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A Career in Furniture Making - Pricing
Wednesday, 16th February 2011 20:40 PM
Pricing your work is probably one of the biggest challenges for the aspiring designer maker. Price too low and you don’t make a living, too high and you price yourself out of the market and don’t make a living! There are two main elements to pricing; setting your hourly rate and estimating the hours involved in a piece. The hourly rate is applied to the estimated hours and the materials cost added to give the price.
The calculation of hourly rate is fairly straight forward. Work out your annual overheads plus your required annual income and divide by your annual productive hours. Let’s look at the elements of this calculation.
Overheads will include your premises costs (rent, rates, heating, electricity etc); also business insurance, advertising, stationery, renewals and repairs (sharpening, servicing and repair of machines etc), telephone, bank charges. As an example my over heads were £15,000 in a recent year.
Annual income will depend on what you are used to; and ex banker would probably need at least £100,000 to survive while an ex teacher may need £20,000. Let’s be frugal and assume £18,000.
Productive hours. Productive is the important part of this term. You may work 40 hours in a week but will find there are many distractions that stop you being productive. Talking to customers, servicing and repairing machines, talking to suppliers, doing the accounts, updating the website, writing a blog, sweeping the floor, talking on the phone to a man called Nigel with an Indian accent trying to sell your search engine optimisation, etc etc. In fact it is likely that your actual productive hours will be as little as 25 per week. Don’t forget that you will want some holiday in the year, let’s say four weeks. The annual productive hours can now be calculated: 25 X 48 = 1200.
Now we can work out the hourly rate:
(Overheads + Annual income) / Productive hours = Hourly rate
(15000 + 18000) / 1200 = £27.5
That’s the easy bit! Working out the hours to make a piece is the difficult bit. This is particularly difficult when you start out as you will be slow due to lack of experience and also will not have much information on how long you take on any given task. It is important to keep careful work records of all the jobs you do itemised down to individual tasks. In this way you can build up records of how long it takes to do things and refer to them when estimating.
Estimating is quite a helpful start to the making process. When estimating you think about the individual tasks involved in making a piece which is an important part of making.
I have a simple hall table which we make on my five day beginners course, let’s look at the tasks involved in making it and how long each task takes.
· Draw up rod and cutting list 1.5 hours
· Buy and collect timber 3 hours
· Cut and machine timber 3 hours
· Make jigs and templates 2 hours
· Mortice legs 3 hours
· Cut tenons 3 hours
· Taper legs 2 hours
· Shape rails 2 hours
· Joint boards for top 2 hours
· Assemble 1 hour
· Sand and finish 3 hours
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25.5 hours
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By applying the hourly rate you can come up with the labour costs 25.5 x £27.5 = £701.25.
Some of these costs would be reduced for subsequent tables as the templates and jigs would already be available. Batching the work would also reduce the times.
The materials costs can be derived by drawing up a rough cutting list and calculating the volume of wood required. For this table in oak the materials cost is £60.
So the price for this table should be £701.25 + £60 = £761.25.
The next problem is; how do I get the customer to pay that price? I think this must be the subject for another blog.
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Table made on my beginners five day course