Whilst woodworking may be a passion of yours, it still doesn’t come without its struggles and hard work, especially for intricate pieces of work or large commissions.
If you’re just starting within this industry, one of the most difficult things is determining how much you should charge for your pieces of work.
You don’t want to overprice your work in case it scares off potential customers but you also don’t want to underprice your efforts as it could be damaging to your business if it’s a full-time gig but also undervalues the work and effort you’ve put into them.
Customers who buy woodwork pieces online will compare various competitors to try and find the best value, and if your projects and pieces land somewhere in the middle then you’ll have a better chance of making more sales and therefore more money.
This article will show you how to price your woodworking projects based upon several factors so you can be properly awarded for your endeavors but still keep customers happy.
Factors To Consider
There isn’t just one basic formula that forms the prices of your work and if we’re being honest, you could charge anything you feel is right for your work, you just might not make any sales.
Many factors will need to be considered when pricing your projects and we’ll go into them below. When you work on individual projects, it’s probably best to note down key things so you remember everything when you come to price pieces up.
The Cost of Materials
You’ll need to work out the cost of your raw materials to help base your prices off and not underprice your work. Make sure to add all the prices of all the materials you used for each price every time.
If you’re making a wardrobe and you use 50 planks of a certain wood, which cost $10 a plank, then it will cost $500 for the material of the wardrobe and therefore you’ll need to charge at least $500 for it when you come to sell it.
Don’t use the cheapest materials you can find as the quality of your work will be worse and customers may have issues in the future.
Make sure to factor in costs of doorknobs, screws, and bolts, etc for your pieces, even if they’re only $5 each time as these can begin to add up.
Read more: which woodworking projects sell best?
The Cost of Your Labor
Next, you’ll need to put a price on labor for projects. Some pieces may only take 4-5 hours to make whereas larger pieces may take days.
Try to come up with a reasonable hourly rate for your work which will hopefully leave you with some profit.
If you’re just starting, maybe charging $100 an hour is not the way to go, but if you are more skilled and talented then you charge a little bit more.
On average, $25-$50 an hour should be sufficient for you to make a profit but also leave customers happy.
Potential Overhead Costs
If you’re renting a workspace or tools to carry out your projects, then you’ll need to factor in these when working out your prices.
Tools, maintenance costs of tools/workspace, utility bills will need to be totaled up for the period of making each project.
However, you can go off an average to make it easier. The industry average is 13% for overhead expenses (yours may be higher) and to work out your overhead average, you have to multiply 13 (industry average) by the cost of raw materials for each project.
Calculating Potential Profits
If woodworking is more of a passion project rather than a major income source, then maximizing your profits may not be at the forefront of your mind. However, you should want to be rewarded for your hard work and also have enough money to keep your little business afloat.
You should take 20% (average profit taken of industry) of the total cost of materials, overhead costs, and labor to work out how much profit you’ll be making for each piece.
Selling and Marketing Fees
When working out prices for your pieces, you’ll need to consider the marketing and selling costs/fees that it costs you to get your projects out there to draw in potential customers.
Maybe you’ll be selling some of your pieces in a local store to reach a wider customer base. This is a great idea, however, the store or individual who owns it will want something in return for displaying your pieces and also using sales techniques to encourage buyers.
If you’re going to be selling your items on online selling platforms like eBay or Amazon, the site will charge an insertion and selling fee for hosting your pieces which can vary depending on your membership. This will be taken out of the total order amount when a buyer purchases something from you.
When you also factor in handling and shipping costs to get these pieces to customers, then you could be missing out on a large amount of money.
You can do the marketing for your woodwork projects yourself using tools such as Google, Facebook, or Instagram ads to entice customers. However, these will come at a cost and it’s something to factor in when finalizing your prices.
Other Things To Consider
If you’re going to be selling your woodwork projects primarily in a physical shop in your area then you may have to base your prices around what kind of area it is and what type of people live there.
For example, the cost of living in NYC is the most expensive place to live in the US regarding almost everything, housing, eating out, groceries, clothes, and transportation so you could easily get away with charging higher prices for your work as it is expected by the residents of the city.
However, if you did live in an expensive location, you’d need to factor in your cost of living as a factor when basing your prices, especially if selling woodwork is your main income.
Helpful Tip: If you’re going to do commissions for buyers then always take a 25-50% deposit regardless of if they’re friends or family. It will help cover the cost of materials and cover your back if they try to back out of the purchase later on.