What to charge?

[mindpilot]

I swore this would aways be a hobby; once schedules and deadlines enter the equation the fun goes away. But things being what they are, that may be a luxury I can no longer afford.

So, what do y'all think is a reasonable hourly rate and estimating process? When I was a car guy, my estimating technique was take a SWAG at how long it would take, double it and add some.

[kalynzoo]

A true quandary. I've asked this question of myself for years. Last Christmas the kids gave me a book on pricing your woodworking. As a retired retailer, the information was common knowledge and useless, but the gift was from the heart and appreciated. (They don't read this forum). My personal observation is that the selling price is based on "location, location, location." Last weekend at a craft fair, handmade, (poorly hand made) puzzles were displayed at $10 to $20. I once displayed my work at a local holiday fair and sold wine racks for $75. Since the funds went to local charities, the sale price is not a fair gauge of value. Back to location. At a local fair or craft shop your work is a craft. At an art show in Monteray, or Newport, where you sit and sign the certificate of authenticity, your "artwork" has value far above time and materials.
Choose your venue wisely. And Happy Holidays.

[greitz]

Those are some pretty complicated questions, mindpilot. Are you planning to make a living from this, or just selling occasional pieces for extra spending money? Doing it all yourself, or employing a team? Etc.

Gary

[john]

I think the two Gary's are on the right track.

First decision is wether this will be a business to generate income or a "hobby business" to sell stuff so you can make more and earn a little money in the process.

If it's a real business then you need to accurately track expenses, including equipment purchases, and time, and charge accordingly to make a profit.

If it's a hobby business, then again tracking the cost of materials is important then decide what a fair price is for the product, given the market you are selling in.

I am in this latter category, and keep track of the material costs for each item, but don't keep track of time or what it costs to go and get supplies. For pricing I just add an amount I would be happy with. Sometimes the smallest item has the biggest return.

A local fund raising craft show will usually attract people wanting to support the cause but not spend too much. A higher end show will attract people looking to acquire a unique or hand made item and will be willing to spend more for it. Pricing can be adjusted accordingly as long as the two markets don't overlap.

Good luck with your decision.

John

[SDSSmith]

mindpilot -
What services do you plan to provide? What part of San Diego are you in?

[JPG]

[quote="mindpilot"]I swore this would aways be a hobby]
Please do not start building infrastructure!:D

[edflorence]

So, what do y'all think is a reasonable hourly rate and estimating process?

Its an interesting question and I think at the heart of it is the reality that we no longer have an apprenticeship system for the crafts like our kind of woodworking. When you're starting out, you are relying on your customers to act like patrons and subsidize what is in effect your apprenticeship. As your skills improve, you can expect that customers would be willing to pay more for pieces that are more complex, finished to higher level etc. So, whatever formula you use to price your work will evolve as you move from apprentice to journeyman and beyond.

So the theory is that pricing is dynamic; the practice is that you need some kind of formula to get started. Basing the formula on "hourly rate" puts the cart before the horse, I think. Better to begin with the fixed costs such as materials, shop rent, shop heat, tool maintenance, business promotion and so on. If you are turning bowls you can base the selling price on the size of the bowl. As I recall, Raffan in one of his books explains how he does just that. What he is doing is in effect applying a multiplier to the basic materials cost, and I think that is the way to go. The "hourly rate" idea then becomes your incentive to develop more efficient work practices. In other words, the "hourly rate" becomes a measure of your progress through your apprenticeship.

If you take the cost to you of wood, glue, finish and any other materials that go into the piece, then multiply that cost by 3, you have, in my opinion, the very lowest price you can charge and still keep your business alive. 1/3 of the selling price goes to replace materials, 1/3 goes towards the fixed expenses of the shop and equipment and 1/3 is profit and marketing. It seems to me that as your skills improve your multiplier goes up and, presumably, you will be working faster and more efficiently, so your hourly rate will go up. I think for solid journeyman work the multiplier can go to 4, 5 or even 6. When you get up around 8 times materials you are entering the level of "museum quality" or "art." If you ever do succeed in convincing the public that you are producing "art", all conventional rules of pricing go out the door.

Thats my two cents anyway...hope it is helpful.

[kalynzoo]

Along with pricing based on time and materials, I think I would do a comprehensive search on the internet. Using the previous example of bowl turning: if my work is "craft" a search of bowls from specialty areas might be appropriate. Oregon Myrtlewood bowls, Hawaiian turned bowl, etc. It will give a guide for hand turned bowls sold to a mass market. If your work is "art" the game changes. First you need to sell, donate, exhibit, your work where it's value will be documented. Then you can exhibit for sale work by a recognized artist. Again, this is perceived, as I have been to art shows in Jackson, Wyoming, where recognized artists display art for sale for thousands of dollars. I don't recognize them, but what the hay.
But for now, as I contemplate similar activities of selling my creations, I check the net for pricing.
My granddaughter sent me this site to look at: http://www.etsy.com/category/woodworking

[edflorence]

Gary...

Thanks for the link...there is a wealth of design ideas there!

[charlese]

Remembering an article once read in one of the woodworking mags - the author suggested:
a) Establish the total amount of revenue you want to bring in yearly from your enterprise.
b) Divide that number by the number of hours you want to spend at the enterprise. This becomes your hourly rate.
c) Keep track of your time on a project and apply your hourly rate.
d) Determine if that value will work for you (and potential purchasers) on that project.
e) Test to see if it will sell for that amount
f) Are your real costs covered?