How to Price Your Woodworking Projects: Advice for Entrepreneurs and Startups

prayer kneeler in cherry and black walnut
Prayer Kneeler in Cherry and Black Walnut

Are you in a quandary how to price your woodworking projects?  Have no fear.  This post will give you a tried and true solution developed over the past couple years that may help.  This cost estimating model makes pricing a very simple process and generates a number in which you can be confident.  I’ll give you the specific formula at the end, but need to explain a few things first.

 

 

The biggest wildcard for beginning woodworkers is how long will it take to make something and what the labor estimate should be.  Before you get too far down the road, I have one piece of advice for you:  document, document, document.  If you don’t track your hours on projects, you will be shooting in the dark and working at great risk.  If you are working for free that’s not a big deal, but if you’re starting a business you need to manage your risks.  Once you’ve made a few projects, cost estimating becomes very straightforward.  For example, my first gun cabinet took 100 hours.  I made a prayer kneeler (pictured) which took 20.  A picture frame, depending on how fancy it is, is about 5 hours.  With the couple dozen data points I have, it’s easy to estimate how long something will take.  If you are just starting out and have absolutely no idea how long something will take, try this.  I’m finding that in general 60% of my projects are labor and 40% materials.  This varies from project to project, but does not stray far from this median percentage.  I would think this type of percentage (not the actual values) would apply to other maker startup efforts like photography, etc.  So if you don’t know how much the labor will be, you can usually estimate very closely how much the materials will be because the dimensions of your project will require a certain number of board feet (see the post about buying lumber) then you can extrapolate to the labor hours by multiplying the materials cost by 1.5.

So now that you’ve estimated how many hours something will take (based on previous projects or the 60/40 split mentioned above), how much should you charge per hour?  I give a lot of credit to The Wood Whisperer, Marc Spagnuolo, who wrote a post on this years ago that influenced my initial thinking.  My current thinking is that the hourly rate should be high enough that you feel good about working on a project in the wood shop at that rate and don’t feel like you’re giving away your work.  On the other hand, it would be nice to set a very high rate, but the market probably won’t bear it.  A good way to get a feel for the going rate is to search on the Internet, but stay away from researching custom woodworking prices on sites like Craigslist, because custom woodwork is not a bargain basement proposition.  We use Craigslist a lot to declutter and minimize, but it’s not a good fit for selling custom-made pieces.  A better site for researching the price of custom made projects might be one like Etsy.

Materials

I had a client over to the shop the other night and we were discussing the wood type for their upcoming project.  I like to give a range of woods and prices because some people are price insensitive and others want to stay within a certain budget.  It’s all about what the client wants.  In this case, the client decided to go with some nice premium cherry I had leftover from a previous project that had a beautiful grain pattern.  We talked about dimensions and since I knew the price per board foot from having purchased this board before, the calculation was straightforward.  If you’d like more information on how to do this calculation, check out our post on buying lumber.

So now that we’ve laid all of that foundation, here is the formula:

Labor

Hourly rate times estimated hours

Materials

Board feet times price per board foot
Required hardware
Any special tools or bits required for this specific project

Overhead

Overhead Rate times (Labor + Materials)

What should your overhead rate be?  All those tools you purchased have to be paid for somehow.  The trick is to figure out a reasonable overhead rate to amortize this cost over your projects.  I’ve been using 10%, which is probably a bit low, but it will give you a starting point.

Tax

Your Local Tax Rate times (Labor + Materials + Overhead)

Total

Labor + Materials + Overhead + Tax

There you have it.  If you are just starting out, this can be a bit daunting, but I recommend increasing your margin of safety by conservatively estimating the labor hours, making sure you’ve allowed for enough wood in the board foot calculation, and charging a high enough overhead rate.  That should keep you out of trouble.

Other entrepreneurs out there–what are your lessons learned?

Get Out of the Rat Race: How to Manage the Transition from Career to Maker

small business lessons learned
Building the Small Business

Tired of the rat race?  Ready to get off that hamster wheel?  Being a maker (like a woodworker, for instance) can be incredibly rewarding.  It’s not easy to get there, but the rewards are incredible freedom and limitless creativity.

 

There are many paths to success, but I’ll share what has worked for Traughber Design.  We’re currently in a position of having as much business as we can handle as a part-time (see blog post #1) enterprise.  We’ve delivered two commissions in the past couple weeks, are currently working on a dining room chair commission, and are about to ink three deals on more projects.  This was after 2 years of effort, though, and we’ve learned some things along the way.

If you’re contemplating such a journey or have already retired, the following principles may help.

You have some amount of time every day you can devote to making.  Everyone’s situation is different, but you can get up early, stay up late, or shoe horn in a few minutes before or after dinner.  That amount of time depends on how badly you want to succeed with the transition.  I experimented with multiple approaches over 2 years and found that allocating a set amount of time every day worked best for me.  I’m currently setting aside 90 minutes every day split in two pieces (more on that below) since I’m about 2 years away from retirement and want to ensure this endeavor supports my family before then.

Along those lines, another key ingredient for success is to just get in the shop.  Some days I get tired and don’t feel like it, but I drag my sorry butt down to the wood shop.   Once I get started I’m energized again and more often than not, find myself in the zone (or flow).

Another strategy is to get up a little earlier every day.  As we learned in our interview with an Amazon Best Selling author and entrepeneur in a future post, getting up early every day before someone’s day job is a way to squeeze in some regular making time.

Split time between making and managing.  I owe a great debt of gratitude to Paul Graham, the founder of Y Combinator, which many view as the pre-eminent start-up incubator in the world.  Graham wrote a great blog post in 2009 called Maker’s Schedule, Manager’s Schedule about the difference between making and managing.  Making to me means unfettered time in the wood shop to create or time to write blog posts.  Managing is all the associated functions like drafting proposals for clients, filing taxes, etc. and includes everything not making. I allocate 60 minutes minimum for making and 30 minutes for managing every day (remember I’m doing this part-time for now).  Sometimes life happens (Back to School Night for one of our kids, for example) and I don’t get to spend any time in the shop, but that is the exception rather than the rule.  If I can’t get the full hour in the shop, I try to spend whatever time will allow.

An hour per day for a year is extremely powerful!  I take Sundays off, and 1 hour per day, 6 days per week over the course of a year comes out to 312 hours.  That is a ton of woodworking projects.  The gun cabinet project took 100 hours, but most projects are in the 10 to 20 hour range.  That means you can potentially crank out around a dozen projects in a year with only 1 hour in the shop per day.  If you leverage holidays and weekends while you are still in a career, you can accelerate your making that much more.

Another very important concept to consider is efficiency.  Between the times I’m in the shop, I’m thinking about how I’m going to use that hour the most effectively.  In addition, I write down exactly what I’m going to do with the 30 minutes of managing time. As I’ve told our kids a million times, “plan the attack and attack the plan.” It’s amazing how you can quickly move through your tasks during managing time when you’ve written them down.  For example, my goal was to spend 30 minutes per night going through a WordPress class this summer, but I found if I focused, it didn’t take 30 minutes every night.  If I had extra time, then I moved on to drafting blog posts, like this one.  I could not have been that efficient if I hadn’t written down what I wanted to achieve in those 30 minutes.

Start your side business now while you have income from your primary career.  Building a business takes a very long time.  I’ve been at this for almost 2 years now and am just now at the point where the commissions are rolling in on a regular basis.  I’m confident this will work.  You want to build enough revenue that you can be confident your small business will be a going concern before you jump ship from your primary career.  In addition, you can build all the start-up infrastructure (company registration, insurance, website, tools, etc.) you need so that when you do transition you can focus on making and continue to build your client base.

Already made the transition?  Share your lessons learned below!

 

Woodworking and Minimalism: If I Buy All These Tools Am I a Minimalist?

minimalism tools
A Minimalist’s Set of Tools?

Mrs. Woodworker and I have been on a minimalism kick for a long time, way before it became “a thing.”  Our military moves (called Permanent Changes of Station, or PCS’) were terrific opportunities to get rid of things we hadn’t been using.  For example, we’d unpack boxes at our new duty station and say “I didn’t use this at the last house, why do I even have it?” then get rid of it.  We also have had a regular run to the local donation center for quite a while and are long-time users of eBay, Craigslist and Freecycle to get rid of things.

Can you be a minimalist and also a woodworker?  Some might say no, because of all the materials woodworkers use and the myriad of tools in our shops, but I’ll argue you can be a woodworking minimalist for a few of reasons.

First, I think the question needs to be asked why are you being a minimalist?  Josh and Ryan at www.theminimalists.com write about their focus on finding meaningful lives and the things that add value.  We’ve been following their podcast for some time now and just watched their new documentary.  Minimalists get rid of things and extraneous tasks so they can cultivate their passions.  They are aligned with their goals and passions.  If you are passionate about woodworking, then a minimalist would strip away everything that’s unnecessary in their lives so that they can pursue their woodworking craft.  It’s not about minimizing woodworking, it’s about minimizing in order to work wood.

Second, woodworkers can pursue their craft in a minimalist way.  One of those ways is to use sustainable materials and purchase lumber harvested from fallen timber.  Another way is to create our pieces using the minimum amount of wood possible.  That’s one of the reasons a cut list is so important:  to plan every piece out of the larger piece in order to minimize waste.  Along those lines, sometimes you can make something with scrap wood versus buying new wood.  A good example of this is the fairing stick project we wrote about in another post.  That project was made with leftover pieces from other projects.  A third way to pursue your craft in a minimalist way is to buy the minimum set of quality tools required to cultivate our passion.  Do you really need multiple power drills, for example, or can you buy one quality drill that does that job?  I purchased a core set of Festool that does about 90% of what I need to do.  Do I drool every time the hardware circular comes in the mail?  Sure.  But do I really NEED what they are selling?  Most of the time the answer is “no.”  A fourth way is to run a clean shop.  How many times have bought a part or piece of wood and didn’t realize you already had what you needed?  An organized shop will prevent a lot of those redundant buys.  Think about the best way to store your tools, hardware, and lumber so you can easily see what you already have.  Speaking of seeing what you have, it’s probably a good idea to survey all the tools in the shop on a regular basis and see which ones have not been used for a while.  It may be time to pare down and sell some of those tools on Craigslist.  Keeping a tool “just in case” is probably not a good reason to keep it.

Third, woodworkers are generally making custom pieces that are more solidly built than cheap furniture from the big box stores which minimizes the amount of furniture that needs to be produced. Since the pieces last a long time, they can be passed down from generation to generation and enjoyed over a longer period of time, not needing to be replaced as often.  This is a more sustainable model since it requires fewer trees and the large logistical tail to bring additional pieces of furniture to market.  Not only that, purchasing custom-made pieces supports the local economy which is more minimalist than having items shipped halfway around the world.  For example, for most pieces I make I’m buying wood, supplies, tools, etc. locally which help pay the wages of people in the local area and support local businesses.

My ultimate minimalist vision, though, is to harvest fallen wood on our own land and mill it for use in the pieces that we make.  We’re on that road now and are planning to downsize to a smaller house (and wood shop) next year then plan to eventually buy some land with a tiny house and wood shop.  We’ve learned a lot about small personal saw mills from sites like Pure Living for Life.  Check it out if you get a chance.  I’ll share more on our journey and the wood shop move in later blog posts.

I hope I’ve convinced you that we can be woodworkers and minimalists.  Chime in below.  What do you think?