Pricing items methods? - Woodworking Talk - Woodworkers Forum
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post #1 of 18 Old 11-03-2017, 08:39 AM Thread Starter
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Pricing items methods?

Now that I've started to make "real" items and not just jigs, carts and benches, my thoughts are turning towards actually trying to sell my made items at flea markets.

I was wondering if there are some guidelines or methodologies people used for pricing their products.

I understand of course, one can take the number of hours to build and multiply that number by ones perceived hourly value then add in the costs of the item to build - easy enough really. I keep a spreadsheet of costs for everything I make at the moment anyway.

I don't however, keep track of actual hours to make an item although that is one of my next tasks in my next project.

But is there more to consider?

Example: Do you add in incidentals to the materials costs (glue, sandpaper, screws etc.) or are they disposable costs since they can be absorbed into multiple projects?

I know so many of you are experts in wood working and your time value is significantly greater than mine, however what do you think would be a fair hourly starting rate for a novice - I'm thinking minimum wage is way too low for starting out.

Thanks as always in advance
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post #2 of 18 Old 11-03-2017, 09:34 AM
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Quote:
Originally Posted by new2woodwrk View Post
Now that I've started to make "real" items and not just jigs, carts and benches, my thoughts are turning towards actually trying to sell my made items at flea markets.

I was wondering if there are some guidelines or methodologies people used for pricing their products.

I understand of course, one can take the number of hours to build and multiply that number by ones perceived hourly value then add in the costs of the item to build - easy enough really. I keep a spreadsheet of costs for everything I make at the moment anyway.

I don't however, keep track of actual hours to make an item although that is one of my next tasks in my next project.

But is there more to consider?

Example: Do you add in incidentals to the materials costs (glue, sandpaper, screws etc.) or are they disposable costs since they can be absorbed into multiple projects?

I know so many of you are experts in wood working and your time value is significantly greater than mine, however what do you think would be a fair hourly starting rate for a novice - I'm thinking minimum wage is way too low for starting out.

Thanks as always in advance
If you are just getting started you need to add every little thing into your cost. Sometimes an item will cost more to make than you can possibly charge for it and you need to know this asap to make a decision as to whether to continue making that item or not. Then after a while adding up every little thing you will be able to look at a project and know right off what it would cost.
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post #3 of 18 Old 11-03-2017, 01:06 PM
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The hardest thing to value is your hours. When you build something to sell you have to be priced competitive to similar items that are for sale. If it takes you ten hours to build something by hand that someone else can build in 20 minutes using a CNC then you probably wonít succeed regardless of how little you value your time.

If you find the right item(s) to sell that canít be easily automated then you charge just about anything your market can bare.


In woodworking there is always more then one way to accomplish something.
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post #4 of 18 Old 11-03-2017, 01:25 PM
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Don't forget to add amortization of your equipment. That table saw won't last forever, and will have to be replaced eventually. Those turning chisels get shorter every time they are sharpened, etc. You will have to have saw blades etc. sharpened or replaced.

Also don't ignore the electricity, heat, insurance, and other "fixed" overhead costs.

Basically if you are doing cost analysis of a product for sale, nothing is free! Because everything you don't add into the cost, will diminish your profit.

My $0.02 worth based on having operated my own business three times in my life, one of those a "hobby" business, and one of those a million-dollar year business.
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post #5 of 18 Old 11-03-2017, 01:41 PM
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I think things like overhead and equipment is easier figured by hourly rate. You just naturally charge more by the hour in business than if you were an employee in someone else's shop. Then just getting started you nearly have to work for free in order to get known. It's really only after you get established you begin to make money.
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post #6 of 18 Old 11-03-2017, 02:02 PM
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I think things like overhead and equipment is easier figured by hourly rate. You just naturally charge more by the hour in business than if you were an employee in someone else's shop. Then just getting started you nearly have to work for free in order to get known. It's really only after you get established you begin to make money.
Except that you can't work for free for very long unless you have deep reserves.

If you don't make a profit, you will go broke.
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post #7 of 18 Old 11-03-2017, 02:29 PM
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Except that you can't work for free for very long unless you have deep reserves.

If you don't make a profit, you will go broke.
When I got started I kept a full time job. With running the business I essentially had two full time jobs for a couple years before I dropped my hourly job. It takes a lot more effort than you think to get a business going, especially trying to figure out what people will buy. I opened a booth in a flea market to sell from and the flea market happened to be an antique mall so I soon found out it was better to do repair work on antiques than make new products. At least the things I worked on had an immediate sale when they were completed.
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post #8 of 18 Old 11-03-2017, 05:59 PM
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A far as craft fairs go I had it explained to me once that you can make your items in a shop or a studio.

In a shop you add up all the costs, material, operating expenses, labor, etc. and come up with a figure that will either be way to low or way to high so you adjust it for the final price.

In a studio, you make the item, take a look at it and determine the highest price you can sell it for.
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post #9 of 18 Old 11-03-2017, 06:53 PM
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Think of what you would offer for it, then add 20%
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post #10 of 18 Old 11-03-2017, 08:43 PM
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Think of what you would offer for it, then add 20%
What if that isn't enough to pay for the materials? Then what, lose money on every piece? Don't make/sell the product? Find a different market or marketing approach that allows you to charge more?

I prefer the latter.

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post #11 of 18 Old 11-04-2017, 10:24 AM
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I think it also depends on how quickly you want (need) it to sell. If you can hold onto it longer, you can charge more. If your finances or space is such that you either need the money more quickly, or don't have the space to store the stuff, then price it lower so it sells more quickly.

I'd try to see what the selling price for similar stuff is, and price mine a little lower than that, to try to get people to choose mine over the competition's.
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post #12 of 18 Old 11-04-2017, 11:32 AM
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I was in marketing for 30 years. Trying to make production make items the market wanted rather than what was easy for them to produce. Then we had the salesforce wanting the lowest price for everything. I had to discontinue some products because we had been selling them at a loss for years.
Once the factory workers were struck down by flu and we had to use a contract packer. He was cheaper than what our production wanted. I had to tell the relevant manager that we could not make a charity of our business. We had to make healthy profits and then we could use some of those profits for charity.
I believe this was a Carnegie policy.
The problem with British industry was that it was production orientated. The Japanese were basically marketing orientated. EG the motor cycle industry. A woodworking example is between expensive joints and pocket holes.
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post #13 of 18 Old 11-04-2017, 12:12 PM
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I was looking into this a lot recently as i would like to start making my own furniture at my house and wanted to have pricing on standby in case anyone asked me if i would sell it. The best i found and way that I think i will be doing it is to track materials as best as possible if you have a lot of specific hardware then include it in the materials if it is a bit of glue here and there you can try your best to track it but overall I will just add markup to materials. End formula i found on Rockler somewhere is this:

Material cost + Hourly rate * hours worked = Baseline
Baseline *1.15 = Baseline + Overhead (coverage for utilities, wear on tools, incidentals that you may not track well in materials (like glue and such))
Baseline * 1.25 = Baseline + Overhead + Profit (Profit is just if you think you will want to expand if you dont really care about that then dont include it)

I made a little excel sheet for myself that I plan to use to see how this works. I imagine i wont make anywhere near my hourly rate for the first while as products will take me longer to build than they "should" but I will at least know if I can make some money.
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post #14 of 18 Old 11-04-2017, 03:41 PM Thread Starter
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I was looking into this a lot recently as i would like to start making my own furniture at my house and wanted to have pricing on standby in case anyone asked me if i would sell it. The best i found and way that I think i will be doing it is to track materials as best as possible if you have a lot of specific hardware then include it in the materials if it is a bit of glue here and there you can try your best to track it but overall I will just add markup to materials. End formula i found on Rockler somewhere is this:

Material cost + Hourly rate * hours worked = Baseline
Baseline *1.15 = Baseline + Overhead (coverage for utilities, wear on tools, incidentals that you may not track well in materials (like glue and such))
Baseline * 1.25 = Baseline + Overhead + Profit (Profit is just if you think you will want to expand if you dont really care about that then dont include it)

I made a little excel sheet for myself that I plan to use to see how this works. I imagine i wont make anywhere near my hourly rate for the first while as products will take me longer to build than they "should" but I will at least know if I can make some money.
+1 this!

Good stuff - thanks for the formula which is what I was hoping to find.
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post #15 of 18 Old 11-04-2017, 03:46 PM
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Think of what you would offer for it, then add 20%
What if that isn't enough to pay for the materials? Then what, lose money on every piece? Don't make/sell the product? Find a different market or marketing approach that allows you to charge more?

I prefer the latter.
If you know the price that you'd offer someone else is below what the materials cost, well, there's a word for that but its not appropriate for polite company...

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post #16 of 18 Old 11-04-2017, 03:54 PM
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I would add an overhead cost to the item which would include: use of equipment (everything wears out over time and must be repaired or replaced), power, light, travel to obtain supplies, shipping, packaging, handling, advertising, book keeping, office space, office supplies, expendable supplies, design time, etc. Look at this as a business.
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post #17 of 18 Old 11-04-2017, 07:16 PM
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The best advice I can offer is to time yourself from start to finish.
You will most likely have receipts for almost all your material but your time spent should not be a guesstimate.
To make money with woodworking I have always thought it best to build multiples of the same thing. Pick out a project and make 12 of them for instance. You will get proficient, you will use any set-ups or jigs over and over and you will eliminate a lot of waste.

If you don't have time to do it right the first time, when will you have time to do it over?
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post #18 of 18 Old 11-04-2017, 09:24 PM Thread Starter
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The best advice I can offer is to time yourself from start to finish.
You will most likely have receipts for almost all your material but your time spent should not be a guesstimate.
To make money with woodworking I have always thought it best to build multiples of the same thing. Pick out a project and make 12 of them for instance. You will get proficient, you will use any set-ups or jigs over and over and you will eliminate a lot of waste.
+1

Agreed - I've started doing this with my current class project.

The tables are very easy to make and mass produce. The jigs I setup of the class I've made as permanent jigs. Just have to get enough decent wood.

My local box stores don't seem to have any quality boards (uses 1x3's and 1x2's) - they're all twisted or broke so I have to wait for them to restock.

I've considered ripping my own boards out of larger, but afraid that will create too much waste as my TS fence seems to keep falling out of tune by 1/16 to 1/32 - gotta figure this one out
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