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New - what to charge customers

3K views 13 replies 12 participants last post by  Riversmith 
#1 ·
Hi,
I'm still new to these forums, and running a business, furniture building , repair, etc.
I am not sure how to charge customers...
I just repaired a mahogany rocking chair. It was missing a rocking runner, just gone.
The tenons were gone off the legs, but sheared right at the base of the leg.
I mortised out the legs and made a new 5/4 mahogany runner, or whatever you call the foot, rocking thing...ha
I made a template from the existing one and fabricated a copy out of some rough mahogany...
So: I had to size lumber, cut a copy on bandsaw, rout on table for profile, mortise and make dowel tenons, sand, spray-paint, (the chair is black), glue-up and touch up.
Well, this is for a friend, a Nun. So I am doing for nothing, but!!! If, this was a regular customer, how and how much would a one-man shop charge.
I have $20 in materials into it. and probably 5 hrs.
Concerning this job, as well as how to charge others.
I need a formula for how much is a fair and honest rate.
Thanks.
Steve
 
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#2 ·
Steve, if you are in business, doing this kind of work requires three things. First, you have to provide a paycheck. Only you can determine how much you want to make per hour. Second, you have to cover shop overhead.

Most folks figure their time and material and let it go at that. Howerver, you have a power bill for your shop, saw sharpening, bit sharpening, glue, fasteners, sandpaper, etc., that all has to be covered by what you charge per hour. They are legitimate costs that are hard to itemize for each job, so you have to figure in what is called an overhead burden per hour.

Last, you need to think of profit. If you don't make a profit, over and above your paycheck, then you have to take any tool upgrades, additions, or replacements out of your paycheck.

Only you know what these costs are, so sit down and do the math. Think of all those things that you are constantly having to purchase to keep your shop running. Something as simple as rags, cleaning solvents, dust masks, etc. all add up to big bucks over a years time.
 
#3 ·
Don't mean to make you sick but if this going to be your primary source of income you need to to consider your tax obligation.

Self-Employed Individuals Tax Center

Then determine a hourly rate. You need to cover your obligations (life and heath insurance, local fees and such if any,etc.), other expenses like (non-billable consumables and whatnot), and your minimum acceptable annual income. Hedge that up a bit depending on what percentage of a full workload you expect. I don't know what the expected avg. workload is; I'm an hobbyist. Divide that by 2080; the number of hours worked in a year working every week @ 40 hrs./wk. What most might consider "fair" will probably seem a lot lower. I've seen a lot of folks start businesses and saw how they grossly underestimated their expenses and own needs and how much damage it did to their lives just trying to be "fair". Government regs and such make "fair" a very tough road.

Best advice ... get a business mentor and an accountant (yeah ... more expenses).

my $0.02
GCG
 
#4 ·
Troy ninja'd me but I think we're pretty close. Stepping out on your own is not for the faint of heart.

GCG
 
#5 ·
I have some people around here say a good starting point is materials cost x 2 and then go from there .... as stated before being fair will make Ya mad < I learned that the hard way " trying to be fair" with family and friends, cause everyone wants the price I quoted so and so ..... and there it goes
 
#6 · (Edited)
Double your materials(somewhat less on large jobs is ok). Double the hourly rate you wish to make. That is a good starting point for a business.

It can cost $2500-$3000 per month just to have a stand alone store front open. That is before you make a dime, pay any taxes, pay any wages, or buy any inventory. Business utility rates are often double residential rates. Don't forget insurance, accountant fees, etc, etc.

If you end up with more business than you can handle.. raise prices so as to control the amount of work you to level you can do(allow time for record keeping and other non-productive activities). This will also discourage the folks who want something for next to nothing. Probably also one reason big box store junk furniture sells so well!(Quality costs):D

If it is just hobby, it's your call, but the above points are still valid!
 
#8 ·
You either charge a proper tradesmans rate for the work you do so you can keep the roof over your head in which case you are doing it for a living...Or... You charge a little amount that the customer always thinks is great in which case its a hobby.

If you do it at hobby prices be aware that every other person doing it for a living will dislike you for undercutting them and not even making a living wage yourself.

Don't let yourself be swayed by the "Bob the joiner next door says he could do it for twenty quid if he wasn't too busy" argument. They can wait till Bob the joiner next door isn't busy if thats the case.
He quite clearly wasn't interested in the job and has 'queered the pitch' for anyone that might be as well.
 
#9 ·
Y'alls comments are basically the same replies that I have read many times on the photography forums. The one difference is a lot of times new photographers with beginners gear attempt to go pro without the proper equipment. That is why you see a lot of cheap weddings or photo shoots advertised on Craigslist. Many times the customer will be disappointed but they either can't or won't pay the higher prices the pros charge. And that is because the pros have to cover their overhead as well as charge for their skills.

As for the OP's post, it is obvious he has the skills and is not a beginner. Just gotta figure what his overhead is.

Note: Since our electric provider switched our meter over to a smart meter I get weekly email with usage details. Last week it cost me $10.42 daily. That is pretty neat if you can figure out what percentage was shop time.
 
#10 · (Edited)
First rule, keep your day job.
Second rule, keep your day job.
I figure there are too many variable to give you a viable answer. If for example you sold a gizmo 20 miles west of where you live for $50, covered your overhead, materials, cost, and made money, and sold all you could make, You are on the right track. But, on the other hand, if you sell the same gizmo 20 miles east of where you live fo $50, you might only sell one a week, but if you dop the price to $40 you would do a good business. What sells for $800 in Hollywood, or New York City, might not sell in your area for more than $200 - location has a great deal to do with it.

Any pricing guideline (materials X 2 for example) are just that, a guideline, not a hard and fast rule. Keep your job, don't work for free, always charge for materials.
If you take a bunch of gizmos to the local flea market, priced at $10 each, and sell out in the first 10 minutes, you are pricing them too low.
If you price them at $20 each next time, and don't sell any, the pice is too high.
You've got to find a price level inbetween.
And when your woodwoking finally starts to bring in more money then your day job, you are probably OK with dumping the day job.
:big_boss:

Almost forgot. Your time working is probably waaay underestimated. Among other things, I make wooden figure banks. Figured I had the time for each step down pretty close. Found a inexpensive stop watch in WallyWorld, and bought it figuring I could time my work and possibly trim a few seconds here and there. What a shock that was. Steps I thought were taking maybe two minutes tops, over five minutes. Steps I thought were taking five minutes tops, over ten, sometimes more. I have the times way down now, but it took some thinking and planning to do it. Way I did it, I hung the stopwatch around my neck (no chance of it getting in anything whily), would click it on, start that particular step, click off when finished. Could just as well hung it from the wall, or put in in my shirt pocket. I would suggest a stop watch for anyone charging an hourly rate. Or, for anyone interested in cutting down work time for that matter.
 
#13 ·
ALL of the above, Steve., except that the material cost angle really is a dangerous road. If you had to disassemble a rocking chair, clean it up, make and replace a couple of spindles, and then reassemble it, and you only charged for the materials x2, you'd have done the job for free!
 
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