Replies

1. 
   CRAIGCONEY_M | Dec 21, 2004 09:58am | #1

   first, figure your overhead cost

   add in design and consultation time

   time to pick up parts/order/hunt down hardware

   how long to machine

   how long to assemble

   how long to prep for finishing

   how long to finish

   cost of materials & taxes paid plus markup how long to install?

   multiply your time x hourly rate + materials.

    

   Don't compare your work to a store.  You build one.  They build thousands.  You can always lower your price easily, it is hard to push it up once you have a figure on the table.

    

    

1. 
   Elcoholic | Dec 23, 2004 01:06am | #9

   All you said but add in at least 10% profit.  If you don't make a profit you're waisting your time and you'll go under.John O'Connell - JKO Handcrafted Woodworking

   The more things change ...

   We trained hard, but it seemed that every time we were beginning to form up into teams, we would be reorganized.  I was to learn later in life that we tend to meet any new situation by reorganizing; and a wonderful method it can be for creating the illusion of progress while producing confusion, inefficiency, and demoralization.

   Petronious Arbiter, 210 BC

1. 
   CRAIGCONEY_M | Dec 23, 2004 01:29am | #10

   Don't forget about adding in contingency money as well for the 'unexpected' on certain projects

    

2. 
   jackplane | Dec 21, 2004 05:55pm | #2

   First, I may be wrong but I'll assume you do this for cash or as a hobby.This makes a difference in your approach.

     In the industry, there are three generally  recognized grades of work; economy,standard, and custom. Since your work is at the high end it is fruitless to compare to mass produced pieces. Rather, your work can compare to individual furniture makers who work for a much different and more affluent client. Visit www. furnituresociety.com online.

    If this is a business, consider the second post's advice and develop a business plan.Too many talented craftsmen wind up broke because they forgot they were running a business.

    

    

   
   

   ---

   Edited 12/21/2004 1:11 pm ET by JACKPLANE

3. 
   VomSorb | Dec 21, 2004 06:25pm | #3

   A bare minimum of five times raw materials cost assuming you're using fine hardwoods (and softwoods I guess) and no sheet goods for a straight repro. project with little, if any, original design time involved.  It gets murkier, but obviously more expensive, for a true custom project (an ORIGINAL design).  Projects with extensive carving or other intricate work or an intricate project on relatively cheap stock will require a higher multiple. 

   There is an art to setting prices in a custom furniture shop.  You are not building a commodity product.  There is an artistic element involved that cannot be captured using desired hourly rates of compensation captured in a so-called 'shop rate.'

   Over the years of my operation I have found that my pieces typically sell for at least twice what the most comparable piece would cost in the best furniture store in the area (this is your benchmark or 'sanity check' if you will).  You cannot compete with assembly line furniture.  If you try you will not make any money.  Markdowns as a marketing tool to establish your reputation are another matter and probably an investment you need to make but also budget for.  Be careful if you do this that you don't develop a reputation (you do have to have referrals therefore you have to build and deliver something) as an inexpensive custom furniture maker as those terms are MUTUALLY EXCLUSIVE.  Custom furniture is not inexpensive.  Don't whore-up the marketplace for the rest of us please.

   Unless you are renting shop space, have employees, have a huge investment in capital equipment, expensive insurance policies, ect., an overhead or 'shop rate' calculation is practically meaningless.  Your customers will not pay you for your idle capacity.  If you need eighteen commissions a year to make a decent living (and this represents a full-time slate of work) but only get eight, the eight you do get won't pay for the ten you needed so don't even try.  Ultimately, that's the concept bound up in calculating an overhead rate and an hourly shop rate.  It would be worth revisiting the issue if you get so busy that you routinely turn projects down or have waiting times exceeding several months or over a year.  When this happens simply raise your multiple until you start losing bids based on price.  If you get every job you bid on you're most likely too cheap, or alternatively, you've become so famous people don't mind the wait or your prices. 

   One develops overhead application rates in certain circumstances but the key component in doing so is production planning - you have to know what production will be (or have a damn good projection of it) in order to apply enough overhead to each job in order to actually recoup real overhead costs by the end of an accounting year.  This starts to sound silly when you apply the concept to a sole craftsman who has no idea how many commissions he will get in a year and what they might be

   If your bag is building standalone furniture a project at a time the best thing to do is keep overhead to the barest minimum which it probably will be anyway.  A person working by himself or herself most likely will not be paying $3,000 a month for shop space nor depreciating $100,000+ worth of equipment.  You can make a good living and leave the production-style cost accounting to the kitchen cabinet shops and other plywood outfits.  These folks are running capital intensive businesses, at least as compared to a custom furnituremaker.  They need space, employees, and production equipment to be competitive with other firms.  Hopefully, you are one of no more than a handful of custom furnituremakers in your area, if not the only one.

   I'm not suggesting that you be cavalier in setting prices.  Just don't make the mistake in believing that production accounting applies to an small mostly artistic endeavor.  You will run yourself ragged trying to compute accurate overhead application rates and set hourly shop rates, especially if you aren't fully booked for the year. 

   You need to know when a client can stand a little higher bid.  Look up the 'luxury goods pricing theory' in a college marketing text.  This phenomenon, as much as anything else, is the reason for whatever financial success I've had in this business.  Go shop for a car at a Mercedes dealership and then shop for one at a Toyota dealership and note the difference.  Some of your clients are as interested in buying the EXPERIENCE of commissioning custom furniture as much as they are the piece itself.  Give them the experience they want to pay for.  The customer is always right.  An 'aw shucks' attitude is the wrong one to take in this business.  Be confident, be knowledgeable, you're an artist as much as you are a woodworker. 

   Read the FW artist profiles with a grain of salt.  There are literally hundreds of other furnituremakers who have neither the time nor inclination to be featured in the magazine.  A lot of the guys and gals FW features are not full-time furnituremakers.  Most of them either teach woodworking at their own school or somebody else's.  Some of these woodworkers come across to me as having that 'aw shucks' attitude.  I guess that's fine if you have a salary from a woodworking school or slate of students in any given year to supplement income from actual furniture making.  Don't use as a model an operation that is not a full-time furnituremaking endeavor.  This would be a financial catastrophe waiting to happen if you are in fact a full time furnituremaker.  PLEASE NOTE: Messrs. Hack, Dunbar, and Company ARE NOT full-time furnituremakers.  When they talk about the business aspects of their furniture making either ignore it or take it with more than a grain of salt.  Dunbar is too negative and Hack is a gentleman farmer-architect-cum pro woodworker.  My gut tells me he could lie down in front of the t.v. tomorrow and never skip a beat, financially speaking.

   Also, don't get intimidated by the projects you see from supposedly professional furnituremakers that took literally months to build.  I've met some of these folks and most of them are living off trust funds - no kidding. You know the type, a rich craftsman who has nothing better to do than spend months on a project.  One of the British Royals is a profoundly accomplished woodworker (forget which one), but I doubt he could make a living at the craft, although he does hold out as a professional. These types of craftspeople can take on wildly creative, time intensive projects with nary a worry about the light bill or the kids' braces.  The most creative work you'll ever do will probably be for yourself on your own dime.  That's not to discount the value of a true patron who underwrites your career.  It's rare, but something worth hoping for.

    It will be the rare commission that you can spend 800 hours on and make enough money to support the effort.  It can happen, but it is unlikely.

   
   

   ---

   Edited 12/21/2004 5:07 pm ET by cstan

1. 
   DavidxDoud | Dec 21, 2004 08:40pm | #4

   There is an art to setting prices in a custom furniture shop.  You are not building a commodity product.  There is an artistic element involved that cannot be captured using desired hourly rates of compensation captured in a so-called 'shop rate.'

   thanks Charles - - I'm delivering a piece tomorrow and I came here for help in pricing and what pops up?  this thread...

   this piece has been getting ever more expensive as the deadline approaches - late night working, what an effort - it's a little like putting a price on a child - how much is flaming cherry I cut off the farm,  stacked and stickered for 3 years worth?

   rush order,  custom design for a piece that is not commonly availible at a furniture store,  I'm tryin' to think like 'NY City',  but it's scaring me...shouldn't - I've done others for this person,  and as long as it's what he wants there has been no ungraciousness about the price - Lord knows,  it's been an effort...

   I guess another question revolves around how much responsibility the commisioner bares for the time I spent with the practice corner I did to make sure the design was correct - gotta charge more for the extra running involved with a hurried order - -

   it's turning out nice,  I'll post a pict or two in a day or so

   regards,  DOUD

    

    "there's enough for everyone"

1. 
   VomSorb | Dec 21, 2004 09:55pm | #5

   Good luck David.  Good for  you that you have an open-ended deal that lets you adjust the price on the back end. 

   We should all be so lucky.

   Edited 12/21/2004 2:16 pm ET by cstan

1. 
   DavidxDoud | Dec 21, 2004 10:36pm | #6

   Good for  you that you have an open-ended deal ...

   indeed,  rare enough to be very much appreciated - it's the way the world oughta work...

   - probably the next to the last commission for this fellow,  he quit taking his cancer meds a couple weeks ago - called me about the same time with the idea of a display case for a Christmas present - - I pulled off of another job that could be postponed and have done not a whole lot else other than push on his project since - -

   so with the open ended deal comes the responsibility...I keep thinking 'it's not a particularly difficult piece techniquely,'    there's more effort in design,  procuring hardware and other materials (black velvet,  padding,  etc - I've never done much upholstery...) but altogether it's a couple weeks out of my life - even if I have been stroking beautiful wood in the comfort of my shop...

   thanks,  it helps my self assurance to verbalize (at least thru the keyboard) my thoughts -

    

    

    "there's enough for everyone"

2. 
   Farmersteve | Dec 22, 2004 06:02am | #7

   Thanks for all the great advice.

   This is definately the hardest part of the business.

   It's great to have a place to come and talk to others with similar experiances.

    

                                                                                              Thanks again

                                                                                                      Steve

1. 
   CRAIGCONEY_M | Dec 22, 2004 08:29pm | #8

   Steve,

   Good luck with your project.  my posting was to get you to realize how much is involved with making an item.  Regardless if you are producing one table or many boxes, you still have overhead if you turn on the lights, use power tools, etc. whether its $5 a day for electric or $300 for labor, machinery leases, building leases, etc.    This is one aspect alot of people forget and at the end, they realize they really didn't make anything near what they thought they would.  Experience is one of the best tools in estimating and pricing work.  There really aren't any set standards, but you should know in advance the ball park you need to be to cover your expenses and time- however much you feel you should make and still be happy.