Don’t Undervalue Your Work!

Article - January 9, 2014

Now more than ever, people are breaking out of the traditional employment mold. Thanks to the internet, a small niche business that would have died on the vine fifteen years ago can now thrive with low overhead and easy access to a worldwide customer base. It’s not all rainbows and unicorns for everyone, but for many, it’s a great way to make a living while re-defining your role as a world citizen.

I exchange emails with woodworkers everyday who are taking the plunge. The story is very often the same. You start making items for your own home as a hobby. Friends and neighbors find out that you’re a woodworker so they begin to inquire about your services. Because you’re a nice person, you charge them for materials only. Word gets around and you begin receiving requests from acquaintances who hear that you not only do good work, but you’re cheap too! This is where the problems begin. Even if you aren’t interested in becoming a full-time woodworker, you will likely start to wonder if you’re valuing your time appropriately. Is it fair to charge someone a reasonable fee when you truly LOVE what you do? Should you fight that sense of GUILT you feel at charging someone money while you fart around in the shop?

If you’re planning on changing careers and doing this woodworking thing for a living, you better answer with a resounding, “YES! It IS fair to charge a reasonable fee!” If you are taking on jobs as a side-business simply to keep your hobby going, your choice might be a little more difficult. Though I’m sure many professional woodworkers would really appreciate you charging appropriately for your work.

At the heart of this issue is the question of value. How valuable is your time? How valuable is the material you use? How valuable is your creativity? How valuable is the final product you produce? Does the customer see the same value in that product or do they value it more or less than you do? These are all interesting questions to ponder when deciding how much to charge for something. But if you are starting this process by undervaluing yourself and what you bring to the equation in terms of skill and creativity, then you’re going to have a significant uphill battle. If you don’t value your own time and skills, how can you possibly expect your customer to?! Undervaluing your work is a great way to become the busiest woodworker that ever went out of business.

I bring this up today because of a video I recently watched from a friend of mine, Bill Doran. Bill is a prop-maker and owner of Punished Props. He makes custom props for use in cosplay, TV, and movies. Much like a woodworker, Bill receives commissions and has to price his work accordingly. He has to come up with the plan, source the materials, and build the item within a reasonable amount of time and he faces all of the same challenges woodworkers face. He recently made the video below explaining why he has to charge a hefty sum for his commissioned work. While he is focused on prop-making, the message applies to woodworkers.

As you can see, independent woodworkers aren’t the only ones struggling with this issue of valuing one’s time. In fact, here are three other articles I highly recommend you read:

– Materials, Time, Creativity
– Why You’re Undervaluing Yourself (And How To Stop)
– “How to Price Your Work”

This is a huge topic that deserves much more time than we can give it in a single blog post. After all, even after you convince yourself that you’re worth it, you still have to convince your customers. That’s always fun. But I’d love to hear some of your pricing stories, concerns, anecdotes. Do you struggle with pricing? Do you find that most of your clients are willing to pay your asking price? I’d also love to hear from folks who are currently undervaluing their work. Tell us why this works for you.

Like the cartoon above? It was created by my buddy Scott Johnson. Head over to his website for more awesome web comics!

Discussion

Arnold January 9, 2014 10:19 am

Quite informative, and his delivery was funny. Lol made me laugh. Not sure if it was intentional.

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Josh Mackintosh January 9, 2014 10:42 am

I call the UK home and although at only 20 I have many years ahead of me and only really discovering what direction I would like woodworking to take me, I have done many jobs where I have undervalued myself, and it most certainly does come back to bite you in the butt! Countless times I have cut prices for friends, only for them to then recommend your services to their friends, who want it at the same price. There is a certain hypocrisy in charging two different prices for similar/ the same jobs. I’m with you Marc don’t undervalue yourself!

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Kevin January 9, 2014 10:53 am

Several years ago, I attended a local guild meeting. The speaker that night was talking about selling your work. He started off by saying, “If your friends and family are telling you to sell your work, what they are really saying is, stop giving me your work.” After hearing that, it took me another 8 years before I would willingly sell my work. When I finally did, I looked over a wide variety of pricing models to go by. In the end, I settled for 3 times cost or local going rate minus 1%. I still give discounts to friends and family but with the strict understanding that that discount does not apply to their friends and family. I also have offered a referral fee equal to what I might pay to list an comparable item on an online sale site. This has stopped those I give discounts to from talking about my pricing. While I don’t do this as a full time job, the numbers allow me to expand my capability and shop.

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Christopher Webster January 9, 2014 11:07 am

Your blog and the video are very helpful to me. I have turned some pens, bowls, etc for others and I always struggle with how much to charge, if I should charge at all!

I have found, however, that the less that I charge (like materials only) the less the recipient values the product. I recently charged $100 for a very nice pen (if I do say so myself) and I felt very guilty, and found myself trying to justify the price. Others just don’t understand.

Thanks very much for sharing this!

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Bob January 9, 2014 11:09 am

Bill is gifted with the rare ability to be positive and entertaining on camera.

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Mike Binder January 9, 2014 11:10 am

Marc,

Do you find yourself charging more for your work now than let’s say, five years ago, simply because of your status as The Wood Whisperer? Should a hobbiest expect to charge much less because of our lack of “fame”?

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- Marc Spagnuolo January 9, 2014 11:26 am
  
  Truth be told, I actually charge LESS now. Usually it’s because I am also filming the production of the piece and I’ll make my money on the project through other means. So when I charge the client, it’s a minimal fee that puts a few bucks in my pocket but is nowhere near what I would have charged without the website. I honestly feel a little guilty “double-dipping.” That said, I feel I’d be well within my right to charge full price and my clients (the few I maintain) never expect the discount.
  
  And on a local level, I don’t think my internet presence really has any impact. I actually don’t have many furniture clients these days.
  
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joe laviolette January 9, 2014 11:15 am

Since you asked – I fear I fall into the undervalue category for a few reasons.

1. I have a high paying day job. To retain my same level of income with woodworking would require me to charge obscene rates that I have no business charging at my skill level. As you mentioned, I started making things for around the house. Well, my house is full. So are my relatives houses. I absolutely love woodworking though so doing small projects that sell well and cover the price of materials (and more materials for the next one) is my goal

2. I don’t feel I am at the skill level right now to demand a premium for my work. In my professional life, I have no issues. My work is top notch and recognized as such.

With that said, I am cognizant that there are professionals out there making a living. Greatly undervaluing my work also serves to undervalue their work (as you alluded to). Some people feed their family from their shop and that needs to be considered.

Marc, you can delete this if you feel it is advertising, but here is a good example:
http://etsy.me/1ilXVXe

This isn’t one of those kits you stick on a mandrel and press together. This is custom work. The finish alone took me about an hour. I would actually be OK charging quite a bit less, but that this the average market value for this item.

Personally I think this is exquisite work – from the careful piece selection to highlight the features, the custom internal weighting design to make it work better than even commercial products, and the overall fit and finish – I really should demand more for it. However at this price it will sell quick. – and I am bored and want to make more.

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- Namo January 9, 2014 12:59 pm
  
  Just sell your stuff in Norway. I’ve seen shops selling driftwood on a stick for over $160 (yes that’s what it was, nothing fancy about it and the stick was even flimsy) And it wasn’t even a very fancy shop.Thing is, if you charge high enough people are going to want to buy it BECAUSE of the high price…
  Photography has the same issues, people would rather pay a few bucks for some hobby photographer with a new dslr than for someone with an education and some experience, and it is hard to explain people that editing is more than just pressing a few buttons in photoshop and that one picture alone can take an hour…then they question my price for 80 shots (which is way more than they would get at an actual professional)
  
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John Piwaron January 9, 2014 11:28 am

I’ve found it fascinating that friends have asked me to make things yet are unwilling to pony up enough money to even cover the materials. I don’t if all of them think this, but at least some think material cost is almost zero. I’ve heard “I can get one at IKEA for $50!” (or name other low number) – “Well, I think you’re going to IKEA”.

Anyway, it’s better to price high. Real high. You can always come down. But you can’t go the other way. Raise prices? Forget it. Won’t happen.

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Marc-André January 9, 2014 11:44 am

I find it to be a real challenge to compete with either weekend woodworkers that charge a lot less than I have and the pre-conceived idea that quality furnitire can be found in big-box stores for a ridiculus price (and very questionable quality). To be honest, I make my living and pay for my employee through woodworking, but it is never truely easy. Sure I am my own boss and I do mostly what I love, but it simply bothers me when I have a client that wants to pay 1000$ for a table and six chairs! On the other hand, when people want a new kitchen, I can quote my work to much higher profits simply because it is a big project and it looks complicated when, in fact, it is a lot simpler than building high end, solid wood furniture.
As an advice to some of you who are thinking of going “pro”, be careful and don’t be affraid to price your work so you cover the materials, overhead, a decent salary and extra profits. Don’t forget the profits, otherwise go work for someone and don’t worry about business and administration!
Woodworking is an artform, don’t let clients think it as simple as putting two board together. It is important to convince them that they will get what they ask for and that you will provide them with quality service. If they are not convinced after that, they just aren’t worth more of your time.

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Tracy Hall January 9, 2014 12:03 pm

Marc;

I’m in kind of a unique position to comment on this: My primary career is toy design and development for large corporations (classic retail); my current career includes owning and running an Artisan Jewelry and Craft retail Gallery, and making (and selling) non-traditional wood-and-copper jewelry displays and holders.

I see this from *all* sides of the business. For a lot of reasons, I try to get our artists to think of their direct sales as three distinct businesses, each with it’s own income and profit:

FABRICATION
This is, really, just your *labor* – the time you put in – including concept and design, as you allude above. Standard product is easiest, as you amortize the overhead costs over multiple pieces – which is why custom/commission is expensive.
BUT – this is *not* where you make most of your profit, overall – you need to price your time *here* as an employee – even if you do the work yourself, you should only “charge” what you would have to pay someone to execute the same labor. In this stage, you are an employee, not a business owner – but do *not* charge *less* than what you would pay someone else; you do want to support yourself!

WHOLESALE
This is the first “business” in the classic sense – you source materials, make equipment available, supply power, heat etc, and employ labor (see FABRICATION, above). Like any business, your goal is to buy low and sell high – your profit margin is on top of *all* your costs.
Best way to start is to add up all your costs – *all* your costs. Materials (including scrap, waste, nails, glue) and labor, and *overhead* – a guesstimate of an “hourly” rate for heat, electricity, rent, etc.
Generally, most businesses double their *total costs* (materials, overhead, labor) to arrive at a wholesale price. This allows for covering intangible costs like marketing, sales calls, shows, etc etc.

RETAIL
If you sell direct to customers (Etsy, or direct from your shop, or whatever), your are *still* selling retail – in *addition* to your intrinsic wholesale business. If you hope to ever reach a larger audience, you need to allow for the retail margin – typically, retailers will *at least* double the wholesale price, to cover sales, marketing, advertising, storage, customer relations, etc etc. – and usually multiply by 2 1/2 to 4 (depending on price, market, etc) to “list price” – which leaves room for discounts and deals. If you price your direct sales *less* than retail, you are doing yourself a disservice – most retailers will *not* try to compete with your “wholesale Etsy” prices.
Do retailers earn this mark-up? Seeing it from *both* sides of the deal, the answer is “hell yes” – good retailers cultivate their client base, help you to focus of product that appeals, deal with returns, exchanges, unhappy customers, happy customer, the picky ones who take a month to decide, etc etc – try to treat them as partners – they (we!) can really help expand your business!

O.M.G., I DID ALL THAT AND THE PRICE IS WAAAAYYY TOO HIGH!!! NO ONE WILL PAY THAT!!!

I’ll add another post (just below), assuming Marc is OK with it, to address this – I deal with it with $14.95 toys, $177 displays, and $1777 jewelry…

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Tracy Hall January 9, 2014 12:30 pm

O.M.G., I DID ALL THAT AND THE PRICE IS WAAAAYYY TOO HIGH!!! NO ONE WILL PAY THAT!!!

Yeah, it happens. You have a great idea, you plan it out, build it, and find that your wonderful new type of cutting board should be priced at $750… Do you give up, or simply price it where the competition is, undervaluing your effort?

Well, neither, really. This is the “joy” of retail – how do you create a product that delivers your customer’s delight and expectations, at a price that *works*?

All retail is a balance between these pressures – the costs that go into creating a great product, and the prices a consumer can or is willing to pay.

So what do you do? A few steps help:

INVERT THE PRICING EQUATION
Start with the price that consumers seem to be willing to spend (i.e. the competition), and work the numbers *backward* – to see what you *can* afford to put into the product. Then look at where your costs are coming from, and see what you can adapt/change:

Excess Labor:
Are you putting in 3 hours on making the exquisite spring edge joint on that table top, that will last for EONS – but is so perfect nobody knows it’s there? Are you making a 6-way sliding dovetail dado joint with pegs, pins and splines – where no one will ever see it?

Excess Materials:
Do you really need Honduran Mahogany recovered by the feet of native peoples of Ecuador from the bottom of rivers, lovingly cured over smoky fires and tended by priests of the Mayan religion for 28 years, slowly milled with stone and sand to create that perfect 8/4 45″ wide slab – for a small spline? Hand-forged cut nails from ore gathered in Mannheim, Germany only on the spring equinox?
Yeah, I’m exaggerating, but you get the idea – make sure your materials justify themselves.

Once you’ve examined all your costs and techniques, see where your price ends up – see what you can “give up” and still make a product that delights.

Still doesn’t work? well, then:

MAKE SURE YOU GET CREDIT FOR YOUR WORK
Not all consumers are as obsessed with wood as we. Our job is to *help* our customers understand making “taking credit for the work” – don’t *hide* that joint, celebrate it; make it a feature. Don’t, necessarily, blend all your woods together – *maybe*, if you’ve carefully jointed two pieces together, they should *still* be obviously separate – so your customer can enjoy it.

This is where Bookmatching and other such techniques shine – they create a feature your customer can see and value, even if they have no idea how hard it was. This is also why good finishing can be critical – no, it doesn’t necessarily make your piece any more durable, but it sure helps to show it off. It’s another reason for the Craftsman-style, Greene and Greene style features – show off that work!

Also remember, “taking credit” helps your retailer (whether it’s you or someone else) – it gives them the tools to sell your work!

Most designs (including all of my own) are iterations to arrive at that balance – feature and finish, vs. price. I don’t sell some of my favorite designs – because I just can’t make the pricing work, no matter how much I love them. Still make’em for the wife, tho.
Design and price your work for both delight and profit. It takes work, but it keeps you creating more!

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Grant McMillan January 9, 2014 12:49 pm

Don’t forget to charge for all the years of training and experience, and potentially course work that you’ve done to get to the level of expertise that means you can charge for your work. That’s often what distinguished you from the guy who just started wood working in his garage.
Also, don’t forget that the more you charge for your product, the more people will value it (to a point – don’t go overboard with this).

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Brian January 9, 2014 1:05 pm

Marc,

I’ve found all your postings on this topic very helpful. I posted on the woodtalk forum a while back that this is something I would like to see added to the guild. At the end of the Dogon Bed project, you shared what you would charge for the bed if you were selling it to the client at your normal value (i.e., not your “cost” in avoiding the double dipping). I’d love it if you would comment on the other guild projects and how much you would charge for them. Even if it’s just a ballpark discussion, it really helps to see you put your formula into action. I’ve read your previous article about this, and I appreciate the detail you went into regarding how you arrive at a price, but I think it’s very helpful to see examples of how you do this, and like I said, I’d love to see it become a regular feature of the guild going forward (and maybe just a blog post about the past projects describing how you would go about pricing those).

A few people who replied to that posting even suggested that it might be nice to have a subforum on woodtalkonline, like a “help me price my project” forum, where people could give input. Obviously everyone lives in different markets and has different experiences, but I think “crowdsourcing” the price might be helpful to many.

Very helpful as usual, thanks a lot for all you do!

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GregF January 9, 2014 1:31 pm

Great article, Marc and I enjoyed reading the responses. I also found Bill Doran’s video entertaining and informative. Frankly, his video could be used as an introduction to a Cost Accounting or Economics class.

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Kaleo Kala January 9, 2014 2:48 pm

Pricing is always a tricky topic. You can’t tell some one to not try and sell there products. But weekend hobbyist severely undervalue themselves and the market.

The real question here is finding your market. If you want to attract walmart and Ikea buyers, then price accordingly. The problem is they wont come to you because you will still be more and they can’t get it fast enough.

If you want to attract millionaire clientele- then you need to charge what they expect to pay. To many woodworkers fall into the trap “who would pay that much for a table” Just because you and I might now pay 15,000 dollars for a dining table- there are plenty of people out there that will and do.

It’s about perceived value- if you undervalue what you do, how can you expect anyone else to value what you do.

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Ray Misiti January 9, 2014 5:28 pm

This is a fantastic and simultaneously difficult subject. As a burgeoning, semi-pro, furniture builder, I fight with this on almost every project I do that is for sale.

In the short time (only 1 year so far) time that I’ve been selling my work, my prices have been all over the place. From cheap to what I would consider overpriced. If I did this full time and had a large clientele, I think my prices would nestle somewhere in between. Furthermore, if I had hundreds of projects out in the wild, charging different rates to different people may be a poor business decision. You never know who knows whom and what could come back to bite you.

I also believe there is a huge difference in the time it takes per project for a project that will be sold vs. a project that is for one’s own hobby. When working on something for myself, I tend to get lost in the “wonders of woodworking” a lot more than when I’m working on a project that is for sale. I know I’m on a scheduled lead time that I quoted the client along with the fact that the sooner it’s done, the more I make per hour if you want to think of it like that. I don’t cut corners, but I’m much more likely to speed along more quickly by batching things, planning better and being self aware to my rate of overall speed with each task.

I think the biggest factor overall is the client type. Your next door neighbor may or may not be able to or even contemplate a $15,000 dining table. Currently, I only advertise to people in a very high tax bracket who can afford and more likely know the difference between custom made furniture and going to the local store for their furniture.

My best client so far actually owns a commercial, custom furniture company. They do cabinetry, built in’s, etc. on a large scale for entire condo complexes and high rises. They can produce a kitchen’s worth of cabinets with alarming speed. However, they aren’t what would be called “fine cabinetry”. More like what you’d get if HD built your kitchen. Looks great, but it’s mostly particle board and veneer with pocket screws.

His wife is somewhat of a furniture collector and he asked that I build a piece for her. His designer sent over a rough sketch of what they were looking for. After I quoted what I thought was a fair price, he called and accepted. He was also honest enough to let me know I could have sent the price in at double what I quoted and he would have still commissioned the piece.

We’ve become somewhat friendly over the last six months. He explained to me that I should focus most, if not all my attention on upscale clients. He even divulged that part of his wife’s enjoyment is telling her friends how much she paid for her household decor. It’s sort of a keep up with the Jone’s thing I suppose. I’ve listened to him and it’s paying off. I’ve even sold his wife two more pieces at rates I would never have though to charge in the past.

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Jonathan Szczepanski January 9, 2014 8:46 pm

I think I undervalue my work, and I still have people balk on the price. I always state that I am building a quality product, and I base my prices on that. I list examples of the quality construction and materials that I use, and if it’s more important for the client to have a lower quality item at a lower price, then I can change my techniques or materials to approach that price. Some times it works, some times it doesn’t. At a minimum it helps identify clients that are serious versus those that want a lot for a little. The good news is that every year I have been able to charge more for my projects and earn more for my craft. Before you know it, I might be able to get what it’s worth.

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Zac January 10, 2014 3:46 am

I finally took the plunge and made woodworking my main business, and it’s really hard to price work out. Even if you try to go through every possible cost plus overhead, etc., you always get stuck on the labor part of the equation. Since I am relatively new the business, with an efficiency level of snail-paced, it’s difficult to estimate a reasonable labor cost. At my pace, I would have to apply less than minimum wage for the price to be reasonable.

What I have learned is you can sell anything for any price, as long as you find your target market to sell to, and you are 100% confident in your product and the price tag. The moment you have an ounce of self doubt, you’ve lost the ability to land that client. If you remain firm and have full confidence, then your customers will believe in your product and pay you what you’re asking. If you don’t seem to be convinced that your product is worth the price your asking, how could anyone else?

The other problem I ran into in the very beginning was lack of a portfolio. So, I found friends who I could help out by building awesome furniture for, and I barely covered costs; however, it allowed me to really take control of the design so I could build something I wanted in my portfolio… and I made it very clear that the price tag was to never be mentioned and I let it be known that I expected referrals whenever possible from my friends.

It’s tough, but if you believe in yourself you can accomplish anything. Just remember that there will always be someone pricing their work lower as well as higher than you.

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Steve Desmond January 10, 2014 7:05 am

The problem of pricing your work is a challenge no matter what you make. I make custom downhill skis. I’m in the serious hobby phase at this time. What do skis have to do with woodworking? All high end skis still have a wood core no matter how fancy or flashy the graphics. That being said, I have a good handle now of what it costs to make skis from a material and time-spent standpoint. Now what is a fair price to cover my time and incidentals (wood glue, sand papers, waxes, base tuning, etc) ? AND most of all what will some one pay? I looked at what the market is charging for other custom made skis and from other micro builders and the pricing runs from $450 to $1800. That’s a huge swing. Then I looked at what the known manufactures (Atomic Fischer, Volk,..) are charging for their high end skis and the price runs around $800-$1200. That helped me narrow it down a little. Then I tried the “3x materials + material cost”. That seemed to get me to what seemed a “fairer” price. I think I’m still charging on the low side at this point. A couple things I’m working on are to refine and streamline the process but still allow for the customization. Many great points covered here. The hard part is finding your market and getting exposure.

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Jay Talbott January 10, 2014 10:10 am

Although I only do woodworking as a hobby right now, as an independent software engineering consultant, I can definitely relate to the issue of valuing yourself appropriately. When I first started my consulting business back in 2001, I at first was cocky, and held out for higher consulting rates than I was probably worth at that time, and lost out on many potential clients because of it. Not a good move right in the middle of the bursting of the dot-com bubble…

Then, after not getting any business with that approach, the pendulum swung the other way, where I lacked confidence in the rates I was asking for, and showed, which put the client in the driver’s seat when it came to contract negotiations. But I needed to get some work – any work – just to pay the bills. This resulted in my taking on a number of gigs that didn’t pay anything close to what I had originally envisioned when I started off on my own, and it really made me question my worth.

Fortunately, all that’s behind me now, and for the past few years I’ve been getting rates for significant projects that are actually at the top (and sometimes well above) the range that I originally envisioned for the business, and I’m totally confident in asking my clients for those rates. Of course, I also have much more experience under my belt at this point, and I have built up enough of a client base that I have plenty of work these days (actually, arguably more work than I really want). The only drawback to the success of my consulting business is that it has left very little time for woodworking…

So, here’s the bottom line from my perspective… It starts with confidence in the product or service you are providing. Not cockiness, just confidence (there is a big difference). Second, you need some experience under your belt that shows potential clients what you can do (that also helps build your confidence). Third, you need to identify your target market, and understand what you are competing against, and what value you bring to the table compared to your competition. Know what you can uniquely provide that is difficult, if not impossible, to get elsewhere. And then find clientele that can appreciate your unique product or service.

Getting back to woodworking, trying to convince your next door neighbor that your custom hand-built solid hardwood table for $5000 is worth it when they are comparing it to a $500 table that they can get from a discount furniture chain is a really hard sell. Sadly, it today’s world, the vast majority of consumers don’t see the value in quality hand-crafted furniture that will last for generations. Instead, they buy cheap crap, and don’t mind replacing it every 5-10 years. So, as pointed out above, the target market really needs to be clientele with discerning tastes and deep pockets. Nobody else is going to pay you what you are worth.

This discussion always makes me think about my parents’ fine furniture. They have a full dining set, china hutch, serving cart, coffee table, end tables, grandfather clock, and a number of other smaller pieces, all of which hand crafted out of cherry by Kraus Furniture in Amana, IA (sadly, after 52 years of business, Kraus Furniture closed it’s doors in 2010, and auctioned off their equipment and hardwood inventory). Most of these pieces are 40+ years old now, and, even after several moves, still look the same as the day they were first delivered, other than the deepening of the color of the natural cherry. My parents paid a fortune for that furniture back in the day, but they knew the value of what they were buying. It will certainly outlast their lifetimes, and probably mine too.

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- Jay Talbott January 10, 2014 10:14 am
  
  Correction: Krauss Furniture
  
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Jerry January 10, 2014 12:20 pm

Marc:

I stumbled upon your blog while researching an article for our publication, “Expressions in Woodcraft.”

Understanding what to charge for your services is a HUGE issue in my world (marketing/publishing) and is a major topic of discussion in the furniture world as well. We publish a magazine that is sent to retail stores nationwide on behalf of Ohio’s Amish furniture manufacturers — furniture is a multi-million-dollar business here, and directly responsible for hundreds, if not thousands of jobs. The spinoff jobs put the total well into the thousands.

One of the biggest issues locally is when newer businesses start up, and undercut long-established businesses. I always say (as you referenced) that they will get so busy they’ll go out of business. It’s a difficult lesson to learn, but knowing how to price your services — and not being ashamed of what you charge, is the key to long-term survival and success.

Thanks for letting me add my two cents, and good luck!

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seth January 10, 2014 1:55 pm

I’m fascinated with this topic both as a part time maker and consumer. There’s lot’s of work out there that’s well worth the price but I’ve seen a lot where I can’t figure out why it’s so expensive. The mark up for “reclaimed” wood can be obscene especially when it’s just screwed to a steel base, no joinery at all. I do like real reclaimed pieces but that term has become a little distorted as it’s become popular.

I’ve never viewed the part time craftsman as the competition for the full time shops… I thought it’s all local craftsmen vs. imported furniture. The market I’m most interested in is the mid level, people just starting to move on to wanting nicer pieces. If someone wants Ikea then go to ikea, if you want a 15k book matched slab dining table go to the amazing craftsmen who do that… I’m after the West Elm / Create n Barrel market. A lot of those people want to support local handcrafted furniture but fully custom pieces are out of their price range. I can sell a bit cheaper because I’m not fully dependent on the income but I’m not taking business from a high end custom shop, I’m taking business from the chain stores and flea markets.

One addition to my shop that I hope will add value to my furniture is a branding iron with my logo so I can mark everything I make. I feel like it will add a dimension that what they own wasn’t just made by some guy with a wood shop but that they own a brand. Just like I don’t have a side table I have a Stickley drinks table that has a makers mark on the leg. Craigslist is piled full of nameless furniture for dirt cheap, even some quality stuff that’s cheap… You have to elevate your work.

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Baron Korf January 10, 2014 3:53 pm

Interesting. My shop is definitely my hobby, not a money enterprise now or in the near future. However, I did find myself clocking in/out of the shop just to see what the Christmas gifts I made this year were worth. Let’s just say I’d either take a bath on labor or I’d need a marketing genius to get people to pay the prices for me to make minimum wage.

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ben i. January 10, 2014 4:31 pm

don’t forget how important going through those mentioned phases are. I’m a “newer” woodworker, and so far i only make stuff for friends (and unfortunately working at a hospital i do get more request then i can keep up with) but I would rather not charge for my work, I usually don’t even charge for material unless if its something large and I’m going to have to drop a hundred or more to make it, that being said i haven’t had to do that yet. my reasoning is and i make sure everyone i make something for knows this is i take pictures of everything i make and I’m working up a profile for myself, and being newer i have no clue of the quality of the stuff I’m making. everyone that owns something i make, i check up with them frequently for wood moment, peeling finish, or other things i might of done wrong, which helps me out more then they know. granted I’m not trying to make a living doing this, but if i do at one point i will have the portfolio and the follow up to make sure I’m doing everything right. though making money is great i do think there’s value in every new woodworker to make it through this phase for personal development and growth. just my opinion i guess but i agree its no place to get stuck in and stay once you feel that your product is high enough quality to compete in the market

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Greg January 10, 2014 4:48 pm

There is a lot of discussions regarding pricing with competition in mind such as buying something at Ikea or some other additional location where the price is much lower than what we charge for our work. There is much competition in many areas of woodworking and a tremendous number of consumers that are vastly uneducated as to what all goes into every aspect of creating a custom piece.
One thing that I had not heard discussed is that of designing and creating work that can not be mass produced or duplicated by factories, ikea or any such sources that we compete against. Many consumers, when shopping compare a custom piece made by a craftsman to that similar piece they saw at (fill in the blanks________).
When a piece is totally unique and one-of-a-kind, like nothing else they have seen anywhere, the low end stores and websites where they shop will not have anything like it….

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Brian A January 12, 2014 7:03 am

I think these videos explain a lot of the issues of custom work. :)

http://www.youtube.com/watch?v=VBi4zroEj1w

http://www.youtube.com/watch?v=m9hIXiM-yrY

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John Kunstman January 12, 2014 9:13 pm

Hey Marc,

I am a full time Paramedic / Firefighter for my “day job” on my off days I like to tinker and build custom one of a kind pieces for what started out as friends and family. Well it has grown like a fungus in a dark wet room. I am now building for friends of friends and people I have never met before. This is a truely great feeling, I am actually having to turn down some builds due to time lines that they want it by.

My shop is a smallish 2 car detached garage 25 x 40 my equipment is on the cheaper end as far as power tools go. But my niche is more to the hand tools and this is what I sell to my clients. For an example, I just finished a demilune table made with mahogany and eucalypitus in a fan pattern. a true sand shaded fan in the center surrounded by a tinted birds eye field with natural birdseye for the borders. it also has tapered mahogany legs. The apron was built in the brick stack method with M&T and bridal joints attaching the legs. This piece was a christmas gift for my mother in law so the price is (priceless!). however. while making this piece I have been asked to make a second and a third each for a seperate client. When asked what I would charge, I said $3000.00, with a $1000.00 down payment. They seen the construction details. the use of the hand tools, the piles of plane shavings on the floor, and left me with check.

Do I feel I undervalued my work? Well lets break it down,
1. It will take me 3 to 5 weeks to build the piece and another week to finish it.
2. cost of materials wood, veneer, glue, screws, etc roughly $400.
3. cost of overhead, shop opperating costs, eletricity, shop supplies roughly $600

that will leave me with a net gain of $2000.00 for the month if I finish it in a month. thats $24k a year, which breaks down to $11.54 an hour if I work a 40 hour week. Is it too little? too much? for where I live its a fair wage expecially for a part time gig that I work when I want to work and I love what I do. Now that I have the sequence of building one down. I know where I be more efficient with my time and not cut an corners. and by building tables 2 and 3 at the same time I can double up on alot of the processing and quite possibly increase my hourly wage signifficantly.

The formula that I used is: (rounded up)
2000 (profit) x 12 = 24,000.
24,000 /52 = 461.54
461.54/40 = 11.54
I try to apply this to all of my larger projects sometimes its good, other times its not so good.

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- zman January 21, 2014 8:30 pm
  
  Don’t for get to include Uncle Sam’s share as well. At some point the tax man is going to wonder where you are getting all this extra cash from. Don’t get caught up in that.
  
  Reply
sheenyglass January 14, 2014 9:56 am

If you are a hobbyist who doesn’t rely on your work as a source of income, one of the best pieces of advice I’ve seen for an unsolicited commission request is not to start with a “fair” price, but to pick an amount that will leave you happy the commission at the end of the day.

Usually that will be pretty high, but people saying “no thanks” is ok. You’re not trying to run a business, you’re seeking personal satisfaction. If it feels onerous, that’s your gut telling you that you’re undervaluing yourself. Plus whether someone is shocked an appalled is a good way to sort out people who appreciate your craftsmanship from people who are looking for a deal.

Of course I’m not good enough to have much opportunity to put this into practice, so grain of salt and all.

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Marc M January 18, 2014 11:05 am

I too understand all of the issues, I hate having to charge friends. Most manufacturing companies see this as well. Hence why everything is made in China or the third world. But thankfully there are people out there that appreciate good quality built items. On the other hand My wife purchased two “custom” upholstered chairs for $600 a piece that were made in N. Carolina USA that are absolute JUNK. I’ve had to do multiple repairs on the chair frames that were mostly constructed of 7/16″ OSB, finger jointed pop. and staples. I might as well have purchased chairs from an importer and spent half the money for the same quality, or convince her to let me make us furniture and learn to upholster!

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Fiddler January 28, 2014 5:24 pm

This is always a problem, especially for the weekender. Normally we have an idea for a friend or family member which we are happy to make, just for the sake of making. As woodworkers we can be selfish, if it comes out poorly then uncle Bob will just have to wait for his easy chair table. However if it comes out right and uncle Bob’s neighbor wants one, you do the quick math on wood and general supplies but never take into account your wear and tear on your blades and equipment,time electric, etc. So you give uncle Bob’s neighbor the quote which is probably half of what it should be and he scoffs at it because he can get it on line for half that price.
Custom woodworking takes time and although a passion for many of us “students of wood” your time is worth money. If you build a quality item that you are proud which will last then you should never have to pay to sell an item. If you break even and your payment is in the end product then give it away for cost. You might build a customer base but new customers will want it for cost.
I have been charging family members and friends the cost of lumber plus 20% for years. If I am lucky enough to get though without any mistakes then little things like paper,glue and blade wear are covered. If I mess up I pay for the replacement lumber and then have some extras around for me…or the next project. Others get a lumber + 100%. Risk is higher and I feel compelled to do a better job, which means I pay for more lumber. Never going to get rich either way but it will buy a few tools here and there, plus I do it for me.

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LCW January 29, 2014 9:43 pm

I’ve just made the leap into full-time woodworking as a business. Until now, I’ve been one of those high-priced Executive types, a lawyer, and I’ve made more than a little money as a consultant to small business owners (mainly for start-ups and small businesses that were on the brink of bankruptcy).

The key word here is Business

If you sell your work, you are no longer a hobbyist. You are now in the business of ____ (whatever your niche happens to be). And like any business, you should approach it exactly like ANY business owner.

I started to write out my opinion/advice on how to value your products, but I quickly realized that it would be a full sized article (for which I am usually paid to write, I might add, LOL) So, instead, I’m limiting my comment to a few things that others of you mentioned:

The value of your time
It’s actually quite simple to determine how much to add into the price of an item for your time. Normally we call it “rate of pay” or “salary”. It’s YOUR business, so you decide how much you should be paid. So how do you decide? Think of it this way:

If you were working for someone else, how much would you expect your employer to pay you for the same work?

To answer that, you have to judge your skill level fairly. Maybe $12.00 an hour for a novice; $21.00 an hour (approx. $40K per year?) for someone who is “above average,” and up to $100 an hour for the absolute pro! (EX: I’ll be adding in $9.00 an hour for the work my 2 employees do for a project. They are absolute beginners just learning to sand properly!)

These are just suggestions to make a point, and pay rate will vary by location, etc. But, you have to come up with a fair number if you’re in the business of selling your work.

Another note: You need a minimum pay rate price, for those rare times and items that don’t take much time at all. It’s kind of like the plumber who has a minimum rate even if he only spends 5 min. to fix the water heater (simply lights the pilot light or something!)

Regarding competition: Products that can be purchased from places like Ikea are NOT your competition. There is no comparison, and no one should try to make a comparison. So someone says, “But I can get a table at Ikea for $800.00!” and your response is, “Yes, you can. And if that’s the style and quality that will satisfy you, then that’s your better option. I only make and sell heirloom quality custom made tables. The price point is so different because the product is totally different. It’s like the difference between a 1980’s El Camino and a 2014 Porsche. They are both vehicles, but there’s no comparison beyond that.”

Your competition is other hand-crafted wood furniture (or whatever your product may be) unless, as someone said earlier, you have a truly unique product made exclusively by you and no one else. In that case, you set the pricing standard because there literally is nothing comparable for comparison.

Tracy Hall: regarding some of your advice, I respectfully disagree. For example, you say to “guestimate” overhead costs like utilities. There is a simple, accurate way to measure those costs using a simple mathematical equation any of us can do, and avoiding the likelihood that the “guestimate” is too low (given people’s tendency to undervalue!) I also disagree that seeing this as 3 distinct / separate businesses will help anyone determine the value of their product(s). It’s hard enough for most people to get a handle on owning and operating ONE business, much less three different types of businesses, all by themselves. And, lastly, you said that “standard” work costs so much less than commissioned work because of the amortization that goes into the standard work? I’m sorry, but I don’t follow your logic. Why doesn’t the same amortization go into the custom work? (It should!) Commissioned work is usually more expensive because it takes longer, it may involve a learning curve, specialty materials, greater skill, greater expectations from the client, etc.

I’d love to write more on this subject, but I can’t do the topic justice without writing a full article. Interestingly, I will soon be facing the pricing problem myself in the next few weeks, so this is definitely a hot topic for me!

Great topic, guys. Thanks!

Lyn

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Ken November 23, 2014 6:11 am

My business model, though not perfect, offers simplicity, ease and flexibility.

When I create an invoice, the total price is derived from 3 things…

1. Materials
2. Labor
3. Misc. Expense

I don’t put a lot of thinking in to materials and labor. I simply go with the actual cost of the materials and the actual hours I put in to doing the actual task. I have 2 labor rates…semi-skilled and skilled and I may use my skilled rate for a semi-skilled task if a lot of “heavy lifting” or some “other factor” is involved. Again a reminder…in my business model, labor is actual work…not design, not planning, not trips to the home center or talking to the customer.

I speed through item costs 1 and 2 and that leaves me time to give careful thought to item cost 3 which is misc expense.

Misc. expense is basically “everything else”…profit, tools, truck, gas, phone, insurance, design, planning, etc., etc., etc. Examples of flexibility with misc. expense include if a customer is close to my home, he pays less and I will even charge extra for “aggravation” with this expense. A lot of the time, for my regular customers, I use a “daily rate” for misc. expense based on a 10 hour day from item 2 labor.

I do give thought to the “learning process” regarding what I charge for a task. If I spend “extra” hours doing something because I’m learning…I may reduce my total labor hours.

Finally, if for some reason I want to offer a bargain, I consider items 1 and 3 “hard” costs. Item 2, labor, is simply my time…and that’s what I can give away for example to a friend or relative that has helped me in the past.

I know my business model doesn’t provide “all the answers” but it’s a great place “to start”, gives you lots to think about and is easy to use and flexible.

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Don’t Undervalue Your Work!

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