision as to what they will be getting and decide then and there to make the deal or not. All that is left for me is to deliver on what I have promised.

PS Very nice looking cabinet so far. Please post pix of the finished product.

[Craig McCormick]

I'm a small business owner with very low overhead. If I charge any less than $40.00 per hour and materials + 20% I loose money. I also charge full price + 20% for materials left from other jobs or purchased at a discount.

The cost of doing business quickly eats up ones bank account.

AZCRAIG