What would you charge?

[dvoigt]

This question is directed more to those that are pro's at this stuff .

As with alot of my thoughts on this projects, I was wondering if someone came to you and said they wanted a custom built wall hanging cabinet, what would you charge for it? Assume that it is made from Cherry and your materiel cost are in that $150-200 range and the size is the same as the one built in the guild.

I was figuring that about $600-700 would be a reasonable price. Maybe $800-1000 when you get into fancier woods. What do you guys think?

I know that everyone's pricing is different and everyone has their own math to come to the total, so speaking in general, is $600 crazy cheap and $1000 be the low end for custom work? Just wanted to know people thoughts on this

Thanks!

[ChetlovesMer]

Okay, I'll take the first stab at this.

First of all, I was told to start out with double your cost and use that as pricing.

I'm not a fan of this type of pricing. It is too difficult to figure total cost. Does cost include tool sharpening, or electricity, or heat, or matenence, or any thing like that? I think one of the greatest challenges of going pro is to determine your real total cost. In you example, you say material cost is $150.00. Does that include wear and tear on your equipment, replacement blades, or what ever? I'm guessing here, but I be most small businesses under-estimate their total cost on a project.

Secondly, I moved to paying myself a wage. So, if a project looked like 20 hours of work, I'd charge based on cost plus my wage to do the job. This method helped a lot in getting closer to market value for projects that required a lot of detail work, rather than just building a box with a door on it.

Okay, now I try to market price my stuff. I try to determine what fair market value is for what ever I'm creating and then put together pricing based on that. Repeat customers always get a healthy discount from me.

One thing I believe is important to remember is that if any job you take is an agreement between you and the client. You want to make sure it is exciting for both of you. If you can not build something and sell it for fair market value, you shouldn't take the job. When I started out, I would avoid the discussions over pricing because it made me uncomfortable. Now, I make sure we discuss it thoroughly. Both parties should know exactly what is expected before the work begins. I find that in this way, I'm happier and the client is happier.

I hope that I've given you some stuff to think about.

[Mark Henley]

I have run a small business for a multinational corporation for the past 15 years. Perhaps I can be of service?

There are two major buckets of cost, fixed costs and variable costs.

Fixed costs don't change no matter if you produce 1 piece or 10. Rent, insurance, equipment, and the like are all fixed costs.

Variable costs change per piece ... Material and labor are the big two.

You can average out your fixed costs and apply what they call a burden rate per job to cover all your fixed costs ( these are the costs that end up getting people in trouble) if you have an idea on your volume, or apply a burden rate per $100 dollars, or similar strategy.

Assigning yourself a wage instead of a salary is a way to move your labor from fixed costs to variable cost, for example, so there aren't fixed rules for how you bucketize your costs ... However, it is very important that you account for all your expenses.

Working with a CPA on your tax strategy and setting up your books to begin with can really help .... And it is something I would highly recommend ... A few hundred dollar investment could make the difference between profit and loss for years to come.

[Mark Henley]

Part two ...

So ... You've got several decisions to make .... How are you going to capture all your costs? Save all your receipts? Buy a big book and write down every nickel?

One thing you can do is to separate your personal and business expenses .... Which is as simple as opening a separate bank account and everything for your shop/business has to be paid for out of that account. Your wood whisperer guild subscription is a good example, in a business it is a professional association membership or an educational expense ( and tax deductible). Your monthly statement is your expense statement. Remember ... No other, but ALL your expenses must run through this account.

Then keep track of how much time you spend in the shop not working on projects for hire .... This becomes your maintenance labor. (sharpening, etc)

Average out your utilities and assign a portion to your shop ... Which then becomes a fixed cost.

I hope this gives you a few ideas .... I'm not a CPA, they could help you a lot more.

[rodger.]

I am certainly not a pro, but have done a few commissions for people. I also have found it very difficult to come up with a price to charge clients. I at least double the cost of materials, but this is not always accurate (some jobs are far more detailed than others).

For example, a guy wanted me to make him 2 large sets of arch top panel doors in oak to match his kitchen. It took a lot of planning and test cuts to match the profiles that were already there (and both sets were different dimensions). I also had to make a few custom jigs. The material cost was less than 100 dollars, but 200 dollars is a STEAL for all of the time I commited to the project. In this case, I would more than double the cost.

An opposite example is installing a railing cap. I bought a S4S length of white oak, cut it to length and stained/finished it. Then I simply attached it with adhesive and a few finish nails. The cost of the materials was about 70 dollars, and $150.00 is enough to charge for this job.

Hope this helps a little.