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Thread: How do you figure out how much you charge?

  1. #1
    Join Date
    Jan 2011
    Location
    Tacoma, WA
    Posts
    274

    How do you figure out how much you charge?

    This is a topic that is all over the place on the web. Some say this, others that. I know it has a lot to do on your personal preference, market, and the type of build you are doing.

    My question is, if you are doing cabinets, or a dining room table, or book cases, or turned work - how do you figure the proper price to bid at?

    Of course you can go to the stores and figure out by comparing to them, but they are based on mass production and most do not offer the quality in the build or product used that most here offer.

    Do you take the cost of material and charge a percentage on top for the labor involved?
    Do you use an hourly format, or just have a flat rate?

    I would really appreciate others ideas on how you base your costs/bids.

    Thanks,

    Brian

  2. #2
    Join Date
    Jun 2008
    Location
    GTA Ontario Canada
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    12,264
    Brian the best and most comprehensive sensible advice in this area that i have seen is by a member here by the name of Chalie Plesums.
    http://familywoodworking.org/forums/member.php?u=72

    Visit his site and read all he has to say.
    Here are a few choice links i have picked to get you started but its only one part of the equation.
    http://plesums.com/wood/cost.html

    http://www.solowoodworker.com/

    http://www.solowoodworker.com/business/kitchen.html

    You need to look at this as a total business rather than the costing on an adhoc rule of thumb basis.

    Then you need to be aware. Right now you are focused on nothing but cost and estimating for a bid as if that is only criteria that the end user will use to determine choice. While cost is significant and more so in these times, take a look at and ask the person you bidding to for more info about their needs. Get to fully understand what they want and what their expectation is after you done. Understand not only the stated needs but their implied needs and unspoken needs. You need to have a real good conversation with them but you need to do the questioning and then listen. Engage them so that you get a clear picture.

    Then go away and examine how you might best meet those needs and add a little twist. If you can during the course of the conversation ascetain where they stand on budget and how they will be paying what time scale they expect delivery in. Then evaluate the pros and cons of the alternatives they have to choose from.

    Borg cupboards are just that. Cheap and fit for purpose. But they aint great as we all know.

    Simply put is the person you bidding to looking to dress up a kitchen to sell their home because they have heard that this is where they can get best bang for their buck, or are they into staying in it and looking to do a reno for the future and now have reached a stage in life where perhaps they can afford it and now want something nice like Alan or Tom built for their missus.

    These are two different clients the bidding to the two is just simply not the same and not purley price based.

    When you focus strickly on cost you are looking internally and are simply not being customer orientated and then you loose site of what the requirements really are and loose site of the clues that will be there for you to differentiate yourself to be able to win the job.

    Good luck. Read what Charlie has to say he has wise words.
    cheers

  3. #3
    Join Date
    Nov 2006
    Location
    Mountain Home, Arkansas
    Posts
    11,833
    Good luck.
    Those who respond will be all over the place with personal situations, local market conditions, etc.
    I suspect some will not reply to keep their business information confidential.
    Most of what I sell are small turnings. Pens, wine bottle stoppers, small boxes, vases, duck calls and such.
    My basic formula for pens is: cost of materials X2 + $10.00. The ten dollars is an attempt to cover amortization on tools, finishing materials, electricity, etc. Sometimes I'll add more if the pen is an exceptional example and I believe it can demand more than a simple version.
    Example of how it works for a pen: kit $20.00, blank $5.00 = $25.00 X2 = $50.00 + $10.00 =$60.00 selling price.
    I don't dicker, price is price. But, I do have what I call a 'friends and family' discount. I would probably let that $60.00 pen go for $45.00 or $50.00. This has shown to bring new customers and repeat business.
    BTW, with the pen blanks, many are milled by myself and/or come to me free from other sources. Regardless, I always assign a minimum of $5.00 value when pricing. I sell to (try to ) make money.
    "Folks is funny critters."

    Think for yourselves and let others enjoy the privilege to do so, too. ~Voltaire

  4. #4
    Join Date
    Mar 2007
    Location
    Escondido, CA
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    5,175
    None of the above (in your post). You do have to cover costs to stay in business, but you also have to cover the infrastructure costs, and make a living, and make a profit or it ain't worth it. Read Charlie's stuff. Rob gave good advise.

    Not every customer is "your" customer. If your competitor is the borg or a production shop, thank them, wish them luck, and say good-bye. You have to be able to tell them (and yourself) why they should choose you over all others.

    I made custom furniture for nearly two dozen years. That was my 'day' job. The IRS thought I was successful () I always had customers when I needed them. A few I say 'good luck' to, came back, and then I said 'good-bye,' but that is another story.
    ++++++

    Some say the land of milk and honey; others say the land of fruits and nuts. All together my sort of heaven.

    Power is not taken. It is given. Who have you given yours to? Hmmmm?

    Carol Reed

  5. #5
    Join Date
    Nov 2006
    Location
    Delton, Michigan
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    17,475
    small scale and still say as rob has said read charlies words.. and then re read them..till it sinks in.. i havnt got it yet myself..tried to make some profit but havnt as of yet..
    If in Doubt, Build it Stout!
    One hand washes the other!
    Don't put off today till tomorrow!

  6. #6
    Join Date
    Nov 2006
    Location
    Rochester Hills, MI
    Posts
    940
    I'm probably under priced on a good deal of my bids. I don't usually get a lot of negative response when I give a customer a quote. But one guy really amazed me. He wanted a custom deck built on the back of his house. I went out and measured it up and found out what he was looking for. I made up a bid and gave him a call. His response to my bid was "Well I can do it for less than that". My response, "Then why did you call me?". He can obviously do it himself for less money, but when he called me he apparently didn't want to. It takes all kinds!

    John
    "The bitterness of poor quality remains long after the sweetness of low price is forgotten"

  7. #7
    Join Date
    Jan 2011
    Location
    Tacoma, WA
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    274
    Thank you all for replying. I appreciate the honesty and the information offered, I will deff. go through it all.

    Thank you Rob, I really like your thinking and the information you offered.

    Have a great weekend all!

    Brian

  8. #8
    Join Date
    Jun 2010
    Location
    Vancouver Island, Courtenay/Comox Valley, British Columbia
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    3,220
    Interesting thread.

    +1 on what Rob said. I read Charlie Plesums stuff and he seems right on.

    I'd like to add that when we were considering hiring someone to make my bookcases--35 lineal feet--we encountered prices ranging from $100 per lf to $1000 per lf. $100 sounds ridiculously low unless the person was making them out of cardboard or charging only for materials, and the $1000 sounds ridiculously high to me. We would have been willing to pay up to about max $500/lf. So that's the comment from a consumer.

    I'm aware of the pricing difficulties when you're trying to price at reasonable levels, but you know what's out there on the open market that you're competing against. I have run into this exact same problem when pricing quilts that I make. You can definitely buy something cheaper than if I make it custom for you. But I don't work for free.

    I am a great believer in marketing. My experience in other-than-woodworking areas is that it's not always or even usually the one with the best product who gets the business but the one who is the best at selling him/herself. So don't discount the people skills.......
    AKA Young Grasshopper Woodworker
    AKA The Rookie

  9. #9
    Join Date
    Nov 2006
    Location
    Delton, Michigan
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    17,475
    cynthia has made a good point i just changed insurance companys and it wasnt the price that made the decision for me it was the person that came and sold her slef first then the product..and we all know i am not a easy sale
    If in Doubt, Build it Stout!
    One hand washes the other!
    Don't put off today till tomorrow!

  10. #10
    Join Date
    Nov 2006
    Location
    Constantine, MI
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    7,892
    Quote Originally Posted by larry merlau View Post
    cynthia has made a good point i just changed insurance companys and it wasnt the price that made the decision for me it was the person that came and sold herself first then the product..and we all know i am not a easy sale
    Now be honest. The other sales person was a guy and you were really an easier sale than you want to admit. Right?
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