how to price woodworking

How to price woodworking jobs costs woodworkers money and keeps them from taking home a sale. Learn how to price woodworking jobs in 3 steps what most other small business owners do: pricing your products and services using a variety of techniques.

Step 1: Set your goals

The first step in pricing woodworking jobs is to determine the cost of operating your business. This includes all overhead, including rent, utilities, insurance, supplies, equipment and payroll. If you are working from home, you can use the IRS standard business deduction of $5 per square foot of space used for the business. Other costs include advertising and service fees such as insurance or legal costs. Keep accurate records to determine a cost basis for each project.

Next, determine how many hours it will take to complete the project. If you have repeated a project before or have done similar work before, use that as a guide. Calculate the amount of time it will take you to complete the project, including setup time and cleanup time. For example, if you expect a table to take two days of actual work plus two days for setup and cleanup, then factor four days into your equation when pricing projects such as this one.

Step 2: Create your pricing strategy

The next step in how to price woodworking jobs is deciding on a pricing technique. Different pricing techniques will help you reach different goals. As an example, if your goal is to maximize profits you should consider cost-plus pricing

Most people find they can comfortably work between 1000 and 2000 hours per year in their shop. We'll use 1500 hours as our target number of working hours per year.

Step 3: Calculate your optimal price

Finally, there's "price," which simply comes from adding up all your costs and then adding a markup. The markup percentage varies from business to business, but it's a way of pricing that isn't based on what you think your product is worth, but rather how much you need to charge in order for your business to be profitable. In other words, it's normally

What’s your time worth?

If you're new to pricing your work, start by doing some research. Ask yourself these questions:

• What are my expenses? What are my variable costs?
• What kind of profit margin do I want?
• How much time will this job take?

And here's another important thing to consider: what is your time worth? In other words, how much money should you be making per hour of labor on this job. This is generally more than the hourly rate that a worker in a factory gets paid, because as a small business owner, you are a manager who has more responsibilities than just turning the screw that tightens the wingnut. You have administrative tasks like bookkeeping and shopping for materials, and you also have design responsibilities.

It can be hard to determine what your time is worth because it's difficult to quantify all those tasks. But if you don't price your work correctly, you will lose money in the long run. So it's best to figure out what your true hourly rate

How much should you charge?

woodworkers often leave money on the table, and at times they even lose money on a job. Worse yet, they end up frustrated, not sure what to charge for their work.

For most woodworkers, pricing woodworking jobs is one of the hardest parts of their business. There are a lot of factors to consider, and one small mistake can end up costing you a lot in the long run.

Understanding the market

Pricing woodworking jobs for most woodworkers is a mystery. It’s typically based on the materials and how long it took them to build something, but how do you put a number on it? The answer is simple: in your initial consultation with a prospective client, ask if they are looking for a ballpark estimate. If so, you can give them one on the spot.

If they want an exact figure, then you will need to measure the space and take into consideration what they are looking for. They may have an idea of what they want, but are not sure on the design details or materials. This is where your expertise comes into play. You need to explain that this would be an estimate and you will have a better idea once the project is started.

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Conclusion

Before you start a woodworking business, help yourself arrive at an approximate price to charge. This may involve some trial and error on your part while you try different pricing strategies. Do not follow the thinking that as a woodworker, you should determine your fee based solely upon your cost to perform the work because that usually leaves you in the red.