How to charge for projects I build?
Charging customers for custom work can be a very intimidating thing. Some people charge by the hour, some by materials, other charge in a totally different way. The important thing here is to make sure you get paid for your work. I found this to be a hard bridge to cross when it comes to hobby projects. All of us woodworkers want to make our work as beautiful as we can, which in turn sends the labor hours through the roof. To build something your going to sell you need to factor in a few details to ensure you have all your bases covered. Another thing i need to mention is building 1 piece is not nearly as productive as building 10. Of course, if you build something that's totally unique and have the proper client base you can name your price. But, many of us are building projects that inspire us at that moment. Or by customer request.
How do we get started?
Getting started is the hardest part. You need to figure out what your going to build. Ask yourself, Is this something people are actively seeking out? Or, is this something that gets mass produced? Is the demand higher than the supply? you'll need to answer these firstly if your going to sell products online, the competition is fierce and they will create an equal but cheaper product that you'll wonder how they sell it cheaper than I can buy the wood for. This is why you need a plan. A step by step program that you'll take into account for every job. This is for the guys and girls that want to produce and sell online to a pretty tough market, craft work.
When I'm about to embark on a new product, I research google, ebay, and other sites of the like. I find products that are closely related to what I'm trying to build. I check out the prices, then compare them to my costs. This will show me a quick glance of my profit line. Sometimes you can sell it for more than they do, but often times you'll see the ignorance of people that will always go with the cheaper (not to mention the economy's current state).
How do I overcome the mass producers?
This is where you need a little working capital. Enough to buy your wood in bulk. Maybe you only have a basement shop, or garage space, and you can't store large amounts of anything. I have ways to make it work for you. Find out the maximum storage you have, then figure out how much wood each project Will need. This will give you an estimate of how many projects you can buy ahead for. Now to get the better prices you'll have to buy bulk or have a bulk account. There is a way to deal with these suppliers of lumber. One way is to open your own wholesale account. This is only worthy if you buy a substantial amount of wood through out the year. If not they might not even give you an account.
That's when you call around to local wood shops. Offer the owner a few bucks to make a phone call to his supplier to order some material for a pickup. They will normally have no problem making $20.00 from a simple phone call. This works well if you already know the guy your dealing with. Another way is to add to what he already is ordering. and go pick it up upon arrival. This is more successful than it sounds. Like I said earlier, they like the cash in pocket and are willing to help. I find it best to approach them after lunch, when most people are the happiest.
Everything you buy should be in bulk or close to it.
How many do I need to make?
This is where you find your happy medium. Pick a number based on the material you bought. And cut that many parts for the project,( all the parts needed to accomplish your goal). This in now turning to a production line. You'll soon find out your making ten, boxes for example in close to the same time as one.( that's because naturally you want the one to be absolutely perfect. and ten your mindset will be more on quantity while still adhering to your quality standards) Your mass production standards should be at a lower level. Don't produce junk people won't buy, but find ways to "make it work". Smaller projects need to be more perfectionized(is that even a word?). Don't leave things un-sanded or roughly finished, and don't rush your joints too much. It's not garbage until you can't fix it. Remember this isn't for the president or the pope, just a regular consumer like you and me. I find I accept minor defects in woodworking more than anything else. Even my car has a scratch or two, But it's still a nice ride, and no one else sees those marks but me. That's because I'm an anal woodworker.
How do I charge for my hours of work?
Here is the key to the mint, depending on your shop size. I have seen shops charge as much as $105.00/hour and as little as $40.00/hour, and smaller guys are happy with $25.00/hour. Me I'm at the $40.00 mark and this works out great. Normally, it would be me alone in the shop making $40.00/hour, But sometimes you need help for half a day. You can pay someone cash to help and you're still making $25.00/hour that day. This is tricky when it comes to having more employees. You need to charge accordingly to ensure you cover all the guys on that particular project. They need to build more than they earn also, but this is another topic...... Say you start with $40.00, o.k. next you figure your time, 32 hours and that's packaged and all. Then your total material costs, next you do some math.
32 hours X $40.00/hr = $1280.00
it cost you $275.00 in materials
$1280.00 + $275.00 = $1555.00
You built 20 finished pieces
$1555.00 divided by 20 pieces = $77.75 each
I like to add another 10% to that for power costs and fuel
$77.75 + 10% ($7.75) = $85.50/ea
This works fine and dandy if your making jewelry boxes or coat racks. But if your building cabinets and hutches there is another technique to be used that might earn you more money. I've seen larger shops with a developed system charge by the lineal foot. Depending on the customers requests,(base cabs, wall cabs, crown, options, counter type, etc....) you would have a lineal foot prices that includes all the aforementioned. A shop I worked at sometime ago was charging anywhere for $75.00 - $250 depending on all these factors. This would bring kitchen installs into the $10,000 plus range and customers are not surprised by the prices. It's all laid out for them. Like I said you have to have a more productive shop to do this and it would have to be measured in Ln/ft.
Decks are all together different. I take all I already mentioned into account. I charge more an hour due to the fact of paying a helper. This moves me up to the $60.00/hour mark. I can pay my help good and still make a decent paycheck. Complete as much as possible in each day, most guys forget to calculate driving times and fuel charges, the more days it takes the less money you make. You can also charge by the square foot which in turn will help easily determine the price. which normally works out to about $8.00 per sq/ft. It works well for me anyway because I'm laying 300 sq/ft decks in a day or two, depending on the circumstances, that's with railings.(after the cement is dried)
They want a price now!
It's very hard to figure prices, especially because most people want a price before you start. So use your best judgement, lean toward the higher side of your estimates, You WILL run into the unforeseen, there will be mistakes, and guys will call out on you. This all has to be factored in or you'll be paying them for the work you're doing. And another secret is charge more on jobs you really don't want. This way if they do take you up on your offer your getting paid really well. If not it's O.K. because you really didn't want to do it in the first place(of course unless you need the money, this trick ONLY works if your loaded with work)
I tried to cover everything on the topic. I hope this gives some insight to all my woodworking friends out there. There are many, many ways of charging a customer. Finding the happy medium will get you more work and a better paycheck at the end of the week. Most people call on you, because they don't have the knowledge or experience to do it on their own.
Once you have a product or service, you'll have to figure ways to market them. That will be next weeks topic. We will touch upon the most productive avenues for selling your items.
After you completed a job and someone calls you back for more, you can pretty much up the price a little (10-15%) because they appreciate your work, the quality, or speed. This is'nt offensive i=unless it's the same project where you'll have to give them the same price.
Frankie Talarico Jr.
Light to medium bulk woodshop supplies.