What do you charge then?

[J T]

Sat, Dec 4, 2004, 7:41pm (EST+5) [e-mail] (Sam=A0Berlyn) waves and wants to know: Hi, If someone asked me (a 13yr old) to build a bookcase, how much would you charge? It would depend.

I would think you charge on a per job rate, or is it hourly?

It would depend.

Say the materials cost =A315 and it took 5 hrs, how much would you charge.

It would depend.

I am not going to start charging, as I am putting it down to experience, just getting them to pay materials, but just wondering!

What to charge is very rarely a black and white thing. Usually more gray. Materials cost, certainly. Unless you're making something for a close relative, or friend, as a gift. Then it could be optional. Everything else is not engraved in stone. I'll use the US $ sign rather than the pound sign (not on my keyboard).

Someone wants a bookcase. Your materials cost $15. Takes 5 hours to make a bookcase. You want to make $5 pe hours, for a total of $40. The customer is happy, you're happy.

OK, someone else wants a bookcase. Materials will cost $15 this time too. You tell him/her $40. However, this time the client wants a different design - and this one takes 10 hours to make. You still want your $5 hours labor, but you've already quoted $40. Hmmm, that didn't work out quite right.

You get another client, who wants a bookcase, first design. Ah, you say, I know this one. And quote $40. Except this time, you have experience with the design, and cut your work time down to 3 hours rather than 5. Ah, now your're cookin'.

But, then no one wants bookcases anymore. Drat.

Then you decide to make little boxes (or whatever), and sell all you can make, at $15 each - which covers the $5 materials, and take 3 hours to make. You still want to make your $5 per hour, but if you charge $20, they don't sell well. Then you fid out, if you take them 40 miles down the road, you call sell them at $20, with no problem; but then you've got gas, the time it takes, etc. And, if you go down the road 40 miles in the oppositie direction, they will only sell at $7.50 each. It partly depends on what you make, what materials you are using, where you are selling, what price you are asking.

Bottom line, there're just too many variables involved for there to be any hard and fast answers.

JOAT Be who you are and say what you feel, because those who mind dont matter, and those who matter dont mind.

- Dr Seuss

[Jim Wheeler]

The boy is right - cost is not a basis for pricing in a competitive marketplace. Knowing and controlling costs is a requirement to make a profit and stay in business over the long run, but is definately not a factor in setting price in a free market.

jim

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.

[Edwin Pawlowski]

Just what is the competitive landscape for a single bookcase made by 13 year olds?

Right now, are costs are changing rapidly on raw mateial. Yes, we tack it on, but a 10% raw mateial cost increase does not justify a selling price increase of 10%. We are passing on actual cost. So far this year material increase is 50%. It MUST be passed on or we go out of business.

Correct. I also hope it happens that way as it won't be long before another compeitor is gone. That will change the marketplace if we are the only supplier in the region! We lost a large customer to a competitor. They offered a firm price for a full year that is lower than ours at the time. Factor in the 50% material increase and we laugh every time we see the lost customer's truck picking up product.

[Wayne K.]

What to charge is why everyperson is not in Business selling a product. It takes a keen eye and particular know-how to understand what the market will bear and how far to push it. This what makes a good business. Not everyone can do it. Many wannabes come along and cheapen it for everyone. I am neither of the above. I just like to make sawdust. In the case of the 13 year old, I would explain the cost of materials, the cost of time and discuss his budget. I would then offer to let him pay in cleaning my yard, weeding raking leaves etc and some minor shop time. A thirteen year old offering to pay you to make him a bookcase has a good jump on the life he will be facing soon. Give him all the guidance he will take. Very interesting thread. Wayne K Columbia MD

I would think you charge on a per job rate, or is it hourly?

It would depend.

Say the materials cost £15 and it took 5 hrs, how much would you charge.

It would depend.

I am not going to start charging, as I am putting it down to experience, just getting them to pay materials, but just wondering!

What to charge is very rarely a black and white thing. Usually more gray. Materials cost, certainly. Unless you're making something for a close relative, or friend, as a gift. Then it could be optional. Everything else is not engraved in stone. I'll use the US $ sign rather than the pound sign (not on my keyboard).

Someone wants a bookcase. Your materials cost $15. Takes 5 hours to make a bookcase. You want to make $5 pe hours, for a total of $40. The customer is happy, you're happy.

OK, someone else wants a bookcase. Materials will cost $15 this time too. You tell him/her $40. However, this time the client wants a different design - and this one takes 10 hours to make. You still want your $5 hours labor, but you've already quoted $40. Hmmm, that didn't work out quite right.

You get another client, who wants a bookcase, first design. Ah, you say, I know this one. And quote $40. Except this time, you have experience with the design, and cut your work time down to 3 hours rather than 5. Ah, now your're cookin'.

But, then no one wants bookcases anymore. Drat.

Then you decide to make little boxes (or whatever), and sell all you can make, at $15 each - which covers the $5 materials, and take 3 hours to make. You still want to make your $5 per hour, but if you charge $20, they don't sell well. Then you fid out, if you take them 40 miles down the road, you call sell them at $20, with no problem; but then you've got gas, the time it takes, etc. And, if you go down the road 40 miles in the oppositie direction, they will only sell at $7.50 each. It partly depends on what you make, what materials you are using, where you are selling, what price you are asking.

Bottom line, there're just too many variables involved for there to be any hard and fast answers.

JOAT Be who you are and say what you feel, because those who mind dont matter, and those who matter dont mind.

- Dr Seuss

[Sam Berlyn]

Thanks JT for the infomative response, I see what you mean!

:)

Sam

I would think you charge on a per job rate, or is it hourly?

It would depend.

Say the materials cost £15 and it took 5 hrs, how much would you charge.

It would depend.

I am not going to start charging, as I am putting it down to experience, just getting them to pay materials, but just wondering!

What to charge is very rarely a black and white thing. Usually more gray. Materials cost, certainly. Unless you're making something for a close relative, or friend, as a gift. Then it could be optional. Everything else is not engraved in stone. I'll use the US $ sign rather than the pound sign (not on my keyboard).

Someone wants a bookcase. Your materials cost $15. Takes 5 hours to make a bookcase. You want to make $5 pe hours, for a total of $40. The customer is happy, you're happy.

OK, someone else wants a bookcase. Materials will cost $15 this time too. You tell him/her $40. However, this time the client wants a different design - and this one takes 10 hours to make. You still want your $5 hours labor, but you've already quoted $40. Hmmm, that didn't work out quite right.

You get another client, who wants a bookcase, first design. Ah, you say, I know this one. And quote $40. Except this time, you have experience with the design, and cut your work time down to 3 hours rather than 5. Ah, now your're cookin'.

But, then no one wants bookcases anymore. Drat.

Then you decide to make little boxes (or whatever), and sell all you can make, at $15 each - which covers the $5 materials, and take 3 hours to make. You still want to make your $5 per hour, but if you charge $20, they don't sell well. Then you fid out, if you take them 40 miles down the road, you call sell them at $20, with no problem; but then you've got gas, the time it takes, etc. And, if you go down the road 40 miles in the oppositie direction, they will only sell at $7.50 each. It partly depends on what you make, what materials you are using, where you are selling, what price you are asking.

Bottom line, there're just too many variables involved for there to be any hard and fast answers.

JOAT Be who you are and say what you feel, because those who mind dont matter, and those who matter dont mind.

- Dr Seuss

[Sam Berlyn]

No Wayne, wronge end of the stick!

I (Sam Berlyn) am 13. I am asking how much to charge. I have got my own tools and workshed. I am NOT going round weeding and sweeping. and I am NOT going to break other people's tools.. I have my own!

Thanks,

Sam

[Todd Fatheree]

I think we're caught up in semantics here. What I'm trying to say, contrary to some of the earlier posts, is that figuring out your costs, then adding some arbitrary factor (like 3x) is not a proper way to arrive at a price. The price should be "whatever you can get". Of course you want to know what the cost is (I've done my share of multi-level cost buildups). If you want to say it's a basis insomuch as you want to know it before you determine your price, fine. I'm just saying it's not a number you plug into an equation and out comes your price.

Nice. Because we disagree, I have to be stupid. Let's try to focus back on the original question, which was how much to charge for a bookcase. I recently built a maple & padauk table for an acquaintance. I figured out what my material costs would be before giving him a price, but the price I gave him was one that was based upon what custom-designed furniture went for and what I thought he was willing to pay.

todd

[Swingman]

Those are your words, not mine. I've read too many of your posts to believe that.

Finally ... we're back 'in context', sans Eco 201 mumbo jumbo, and getting somewhere.

Hmmmm ... that sounds real familiar.

IOW, _after_ you figured your "costs", you then practiced the art of being a good businessman in your final pricing.

Just for grins ... and be honest now ... just exactly what was the ratio of the price your customer paid to your cost on the maple & padauk table?

I'd be willing to bet that it falls very close to one of the cost multipliers remarked upon early in this thread.

[Todd Fatheree]

Perhaps there is an alternate interpretation of "don't quit your day job" that I'm unfamiliar with.

You have mistakenly assumed somewhere that I said you shouldn't know your costs beforehand. That's not what I said. I said that you don't take that number and calculate your price based on cost plus something. "Cost" is not a variable in the equation that determines "price" in my book.

My original estimate put the material cost at about 40% of the price. (I don't do this for a living, so I'm not real careful about keeping track of costs and I'm sure where things ended up). Had the maple been ebony like he originally wanted, the ratio of material to price would have been a lot higher.

todd

[Swingman]

That's probably a good idea, considering.

[Prometheus]

Figure out what you think it's worth to you, knowing how it's made, then double that. It's really bad business practice to start with a low price- face it, you're not going to compete with WalMart price-wise, so you may as well go for snob appeal. If you can't sell what you've got at the price you've set, it's always easier to drop the price than it is to raise it- and you've got the added advantage of being able to mark it "xx% off" so people think they're getting a deal.

Most people undervalue their work. People go nuts for anything handmade- go check out some Amish furniture stores if you doubt that! Aut inveniam viam aut faciam

[Prometheus]

LMAO! No, it is the 13 yr old *building* the bookcase, not buying it. :)

Aut inveniam viam aut faciam

[J T]

Tue, Dec 7, 2004, 6:48am (EST+5) [e-mail] (Sam=A0Berlyn) says: Thanks JT for the infomative response, I see what you mean!

If you ever figure out a formula that'll work every time, don't tell anyone but me.

JOAT Be who you are and say what you feel, because those who mind dont matter, and those who matter dont mind.

- Dr Seuss

[Todd Fatheree]

Any time you want to stop being an ass will be fine. In fact, I've done it for a living. And if you are under the impression that a product is priced at some point other than "whatever you can get", you're sadly mistaken. I'm tired of explaining it, so if you have any more derogatory comments to make, you're on your own.

todd

[J T]

Tue, Dec 7, 2004, 6:22pm (EST-1) [e-mail] (Todd=A0Fatheree) says: "Cost" is not a variable in the equation that determines "price" in my book. My original estimate put the material cost at about 40% of the price. (I don't do this for a living, so I'm not real careful about keeping track of costs and I'm sure where things ended up). Had the maple been ebony like he originally wanted, the ratio of material to price would have been a lot higher.

You lost me there. Going by that, it seems to me that different prices on wood does make cost a variable that determines price.

Or, are you saying that the price, over and above the materials cost, would have been the same in either case? If that's what you're saying, then I would say I agree. Except I probably would have said it different.

JOAT Be who you are and say what you feel, because those who mind dont matter, and those who matter dont mind.

- Dr Seuss

[Swingman]

Next time you may want to consider changing your ideas about how to price your goods in relation to what it costs to produce them.

And if you are under the impression that a product is priced

Hey bubba, don't look now, but _you_ jumped into the thread of your own free will, and apparently with such a piss poor argument to backup your contention that you can only ultimately defend it by name calling.

[Todd Fatheree]

You lost me there. Going by that, it seems to me that different prices on wood does make cost a variable that determines price.

Or, are you saying that the price, over and above the materials cost, would have been the same in either case? If that's what you're saying, then I would say I agree. Except I probably would have said it different.

I'm saying that a table made of ebony would command a higher price in the market. My main point of disagreement is that I don't start with "cost" and work my way up to "price". I start with "price" (what the market is willing to pay) and work backward, taking "cost" out to end up with profit.

todd

[Todd Fatheree]

I called you an ass for being insulting (twice). Up to then, I made my argument without trying to disparage you, which you had done twice to me. But I don't have to be rude to make my argument, so I apologize for my previous statement. How about we agree to disagree?

todd

[Swingman]

Yep, if you're in business, and want to stay that way, you'd better embrace that principle.

Well, Todd can't have his cake and eat it too. That would be a "cost plus" arrangement which, by definition, uses "cost" as a basis for the final price, something which he insists is wrong.

You gotta laugh at the tortuous twists and turns of supposed modern economic and accounting principles which are, in actuality, designed to hide, not illuminate. They all seem to start with the same mumbo jumbo BS you've heard from the ECO101 adherents in this thread.

And they all have the same quality which triggered your question above, a certain ambiguity that makes it not quite clear what they are getting at.

Pricing your goods in the often one-off world of woodworking is like being a horsetrader in the old days. Those who succeed at it are masters of the art of negotiation and human nature, AND they always use their "cost" as a "basis" and a departure point.

Besides, ultimately there is only one economic principle that overrides everything else in a successful business, be it woodworking or Enron type commerce ... making damn sure that income exceeds expenditures.

Nothing ambiguous about that.

[Swingman]

Inarguably Tom Plamann is a very sucessful woodworker who obviously has a good grasp on pricing woodworking projects. Here's what he said on abpw about pricing and "how long it takes" with regard to his awesome stairway project:

"I figured the price so that if it takes twice as long to make as I think it will, I still make something on it."

Interestingly, at Tom's level "time" is likely his biggest "cost" factor, not materials, so the cost of the materials-multiplier-method mentioned earlier in this thread wouldn't even get you in the ballpark like it might for the rest of us weekly wooddorkers.

Nonetheless, time is money, and inarguably part of the "cost" of a project, and at least one _very_ successful woodworker gives us a brief insight into how he figures that price.

Take note.

BTW, anyone who hasn't been to abpw to see the "prototype" ... "go and be humbled".