How Much Should You Charge for Your Custom Furniture
One of the toughest things a custom furniture maker has to do is to put a price on their work. It’s a bit of fine line. We are makers, and we like to make, but we need to do so profitably, or we won’t thrive if we are making a business out of our passion.
Making a handcrafted piece of furniture is an internal personal creative process, but pricing it for sale is about external business process. The more you understand how the handcrafted furniture market works and where your work fits into the big picture of custom work by individual craftsmen and women, the better prepared you will be to price and sell your work confidently.
If your prices are too low – You won’t make enough money to stay in business. You risk running a loss because you don’t have enough money to pay for your marketing. You may also inadvertently give the perception that your products and brand are cheap, poor quality, low value, bargain buy.
If your pricing is in the middle, you won’t make enough money to grow. You will always be creating, selling, creating, selling, but never breaking out of it to create more and sell more because you don’t have enough money for more.
If your price too high, you risk alienating customers. You might get a sale now and then, but you are always thinking about when your next sale is going to be, because your work is not priced for your market.
Many factors go into the final price, and you have to be able to demonstrate that your prices are fair and reasonable. – which is what makes it difficult – but there are tools, like this custom furniture calculator, that can help you do a better job.
Before you dive into the spreadsheet, you need to do some homework.
Your first task is straightforward information gathering. Here are the things you will need to know to use the furniture pricing calculator.
1. What is your hourly overhead cost?
If you don’t know what your overhead rate, is you might want to take a look at some general definitions plus there are also plenty of online tools available for you. Like this one Overhead Calculator from Prime Estimating and Software
2. What is your hourly rate (what do you pay yourself or your helpers per hour)?
3. What is the board foot price of the lumber you will be using?
4. How many board feet of lumber will you need?
5. How many square feet will you need to finish and the price of the finishing products?
6. How many hinges, handles, drawer glides, etc. will you need and how much do they cost and how much do you need to mark them up.
You will also need to have a good understanding of how long it takes you to do particular tasks – like milling a linear foot. If you don’t know, set up a series of time trials for yourself, or at least start timing yourself on jobs you are doing now. You will need to have a good understanding of:
– How many linear feet can you mill per hour?
– How long does it take you to set up and test cut each type of joint (a dovetail might take you longer than a lap joint)?
– How many linear feet can you sand and finish per hour?
How Much Profit Do You Need/Want?
After you have paid your tangible costs, helpers, overhead, and paid yourself: the business (even if it is just you) still needs to make a profit. When you are just starting out, this is difficult to do. Initially, the goal may be just to break even. Over time, you should be growing enough to pay yourself a salary. However, remember that a salary does not equal a profitable business.
Custom Furniture Calculator
Once you have all these numbers, you are ready to feed them into the calculator. You will need to open up the file in Excel to use it – we’ll send it in email. It is fully editable, nothing is locked and you can adapt/change it to your particular needs, but we recommend that you start by changing the green highlighted cells.
We want furniture makers to thrive so please share your thoughts and comments with us!