This is an excerpt from “Shaker Inspiration: Five Decades of Fine Craftsmanship” by Christian Becksvoort.
One of the most difficult tasks when starting a business is pricing your work or product. Many woodworkers, especially those just beginning, seriously underprice their work. Hobbyists, especially, have no idea. Let me tell you, it’s really tough to be at a show next to Joe Basement, who is selling his very nice coffee table. He has no concept of the actual hours he spent, but his $140 worth of wood has turned into a $200 table. Wow, a $60 profit…wrong. The most basic pricing involves the cost of materials + overhead + profit. Let’s take a look at these one at a time.
Materials are your wood, hardware, glue and finishes – anything that ends up in the customer’s possession. When working with a variety of woods, you’ll have to refigure the price for each species. That can run the gamut from a couple of bucks for No. 3 pine or poplar to $60 per board foot for exotics, to more than $100 per sheet for top-grade plywood with fancy veneers (in 2017 dollars, as are all prices in this book).
Working almost exclusively in cherry, and paying roughly the same amount for the past 20 years, makes pricing for me much easier. Not only that, but I get to use leftovers and offcuts for the next project. At this point in my career, I know the exact board footage for all pieces in my catalog. When starting out, you’ll have to do a bit more math. When you come up with the board footage, add 10-20 percent for waste, depending on how fussy or frugal you are regarding knots, defects, sapwood and general waste. Besides the wood, also include screws, hinges, locks, knobs, glides, glass, hangers and your glue and finish of choice. Speaking of hardware, I always buy the top grade. It takes just as long to install a cheap hinge as an expensive one. Cheap hardware will come back to haunt you, and result in unhappy customers.
Overhead is an all-encompassing term that includes the expenses you pay as the cost of doing business, but of which the customer does not take possession. Here is a partial list: your shop building or rent or mortgage, insurance, vehicle, electricity, heat, office supplies, telephone, internet, tools, advertising, freight charges, accounting, postage, licenses and taxes, and a few others that I may have overlooked. The bigger items, such as the mortgage, vehicle and large power tools can be amortized over a long period of time. Don’t, however, forget to include small tools such as routers that need to be replaced, specialty bits and tooling for a specific project, etc. Again, it will be difficult to estimate these costs when first starting, but after a year or more of good bookkeeping, you’ll have a pretty good handle on what it takes to run your shop. Divide the yearly total expenses by 12 to give you a monthly figure, divide that by 30 to give you a daily figure, and divide the last by eight to give you an hourly overhead cost.
Finally, your profit. Yes, we’d all like to make $100 per hour take-home pay, but let’s be reasonable, especially when you’re just starting out. My profit, or hourly wage, when I opened my shop in the mid ’80s was $20 – which I thought was pretty good. It has since gone up considerably, but only after a few years. You can’t start out with astronomical prices when you have no track record, no reputation and no customer base. That comes with time, working efficiently, keeping your nose clean and keeping your customers happy.
A few random thoughts on prices and shop finances in general. First, if you give a customer a price quote, stick with it. You’re only as good as your word, and your word is your reputation. I’ve eaten my fair share of underpriced projects. It’s all part of the learning curve. Customers don’t want to hear “This took a lot longer than I thought….” They want results, not excuses. On the other hand, if a customer request changes for alterations to the original design, then a change in price is warranted. Keep track of any additions or alterations made after the original quote.
I don’t dicker, and I try to be fair. I don’t gouge customers because they drive up in a Mercedes. The same hourly rate applies to everyone. Once that price is established, it’s fixed, unless times and circumstances change. My shop rate is based not just on time, materials, overhead and profit, but also on my experience, craftsmanship and reputation as a craftsperson. When potential customers try to talk my prices down, I tactfully end the conversation. Now they are messing with my self-worth. Remember, once a customer asks for and receives a discount, they will expect one from then on. And word spreads.
— Meghan B.
Great post. Thanks for this! I’m just starting out and was thinking about pricing recently.
From the other side of the hobbyist/pro divide:
I wouldn’t feel right charging for time and materials wasted due to my own errors. Or charging master prices for journeyman work. On the other hand, if it’s really journeyman work I’d be unfair to other journeymen — not to mention myself — to ask only apprentice prices.
The problem is that the hobbyist often doesn’t em want to charge for time/space at all; they just want to share their work and cover incremental costs. The challenge is convincing them to at least charge for some approximation of the time it would take a pro, which will already be a discount since it would have taken the pro much less time.
(When locksmithing as a hobbyist, I use a “flat rate table” which lists how long standard jobs take a professional; multiplying those by a reasonable hourly rate gives me my labor prices. If I’m slower due to not practicing as much, that’s something I don’t feel right charging my customer for; this calculation keeps the price fair for them and not unfair for me. Harder to do that for woodworking, admittedly.)
Love the phone I also have one in my garage shop.
RE: Joe Basement, I’ve heard several stories
“As long as I get enough to cover my materials and maybe buy a new tool once in a while, I’m happy.” They really have no value on their time or an understanding of their expenses.
Others produce quantities that they can’t effectively get rid of, resulting in a surplus of items to be disposed of at any price.
Other thoughts
People have become so used to cheap goods whether produced in Asia or by mass production and distributed by a Scandinavian flat-box RTA company, they expect a custom made produce to cost what I can’t even buy the lumber for.
I recently made some ornaments for a church charity advent bazaar. Some of them sold for 50 cents and the fancier ones for a dollar never sold. Likewise, my wife made some sewn items that sold for about the cost of materials. I think we’ll just donate money next year.
Being self-employed in business, I would occasionally get asked, “Can you do it for less if I paid you in cash???” I always replied, “No.” and I always thought, “So you want me to lie and cheat the government (where there are stiff penalties), but then trust me not to lie and cheat you?”
Totally true. Hard to be a Good craftsman…
Sometimes the cash question is intended to be “would you rather avoid credit card processing fees, and if so are you willing to split the savings?”
(It’s gotten to the point where I feel I have to ask the seller if they would prefer paper or plastic, even if I’m not looking for a discount.)
Yeah, there are three folks who are offering to do an off the books transaction. But pause before assuming that’s the intent.
I just started reading Chris’ book last night… Its wonderful so far. I have been reading his books and articles and following his work for more than 30 years. This one lives up to expectations!
I did my last commission several years ago. Priced it 30% under what I should have charged. Customer thought it should have cost 30% less. Now I only do work for friends for no charge. I can afford it luckily. However, friends always pay me either monetarily or in kind. I’ve received such rewards as fallen aged walnut tree trunks, outstanding hunting adventures, and momentous assistance when needed – without any asking. Guess I’m just lucky to live in rural north central Arkansas where friendship is still reciprocal.
The one thing the post lightly touched on that’s overlooked by a lot of wannabe pro’s is that Christian builds furniture out of his established catalog. He’s not constantly building custom orders that he’s never built before. The learning curve takes effect when you constantly build something you’ve done many times before.
I am a hobbyist but occasionally people ask me to build stuff for them. Reading posts like this have made me more aware of my pricing (and also my role in not undercutting the professional woodworkers). It’s funny how a percentage of people just assume that because you have the tools that it should cost less than a store. It doesn’t matter if it is my profession or my hobby, time is time. Of course, being a hobbyist also gives me the luxury of turning down projects that are stupid (“I’m sorry but I’m not going to make an “heirloom” quality table for you out of painted pine) or underpriced (“I can’t spend 30h of my time making this for you for only $100).
“The customer is not always right. The customer is, however, the one with the money. Sometimes you have to decide between being right and being paid.” Makes your decision for that case and sleep well knowing it was the right one for you at that time.
Thanks Meghan, very interesting. I have been in the carpentry business for
30 plus years now, and I still get all of those kinds of people that you described.
Fortunately, there are people out there who are willing to pay what the project
is really worth. And if you take good care of them, they tell their friends, who are
like them. It’s hard to say no when you are just starting out, but sometimes
that pays better than taking on a loser project and losing your shirt in the process.