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Last year about this time I decided that I'd try making some money doing woodworking. (About me and my shop. I plus 70 on a fixed income. I have a small shop 168 sq. ft., I have a SS upgraded to 520 (with jointer, belt sander, band saw) a couple routers, a Eureka Zone track saw system, a chop saw and lunch box planer.)

Here are the goals I set forth for myself:
1. To make enough money to support my hobby
2. To have fun and meet nice/interesting people
3. To avoid jobs with unreasonable deadlines that will be just like work used to be
4. To avoid jobs where my liability exposure would be unreasonably high e.g., hanging bed
5. To look for jobs that are different, let's not make cutting boards every week
6. To 'fly under the radar'
7. To look for jobs that are too small or unusual for those who do this full time


I run a simple add on CL, that's my entire marking plan. So after a year my biggest problem is estimating. No problems with materials, it's all set-up and labor costs. I'm either way too high or way too low.

So I'm wondering if any of you fine people, who are in the custom woodworking business with ShopSmith equipment have any suggestions or tips on estimating labor.

Thanks for taking time to read this request.

Congratulations berry on the one year anniversary of berry's woodwerks!! I hope that's not the name you use, I made it up just now.

I would really like to see some of your projects and bids, both too high and too low. I could really learn something. I know it's very hard to make money at woodworking but I would like to figure out a way too.

If you're free, tomorrow is the December meeting of the Minnesota Woodworker's Guild and it is one I have been looking forward to. There is a lot of talent in that room and plenty of time to ask questions. Here's a link to the meeting: http://www.mnwwg.org/meetings.html

Good luck. Hope to meet you tomorrow!

Tom

PS the meetings are free and open to the public. If you do become a member, there are lots of benefits like a 10% discount at Rockler, Woodcraft, various hardwood suppliers, and more. They have a video library too. Lots of very expensive videos are yours to borrow, watch and return next month. I think membership is $30 per year.

I was in business for decades. One of the hardest things to learn is how to price your service/product. I finally learned, after much trial and error, that it is not what you charge, it is how you present yourself, and more importantly, your customer. You need to quit thinking like a consumer, and price your product (because THAT is what you are selling, not your time) based on the simple premise of what can I sell it for, not what is it worth.

Case in point, decades ago, I made a simple electric winch/trailer hitch combo to pull my boat out of the water at our lake from the shore not using the loading ramps. I would back the boat/trailer into the water, drop the trailer, drive the 2WD vehicle out of the water hook up the winch to the trailer ball, unload the boat (or load it) and then winch it to the tow vehicle.

It was a pain to make and was pretty expensive to build. The first time I used it, I had a crowd around me asking questions like "how much to make me one" etc etc. I owned a transmission shop at the time, was buried in work, really didn't want to make anymore, etc etc. One guy came up to me after the crowd thinned out and told me he didn't care what it cost to make him one. I just blurted out some ridiculous figure (like 4 times the materials cost and 150 dollar profit) because I really didn't want to make another. He pulled out the cast handed it to me and said he would be back next weekend.

When I delivered it to him the next Friday night, he had the cash for 3 more.

The lesson was don't worry about your time, material costs (OK, you need to know how much you spend to make it ) but just set prices to where you are comfortable with not what the customer thinks, but if you are comfortable making the item for the quoted price.

I could write a book here, but that is my advise, price it so YOU are happy, and price it high. It isn't about volume, that's Walmart, it's about uniqueness, and craftsmanship, that is what you are selling.

Anyway, blah blah, JMHO, experience.

I disagree with some of the advice. You need to figure out material cost, production costs, your labor costs and a margin to cover "oh no's".

This idea of pricing it what you think it is worth or what you can get is nonsense. It may work for a period of time but one day it will bite you.

I built houses for a period of time. Some subs charged what they thought they could get out of me and other subs laid it on the table, their cost and their profit, their margins. Which did I use?

I used the guys that knew what they were doing. They weren't trying to get rich, or make what they thought I could or would pay. They knew what it was costing and what profit they needed to be around tomorrow. It is called being a business man.

I am sorry Ed if you see it as nonsense, but to me it is the truth. Did it for 40 years. Like I said, I could write a book, but I stand by my assessment. Building houses you are in a guild (license) and have an established market (price/foot). To me that is not what we are talking about here. Do you really think a painting is worth a million dollars. Only to the buyer.

Not getting into a debate, but I think berry asked an age old, and very good question, and I am just passing on my experience FWIW

berry wrote: So after a year my biggest problem is estimating. No problems with materials, it's all set-up and labor costs. I'm either way too high or way too low.

So I'm wondering if any of you fine people, who are in the custom woodworking business with ShopSmith equipment have any suggestions or tips on estimating labor.

Thanks for taking time to read this request.

Hi Berry;

Well, by the terms of your request, since I am not nor have I ever been "in the custom woodworking business" I am really not qualified to respond to your question, but I have never before let lack of qualifications stand in the way of having an opinion. So, here goes...

While I have never been "in the business", I have now and then sold some of my woodworking and have spent much time wondering if I could ever make a living at it. I finally decided the answer was no, not a full time living, so I stuck with a 9-5 job until retirement and a pension. While I was pondering this decision, I thought a lot about how to price whatever I might offer for sale, and decided that what I would do would be to price any item at 4 times material costs. Material costs would include everything involved, even sandpaper, disposable brushes etc etc. I figured that 1/4 of the price would replace the materials, 1/4 would go to future tools, advertising, office supplies, computers etc, 1/4 to shop rent, lights, power and such shop-related expenses and 1/4 would be mine all mine. Since I believe that mass produced wood items can be made for more like 2 or 3 times material costs, this means the items I might make would have to be something with a hand-crafted originality to them. My pricing system has a built in incentive feature in that it rewards proficiency...the better I get and the faster I can work the fewer hours are represented by that final 1/4, which translates to an increase in my hourly wage. And if I ever get good enough to compete with the gallery quality fine furniture that shows up on the back cover of Fine Woodworking magazine, then I will charge more like 8 or 10 times materials, since I will have moved from Woodworking to Art.

I would like to hear from others if they think this way of pricing makes any sense...or not.

berry wrote: suggestions or tips on estimating labor.

Thanks for taking time to read this request.

Hi Berry;

I just posted my first response, then went back and re-read your request and see that what I missed is that you are specifically talking about estimating LABOR. Sorry I did not zero in on that at first. A large part of the 9-5 job I mentioned was administering construction contracts in the Heavy and Highway industry. Roads and bridges for a state dot, basically, with some years as a consultant doing the same thing. And on every job there were changes to the original plans and lots of negotiations about how to price the work to accomplish the changes. Labor costs were always the greatest portion of the cost and typically would run about 40% of the cost of the work. Materials and Equipment come in at about 50% or so combined and Profit at about 6 to 10%. Hopefully that is a somewhat more helpful answer than my first one.

I would figure my time a about $20 an hour, depending on the job and local and client base for the job. Only you can determent that in your area and competition. Here is a perfect example.
http://lumberjocks.com/topics/134002

berry wrote:Last year about this time I decided that I'd try making some money doing woodworking. (About me and my shop. I plus 70 on a fixed income. I have a small shop 168 sq. ft., I have a SS upgraded to 520 (with jointer, belt sander, band saw) a couple routers, a Eureka Zone track saw system, a chop saw and lunch box planer.)

Here are the goals I set forth for myself:
1. To make enough money to support my hobby
2. To have fun and meet nice/interesting people
3. To avoid jobs with unreasonable deadlines that will be just like work used to be
4. To avoid jobs where my liability exposure would be unreasonably high e.g., hanging bed
5. To look for jobs that are different, let's not make cutting boards every week
6. To 'fly under the radar'
7. To look for jobs that are too small or unusual for those who do this full time


I run a simple add on CL, that's my entire marking plan. So after a year my biggest problem is estimating. No problems with materials, it's all set-up and labor costs. I'm either way too high or way too low.

So I'm wondering if any of you fine people, who are in the custom woodworking business with ShopSmith equipment have any suggestions or tips on estimating labor.

Thanks for taking time to read this request.

I have no experience in woodworking as a business, but I have run an engineering design business most of my adult life. There have been many studies done on the cause of cost-estimation errors, on the software side in particular. According to those studies, the two goals that I highlighted above are red flags for large estimation errors.

My own experience corroborates this, and here's why. You can get pretty good at estimating the tasks that you can forsee. But then tasks that you didn't forsee crop up, suck up your time, and blow the budget. So try as you might, you simply can't estimate job costs accurately unless you have done something very similar before. Preferrably many times. Which, of course, can means that the work can get dull and boring.

If you are in a commodity business, you must know and control your costs, and price competitively based on cost. But according to your stated goals, you are actively trying to avoid a being a commodity business. In which case, I wholeheartedly agree with rjent. Figure out what your value is to the customer (which is much easier said than done), and charge accordingly.

But whatever you do, don't dabble here and there in commodity products (never getting really good at any of them), and still try to charge premium prices. In that scenario, I agree with Ed in Tampa -- the market will never give you sufficient business.

BD, wow allot to digest, and figure out, I am not saying your wrong, but I sure could not digest it.