Thread: The commissions are starting to roll in...

Screw the customer. be realistic to yourself and the industry that you are trying to become apart of. Kinda blunt, but it is what it is.

Price should be:
cost of materials + (hourly rate x time taken to build) your hourly rate should vary based on what you want as a minimum.

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Mate it's hard I know. I got asked to make a very specific vanity top for a guy and what I was initially going to charge him would not have even covered the cost of materials in the end. I sought some advice and ended up making a bit of money out of it, but still if this was my full time occupation I wouldn't be able to put food on the table based on that sale.

It is immeasurably easier to give advice than to follow it, but you've got to ensure your business model is sustainable - if you can't put food on the table for yourself and your family you can't keep your business going.

Also don't forget *you* set the expectation - people will talk and while getting sales is good if everyone tells their girlfriends/mates about this great woodworker and tells them how cheap you were it's going to be hard to charge what you deserve to get for them down the track.

My suggestion? Run a line in the sand, calculate what they are truly worth and be honest and fair to yourself from this point on.

Good luck mate.

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I work for myself part time for the last 10 years. It is surprising what some people are prepared to spend.
Very often those with the most assets are prepared to spend the least and those who are dirt poor are able to spend more.

Double your prices, you must cover the cost of material and machines, then be prepared to have a cushion in the labor. If you hit a problem in construction you should be able to absorb some of the cost.
Yes it is hard, but you might be surprised.

It's a funny thing charging people for work you do. I have had a small printing business and realised that while I was a good printer, I was a lousy business man. I had to deal with my own feelings when I submitted a quote. It wasn't the cost of the job but how I felt about charging for it.

Firstly, you have to be prepared to walk away from the quote once you give it. If it's too low you wont feel good about it and will begrudge doing the job. Secondly, you need to learn how to sell the sizzle. That doesn't mean you are BSing the client, but getting them excited about how pleased their partner (and ultimately the client) will be once they receive your project. Thirdly, you may need to renegotiate the quote to suit their budget. It's not an admission that you are charging too much, rather you could make it out of different material or a different finish or maybe smaller. It's their problem not yours. Don't let them make it your problem.
You should project the thought that you are rightly proud of your work and deserve to be well paid for it.


TT

What Paul Alfred said. Try TELLING the client how many hours it will take and your hourly rate.

Good Morning Kiwi75

Welcome to the real commercial world.

You are producing hand-crafted specialty products as opposed to the mass produced commodity products sold by Ikea, Harvey Norman, Freedom, etc. You cannot compete with these volume retailers on price and you should not try.

Your products are unique, possibly tailored to a specific client and price is only a relatively small part of the deal. In many ways price defines quality. A Mercedes costs more than a Toyota so it must be better!

Years ago, when Ford were still producing T-models, Alfred Sloan deliberately priced the comparable General Motors product at $100 more than the comparable Ford but included a "free" ($10) radio. The buyers rationalised that Chevrolets were more expensive than Fords so they must be better. The strategy worked; General Motors is still bigger than Ford.

I'd suggest that you look at the charge out rates of other craftsmen in your area and set your hourly towards the top of the range. As business builds, constantly review you hourly and increase it progressively. Your objective is to be the price leader in your area.

You have entered a lonely but exhilerating world. Best wishes.

Graeme

Twisted Tennon hit the problem bang on the head. As a commercial maker now, this is exactly the same problem I suffer with every day on every quote.

You need to sell your excitement and enthusiasm in the clients project. This will win you the business.

TT's words are exactly right.

My other tip - make as perfectly as possible regardless of the price you charge. Be exquisite.

Years ago I used to make art boxes and sold them at markets. At first they didn't sell and I started to get depressed. I then decided it wouldn't be so depressing if they didn't sell at doubled the price. The started to sell. Go figure.

Being unique is golden to a lot of buyers, the exclusivity of it all, some love it, some don't. Some appreciate good work and are happy to pay, most shop at places where low prices are king. Do not put yourself in that place to compete with that, you will loose. Having said that there are plenty of astute buyers out there.

Batch making is a good way to reduce the labour cost of an item. Setting up and drilling one hole often takes about the same time as drilling ten. Make more is often the answer. Hold them as stock and market them through sales channels. I have an item I do where if I make one it will take about ten - twelve hours. But, if I batch make they take 3 hours each, actually less than that now. Think long and hard about making small, one off items. Is it something that has the potential to fit in with your marketing? If so, it may be appropriate to include it as part of range. Someone wants it, why wouldn't others.

You should really be charging your labour out at twice what you want to earn. You need to cover overheads. Electricity, etc. You also need to cover down time for maintenance, blade and cutter sharpening, consumables, etc.

If it doesn't fit with you, your ethos or your market, then punt the customer to another maker if you can. Never say no, give the customer an option, give them a solution, help them.

Cheers

I be blunt
Your a non sexual hooker.
Go for gold if they want to pay it, they will.
If not they will go next door it's has simple has that.
I will quote someone million dollars to fix there door if they say yes fantastic.
It's there choice that's it

Cheers Matt
Keep your dream happing you will get there

When i started selling what i was making as a hobby i sat down and put a price on all the materials and elements of the build. Once i did this i priced some items i had made and then asked myself would i pay that price and mostly the answer was yes. Another important point is to remember that when you get a commission it means that the customer wants to spend the money so if they baulk at the price ask them what they think its worth and if its in the ballpark be prepared to negotiate a bit ( always add in a bit for negotiation) and if your client doesn't want to play just walk away, you may be surprised that they will think long and hard and come back.
I am continually surprised by the people who scoff at my prices while some say i don't charge enough.

Woodpixel made a comment which i agree is most important and that is you must always strive for perfection. Get your joins tight and sand sand sand because when it comes to timber everyone wants to pick it up and rub their hands and fingers over it. You must be your own harshest critic, if its not good enough for you it won't be good enough for your client.

I wish you all the best.

I've had several businesses over the years, mainly metalwork, and I found this question the hardest of all decisions, what to charge?? If it's too cheap, people will think it's rubbish, and won't buy it. Too expensive and it won't sell.
When you give a price and the customer goes into shock, ask them how long do they think it would take them to make it? Ask would they work for $10.00 per hour, if they say "No" say "But, you expect me too"??.
Worst part is if you've not made something similar, how do you work out the time it'll take to do so, will it be an item that others will want.
Some items I make now, at the Day Centre where I help out, particularly if a customer requests one, I'll make 5 of to see how it'll sell, if it sells well the next batch will be 10 or 15 of. As someone has already mentioned, a production line will probably add 3 - 5 hours more to make 10, but the overall time could be a quarter or half, of what you thought. Most of my time is spent making jigs, as this really cuts down on production time, but you can't charge for it, unless the customer requests several of the items. You'll need to make sure that they are in agreeance, that you can make more of these items to sell to the public, or they want sole ownership, as this can lead to problems later on.
Remember, Do the best possible quality work you can do!!

There's a methodology commonly used in the building trade called cost plus. In other words, what it costs to produce including allowing for wages, admin, insurances, tool allowance, waste etc plus a profit margin for the business. It might be your business (even a hobby business is still a business) but it's better to treat it as its own entity with its own bank account and responsibilities and yourself as the employee.

Also, do your quotes on that basis as well, as least until you are experienced at it. If you do a detailed quote based on what you think needs to be accounted for you are less likely to under quote, and you can do a cost analysis on the jobs you win on completion to see what you forgot to allow for and so you can see if your actual profit margin tracks with the expected margin. Clients like detailed quotes in my experience, because they know exactly what they're paying for. And if the client make changes it makes it easier to charge for them, with less arguments.

Youll probably hate doing these admin jobs instead of spending time making stuff, but the reality is it will take up at least 20 percent of your time. It's the price of being in business.