Three Ways to Price Woodworking Projects to Sell

– In this video I'm going
to give you three ways to price your woodworking
projects to sell. How are you doing, I'm Matt with 731woodworks.com, and on this channel, we build awesome projects with basic tools and I give out woodworking business advice that hopefully you can take and help you make money woodworking. Don't forget to comment
below for your ideas for the next video,
whether it be a build video or woodworking business related video. I read every comment, I
reply to every comment, and I take the best ideas
and make videos outta those. Don't forget to stick around for that power tip coming
later in the video. Typically what happens with me is, a new customer or a previous customer will send me a picture on one
of my social media accounts saying, "What would you
charge for this item?" And it's typically a
picture off of Pinterest.

Now, remember in the last video, when we talked about
selling woodworking on Etsy, how important Pinterest
is to drive traffic to your channel or your store. If you haven't seen that video, I highly suggest you go watch it, And I'll drop that link in the description below to that video. So a lotta times people will
get a picture off of Pinterest, they'll screenshot it and
send it to me and say, "What would you charge for this item"? Well the first thing I need to know is how wide, tall, and
deep that item is gonna be, because that's gonna let
me know how much lumber I'm gonna need to build that project. So if I know how much lumber I need, or a general idea of
how much lumber I need, the next thing I need to know is, how much that lumber is gonna cost me.

And so what I've done is I've
gone to my local lumber store and every time I buy something, they give me a printout
of what I've bought. It's got the price of each item, One by six by 10 foot is $7.25. I log that down in a notes
app and I keep up with that. No matter if it's a one by
four, tubafour, three by four, whatever I try to, or four by four, I try to keep up with that. And for your non-Southern speaking folks tubafour equals a two by four. And so I know the general
idea of how much everything's going to cost as far as materials go. Based on that, I can generally give a
decent price to them. So I know how much I want
to charge for the lumber, and then also how much I'm
just going to make in profit. You know you're going to
need to figure out how much labor is going to cost and
let's be honest with each other, if you're just starting out, should you be charging
a professional's rate? I would say no, because as
a beginner it's no different if you went to start a job
you've never done before, you're going to start at the bottom and you're gonna have to work your way up.

There's no difference as
a beginner woodworker, because you're just starting out, I don't personally think
you should be charging a professional's rate. I didn't do it, I still don't do it because I still don't
consider myself a professional building the type of
projects I'm building. So I would recommend
what's the minimum wage in your area? You're thinking, I don't
work for minimum wage.

That's okay, you got learn something too. That's worth more than
you're going to get paid for. So if you're learning
how to build something, you can replicate that process. The next time you make it,
it's going to be faster, and speaking to that,
you have to consider, if this is the first time
you were making that, you're going to have to consider that it's probably gonna take you a
little bit longer to build this, And if you estimate
your time at eight hours and you're charging $25 an hour for that, the next time you build it and it takes you six hours, because now you streamline that process, you know exactly what to do. You've written down all your cuts, so everything is streamlined. You know exactly how
to build this product, you're going to give
the next person $50 off because you were charging
$25 an hour last time it took eight hours and
now it takes you to six? That's a question you're
going to have to ask yourself.

So figuring out your labor cost is probably going to be one
of the most difficult things you have to decide. Personally, starting out, I really didn't even worry
about labor costs because, let's take the dog
kennel build for example. You see this dog kennel, I
had never built one before, I gave a quote of $350 and
that's what I sold it for. If I was building one
exactly the same way today, I would charge at least 550, But, because I charged the lower amount, I gained that sale.

I also gained the
experience and the knowledge of how to build one of those, now the next time I
can do a little faster. It was a cool build and I wanted to do it. So it's not always all about the money. So now you got your labor costs, you got your material
costs, you got to figure out about how long something
is going to take to make, and let's just say, you're
making a stove cover. On average, a stove cover takes
me about an hour and a half to two hours to make from start to finish. The actual build of the stove cover takes about an hour. I charge on Etsy $129 at
this time to build and ship, free shipping on that item. Material costs me about $25, give or take. So if I take $25 and if
I'm charging $25 an hour and it takes me two hours, that's $75. One, I still have about
$55 unaccounted for, overhead profit, so you
got to have some overhead built in for the use of your stains, the use of your screws, your
use of your electricity, sandpaper, clear coats, et cetera.

Also, on Etsy you have to
figure out your expenses because they charge you a transaction fee, They charge you ad fees, if
it comes from an offsite ad. So there's a lot of
overhead built into that, so you have to actually account for that. If you're displaying your items
in a store or a flea market, or somewhere where you're
having to rent booths, you have to account for that. Then of course, if your building woodworking
projects as a side business, you're in it to make
money, not lose money. So with that in mind, you need to make sure that
you're making some money, but you're not losing money. And at the same time, and if you break even on a new project, it's not the worst thing in the world. So to sum up that method
you've got material costs, overhead costs, labor
costs, and then profit added into all that.

So if you want to take that formula, it's kind of complicated, there's so many things involved in that, and it's just really hard to
figure out from the front end. There's another method out there that says you can do material cost plus 10% to account for any overhead and accidents, and uh
ohs, and cut too shorts, plus your hourly projected rate. Material costs $100 and it's
going to take you two hours and you're charging $50 an hour. That's $200 plus the 10%
for the material cost. So you're looking at $220
for the cost of the project. Not really a fan of that method because it leaves so much out there, but that's a quick method you could use. You know, it gives you a general idea. Some people even say
material costs times two, material costs times three
as a total of the project, but that doesn't really work because if the material costs me
$7 to build a bird house a and I times that times two, I'm only making 14 bucks
and it took me an hour to build it, it's not worth that.

So how does 731 Woodworks
come up with their pricing? I really don't do it like anybody else that I've seen the formulas
on or saw videos on, so here we go. I just try to be fair. What do you consider fair
and what I consider fair may be two different things. So it takes me in at two
hours to build a stove cover. If I sell it locally for $100, I've still got my material
costs of about $25 in that.

And then I have overhead costs in that. And then I have two
hours of my time in that. I just think that's a fair price. So how did I come up with that fair price? Usually I just reach up there and grab it and pull it out of the air. I don't have a set formula
based on any one thing. I don't charge a certain rate because I have other factors involved.

Again, gaining the knowledge
of building something that I've never built, being able to make a
video accounts for that. You may not have to worry about that, and I just want to have a
fair price for the customer and feel like that I've
done them a good service. I've built them something custom. They've got a good deal,
I've got a good deal, I made some money, they're happy. That's the main thing. So this is how we usually
come up with a price for our projects. How you doin? – Sup? – How you doin? All right so I got a customer
that wants a price, see that? That's pretty nice huh? What do you think I outta charge for that? – How am I supposed to know? You're the one that builds this? – Well, I mean, you're good at pricing. What would you pay for
something like that? – How much are you going
to have in lumber in it? – About maybe $75. – Okay, you gotta make profit? Paint, stain, pre-conditioner. – That's right.
– Time. – So what would you think, would be, that would be in a furniture store? – I would say that would be at least 350.

– Well, I was thinking like 250. – Okay, but are you
under selling yourself? – Maybe. – Okay, is that what you need to do? – Probably not. – Okay, you want the
customer to get a good deal, 350 is a fair price. – That's right. – 250 is a unfair price for you. – Okay, so 350. – Yeah, 450 would be an
unfair price for them. – Good point, thank you, love you. – I love you. – Typically, always. That's exactly how we price
the items that we're selling. I always ask her, you
know what time it is? It's power tip time. Proverbs 12:15 says, the way
a fool seems right to them, but wise listen to advice, and so always seek her
advice because I trust her, I trust her opinion, and I
think she makes sound judgment calls when it comes to pricing of items.

So it never hurts to bounce
ideas off of your spouse, or your friends, or fellow woodworkers. Shoot me a message on
Instagram or Facebook. I'm happy to answer those, and to try to help you come up with the price of your product. My main goal, when I started woodworking and I saw the prices of
some of the items out there and I'm like why are they
charging $800 for a small table? That's not fair. I want to remain fair, I want
to make some money for myself, obviously because I'm in
a business to make money, but at the same time,
I'm not in a business to make all the money off of one person. If you're fair to your customer, the customer will keep
coming back for more orders and generates you more sales, which people will be over at their house and see their products like, Oh my gosh, where'd you get that? Hey, I got that from 731 Woodworks, let me give you his name and
number, you holler at him, see what he can build for you.

That's going to gain you customers, word of mouth is going to
gain you more customers than anything else. If they're happy with your
products and they're happy with your service, people will do
business with people they know, be good to people, don't overcharge them just because you're the only game in town making handmade products. So the way we price things is
more based on how to be fair to people versus how to make the most money off of each product.

I've taken projects on to build
at cost for the experience. So I personally don't use
a specific formula for each and every item that I sell. So the ultimate goal, I guess, of this video is to tell you
to be fair to your customers. Don't overcharge them, try to
make a profit for yourself, sometimes you're gonna
undercharge for a project. That's okay, just up it for the next time somebody wants that item. Don't worry about if you
sold it to Joe for 250 and you realize that was undercharging it by about a hundred bucks and the next time somebody
comes along, they want it. They seen Joe's, they
know Joe paid 250 for it, just be honest with them and say, I wildly under priced that product. I should have charged him
350, I lost money on that, or I barely broke even on
that, whatever the truth is, just be honest with people,
they'll respect that. Thank you so much for watching. If you'll click that box right there, that helps this channel more
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