Pricing Your Work, from ‘Shaker Inspiration’

The following is excerpted from Christian Becksvoort’s “Shaker Inspiration.”

Opinionated? Yes. Informative? Absolutely. Interesting and inspiring? You bet.

Not too many woodworkers can claim five decades of business success, but Becksvoort is among them. In “Shaker Inspiration,” he shares not only his woodworking knowledge and some of his best professional techniques for producing top-quality work, but also the business advice that helped him establish and sustain his long career in a one-man shop.

Plus, he shares measured drawings for 13 of his own well-known furniture designs and seven Shaker pieces that he’s reproduced.

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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. Lets 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 requests 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.

I have a policy in my business that once a customer leaves a deposit, that price is firm, no matter what the delivery time. That can be due to my backlog, or the customer’s circumstances. I’ve had a few instances where the customers’ houses took far longer than anticipated, or their financial situation changed, and the piece was not actually delivered for three years. Even though my prices had gone up, their deposit locked in their price until they were ready to take delivery.

Which brings me to yet another important point: a business escrow account. You need to have one for customer deposits. Remember that a deposit is not your money until the piece is actually finished and delivered. I check with my customers before I start to build, both to see if there are any changes needed and that they are ready to take delivery on a given date. If they’ve changed their minds after a nine-month wait, then I return their deposit. I keep the interest. It’s only happened twice in my career, but you need to be prepared, just in case.

A few thoughts on scheduling. Again, your word is your bond. Nobody likes to be put off, especially when they’ve been expecting a handcrafted creation for which they’ve been waiting almost a year. I used to schedule very tightly but soon discovered that was not a good idea. There are always circumstances beyond your control that affect your schedule and work output: supply hang ups, illness or subcontractors who don’t deliver on time. For the past few years, I’ve arbitrarily added a few months to my anticipated delivery schedule. For a desk that should be done in June if all goes well, I tell the customer July or August. That gives me a nice time cushion. Then if the piece is really done in June, the customer is thrilled and it makes me look good. It’s way better to deliver before the anticipated due date rather than after.

Whatever it takes to keep customers satisfied.