Hi,
If someone asked me (a 13yr old) to build a bookcase, how much would you charge?
I would think you charge on a per job rate, or is it hourly?
Say the materials cost £15 and it took 5 hrs, how much would you charge.
I am not going to start charging, as I am putting it down to experience, just getting them to pay materials, but just wondering!
Cheers,
Sam
IMHO, the answer is "whatever the market will bear". How long it takes you doesn't enter into the price, AFAIC. You can use that to decide whether it's worth your time to do it, but shouldn't have an impact on the price. So, it comes down to what would a handcrafted bookcase made of similar materials and of a similar quality go for on the open market?
todd
Sam,
Here is my "general guidelines" for pricing.
Cost of materials + 20% for handling, example 10 bf oak @ 3.00/bd ft = $30.00 X 1.2 = $36.00 USD
Time in shop X hourly rate for example 3 hours @ 40 USD/hr = $120 USD
Then I add the two together = $156 for my wholesale price and I double this for my retail price = $312 USD.
You will get all sorts of suggestions about rent, cost of tools etc. but for me this system will get you started.
what are your skills worth, per hour? it may sound like a smartass question, but it's not- the answer varies a lot by location.
How much do you want to earn? Is the customer willing to pay that?
Very simplified, it is material cost plus labor. So lets step through it a bit.
Material cost is the cost of wood, of course. You must also factor in glue, screws, dowells, and things you may already have on hand. You may use only a portion of a bottle, but it is still a cost you paid. Experience often tells you how much to factor in. You must also account for waste. You can't ask the customer for extra if you screw up a piece and have to buy more wood, but yoiu will damage some. An allowance is usually factored on all jobs, even those where there is no waste due to your error.
Labor will vary. For a business, you must pay either yourself or your worker a wage per hour. Since you are a beginning woodworker, you will earn less per hour. Work it backward. A bookcase is frth $100. Of that, $30 is material, $70 is labor and it takes a skilled experienced craftsman 5 hours. That works out to $14 per hour. Since you are new at this, it may take you
10 hours to complete the project. Your customer may only be willing to pay that same $70, so you can only earn $7 per hour. In a business, you must also factor in time to go get the wood, insurance cost, unilities, sales commissions, supplies, taxes and many other little items
They usual answer is "not enough"
If you don't want to starve, you charge hourly, and you choose work where you can do this.
Installing junk MDF shelves pays better than veneering and french polishing. The reason is simple - one of them is done "on site" and the client sees you there, sees you working for a few hours, then pays you for your _time_ at a reasonable rate. Skilled benchwork however is unseen, and unseen work isn't valuable. Spend a couple of days making a table and their first response is "It's just like the one I saw for £25 in Ikea".
I was recently offered a job by a local kitchen fitting company - fairly well known, reasonably high-end. They saw some work I'd done with inch thick solid oak tops - low budget, but we had the materials for free and it was a good piece of work. Then the guy offered me the same as the rest of his crew - £6/hour. I politely pointed out that shelf stacking in Lidl's supermarket was paying £7, and I'm proud to say I chased him from the workshop with something sharp.
There's a saying in the craft market of "three times materials" as a rough rule of thumb. Now obviously this is crazy - woodturning might begin with green local timber for free and just your skill, some simple jewellery work might be an hour setting a £500 stone into a £100 factory-made ring mount. But it's not bad when you can't think of anything better.
As a comparison figure, try asking a plumber or electrician how much to change a tap. Even allowing for the callout / workshop difference, you will get a huge hourly rate from them. Why should woodworking be any less ?
Unless it's tiny, your materials are more than £15 too. Don't forget the finishes (and the rest of the tin that you waste), the consumables (glasspaper) and the electricity of heating. Ikea's cheapest bookcase is something like £45, and that's just chipboard (I have several, as I can't buy timber for that little)
If you want to lose money on the job, charge 3x the material cost. ie. is it for a family member where profit doesn't matter?
If you want to break even on the job, charge 4x the material cost. ie. is it for a friend that asked you to build it as a favor?
If you want to make a living doing the job, charge 5x the material cost. ie. is it for a customer?
In the case of a 13 yr old, perhaps ask them to help and don't charge them anything...maybe it will stir their inner woodworker.
mikey.
Sam Berlyn wrote:
Actually, and IME, this is pretty close to the truth ... if there is such a thing in this regard.
Even when charging 3X the material cost somebody always comes along and underbids me.........
I just have to say to myself..."they are getting what they are paying for" but it sure makes it difficult to earn a living as a wood dorker.
Gary
This is why I shake my head wondering after reading all of these responses of cost-based pricing if anyone has been exposed to manufacturing. Prior to embarking on my current career of playing with computers, I worked for 7 years as a design engineer for a manufacturing company in a highly competitive marketplace. I can tell you that the whole concept of pricing your product based on your costs is wrong. The only consideration (as you're seeing) when pricing your product is what the the market bears. As I said in an earlier post in this thread, the only way that relates to your cost is that after subtracting your costs from that price, are you willing to work for that much money? Using a 3X or 5X rule of thumb is OK when you're either unsure of the market or no market has been established, but once you get some market experience, it's pretty meaningless.
todd
I agree. I did say that when I charged an amount equivalent to the 3x material cost I often get underbid and they customer gets what they pay for. I can't count the number of times I've been called back to fix the work of the lower bidder. At this point I charge t/m to fix the job with a 50% estimate up front. All of my work is referrel but even with that I'm usually not the chosen contractor but often the one that fixes the work later.
The guy that stated that 3x material cost will result in losing money is still correct in the market I'm in (and most any other market) and I'm not willing to work for that little. It doesn't pay the bills. The past 15 years has seen labor costs drop (Phx, AZ), material prices rise and competition escalate but quality is gone. Unfortunately the economy has become one of disposable products and quality seems to be much less important than cost (i.e., electronics/other from China).
Guess this is why I'm currently working two jobs......to pay the bills.
Gary
I can't disagree with any of that. It's a sad state of affairs, but it's tough fighting the system. The only thing you can do is be flexible and be willing to walk away from it if it (at least as a money-maker) becomes economically infeasible.
todd
Keep shaking your head because you missed the point completely. I did not say that was THE way to price, but just how often it turns out to be the case when you go back an figure it up.
costs is wrong.
LOL ... IME, there is as much "wrong" with that statement as there is in using it solely for a business philosophy.
And I could give many examples of when it's wrong. I wasn't responding to your post anyway. But I see lots of other posts talking about starting at figuring out your material cost plus some cost of labor to arrive at a price.
Well, it doesn't much matter what you (or I) think. In a capitalist economy, that's the way it works. The market doesn't give a damn about how much your costs are, so there isn't any point in using that as a starting point to arrive at price. If you want to enlighten us on why that is wrong, feel free.
todd
The market will determine the selling price, but if you don't know your costs, you can be in big trouble very fast. I've seen big companies sell products at what the market demands and they no longer exist. If you know your costs, know that selling price is less than cost, you find a new product before it is too late. The market price for some items my company makes has been driven down very low. We decided to no longer participate. Our largest competitor (in that market) had a big grin as they gobbled up most of the business. Two weeks ago they closed the doors. Suddenly, the market does care about our costs and is willing to pay more.
I never said you shouldn't know your costs. In my first post in this thread, I said you had to know your costs to be able to calculate profit to determine if the product is worthwhile for you financially. Hint: the market still doesn't care about your cost. It's reacting to a change in the competitive landscape. If your material cost went up 10% tomorrow, could you just tack on 10% to your price? If you gave your employees a 25% raise could you increase your product price commensurately? I doubt it. If someone else came along next week willing to sell the product for the same price your competitor was selling it at (albeit at a loss), where do you think the market would set the price? Presto, once again the market doesn't care what your costs are. Would the other company be foolish to do so? Probably, but the market doesn't care.
todd
and supply the materials...i would then supervise him using your tools so he learns, the job gets done, and your tools aren't destroyed...hopefully! if you don't have the time; then point him/her to someone that you think might have the time, etc. guilty conscience bothering you? help the kid anyway. but make sure the kid learns. rich
You might not have meant it like it reads, but you clearly said price should not be a _basis_ for cost, and that is simply not true:
your costs is wrong.
You ALWAYS use "cost as a basis for price" in some manner, if you want to stay in business that is.
AAMOF, "basis" is the operative word here. You had better know PRECISELY how much your widget cost to get to market before you set a price and that _is_ using cost as a "starting point" and "basis" for price. If your widget cost you .50 cents in materials, labor and overhead to market, you damn well better not plan on selling that widget for .50 cents or less if you want to be profitable. After that point a myriad of other economic pricing factors come into play, just a couple being "what the market will bear", competition, and economy of scale.
Don't give up your day job.
I would definitely WORRY about letting a 13yo use my power tools. If he was injured, you can pretty much count on being held liable for the injury.
Personally, I would quote him a price based on mateirals and TIME, and then decide how much to charge for your labor (or not charge as the case may be)
John
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