Pricing your services

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Pricing your services

Postby Norway 69 » Thu Apr 20, 2017 7:35 am

First of all: Please forgive me for misspellings and poor language, english is not my my native language. I know this topic has been discussed earlier, but I was'nt able to find it, and I guess this is an a topic that is interesting for a lot of you. I'm an optometrist by profession, but I need a hobby that is different from my dayjob, and some years ago I purchased a 4x6 feet CNC router for my workshop. Since then my woodworking hobby have slowly turned in to a part time job; Making wood signs. So far in 2017 i have had a busy woodworking year and the amount of orders are increasing. I have to streamline my woodworking business to keep up with the requests. Pricing have always been somewhat based on gut feeling. I always give a fixed price before I start on a job. Since I'm mainly making wood signs, today I price the sign by the length and by the woodtype I use (pine is cheap in Norway, mahogany is very expencive). I have been way off several times, when I have underestimated the amount of work in an order. I'm curious to know how you set the price for a job. I'm not asking for your rates, but the way you think when you set the price. Are you charging your customers for drawing and making drafts? Are you charging your customer by the hour, are you giving a fixed price or an estimate? And so on. Thanks in advance

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Re: Pricing your services

Postby mezalick » Thu Apr 20, 2017 10:01 am

My impression is that it's a guessing game at best.....but with some notes taken about the process, over several project, one may see a trend of profit or loss.
It's what I call "The business of the Business".

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Re: Pricing your services

Postby plcamp » Thu Apr 20, 2017 11:45 am

This topic is very subjective and many would say that you should be charging $75 to $100 per machine hour. Terrific if you are in the sign making making business, but what if you are a hobbyist creating small projects for weekend craft shows? You have to be realistic, shop around and see what any potential competition might be selling a similar for. The chance of selling a small wall plaque with 5 machine hours invested for $500 at a weekend craft show are at best 'slim to none'.

Be realistic, obviously you do have costs involved in the project, ie; electricity, a reserve for potential equipment failure, tooling, finishing supplies, and hand labor. The tricky part is finding the sweet spot whereas not to give the product away and overpricing it.

Good luck, this is not an easy task.

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Re: Pricing your services

Postby Leo » Thu Apr 20, 2017 12:54 pm

I am charging per square foot.

Simple 2D engraving is a lower price rate.

Complex 3D is a middle price rate.

Complex 3D and painted is at the highest price rate.

Figure out out how much effort is in each level and price per square foot accordingly.

As a "hobby" business, I like to get about $50/hr for my work.
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Re: Pricing your services

Postby newmexico » Thu Apr 20, 2017 1:47 pm

Chief_Sign.jpg


This sign, when cut, will sell for $30. It is 9"x12" and will be cut on half-inch Oak veneer.

In our area (Southern New Mexico), we are lucky to get minimum wage for our shop work. New Mexico, especially, in the South end of the state, is nothing more than a 3rd world economy.

The sad news (IMHO) is that we have to give away our CAD time just to sell a $30 sign. In the example above, we spent an hour drawing up the artwork, purchased the CHIEF symbol from an online vector art site and the FONT cost us $65.

We do our CAD in Adobe Illustrator which costs $50 a month rental from Adobe and the computer we work on cost $1,200.

IMHO, none of us are truly making good money. Like most farmers, our goal is to break even.

Once in a while, a customer comes along who recognizes our ability to do great artwork and orders a sign project at ANY COST. Now we are making some decent money. We get those kind of customers now and then (about 2 per month). To be honest, most of these "AT ANY COST" customers are RV'ers who travel North to South and back again each year. If I were to advertise, it would be in all the RV magazines.

There is a heck-of-a-lot of competition all around us. Hobby Lobby sells signs, WalMart too.

So, why do I make signs and stuff on my ShopBot Desktop ($6,000)? To keep this 66 year-old busy everyday.

If you can build a reputation for yourself, some-how, some-way, either thru competitive pricing or fantastic CAD work or over time, then you might be able to get higher prices. You need an "Edge" or something that makes you unique.

Hope that helps.
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Re: Pricing your services

Postby Rcnewcomb » Thu Apr 20, 2017 5:14 pm

When we started out it was by the hour (year 1)
Later it was by an estimate for time and materials, but we found it was very difficult to get more than the estimate. (years 2-4)
After 5 years in the business we switched to a fixed price that was all-inclusive.
By this time our niche market was architectural restoration pieces and V-Carve and bas relief in stone and wood, so the parameters of the work were well understood. We had a good understanding of how much time would be spent on design, machining, and finishing. We knew our costs for material, bits, and finishing supplies. We learned to add enough margin for broken bits and operator errors that might ruin the first attempt at the project.
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Re: Pricing your services

Postby Xxray » Thu Apr 20, 2017 7:26 pm

Tough to answer, much depends on your local competition, access/cost of materials ect.
I am not the type to make detailed breakdown of costs/time, I have a gut feeling when I know it is worth my while and when it is not.
I have turned down orders when I have felt insulted that people were talking me too far down on pricing, I try to explain look, I have so much design time here, machine time, material costs, finishing time and I even deliver the thing and they want me to do all of this to make $5 ?
Don't think so.
On the other hand, sometimes I'll flat out give something away for nothing, which not only shows the kindness of my heart but also my business savvy as I know very well a donated sign displayed in a bar/club/union office will drum up business for me, and it does.

No set price on items machine crafted from raw material into a useful item, they are worth precisely what you can get someone to pay for it.
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Re: Pricing your services

Postby Norway 69 » Thu Apr 20, 2017 9:20 pm

Thanks for all the answers, seems like you are thinking much the same way I am. Regarding "working for nothing" and people who don't understand that it is a lot of work: I have a minimum price at NOK 500,- (aprox $60,-). No matter how small a job is, I take 500,- plus post and package and VAT on top of that.
When I get a mail with a request for an offer, in a few sentences I give an outline of the price range we are operating in, and what kind of sign I think will do and tell the customer that "if this is of interest" I will make a draft and give them a fixed price. 2/3 answers that this of interest and I go further. I would say a little bit more than 50% of the inquiries I get, end in an order, and that is OK for me. Within the last 12 months I have raised my prices quite a lot, but it does not seem to lessen the amount of orders I get. So I figure I'd rather have a higher price, and put more time in each sign, than doing quick and cheap orders. Norway Is a small marked and I know "word of mouth " is an important marketing mekanism
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Re: Pricing your services

Postby TReischl » Thu Apr 20, 2017 9:38 pm

I have a totally different outlook. I am retired. When I first retired years ago I thought it would be good to sell some of my work. Then I discovered that it was getting in the way of being retired.

These days there are a bunch of characters out there that want to play "Joe Big Business Man" whenever they buy anything. They can go feed their overstuffed egos elsewhere.

I rarely make anything even for friends/neighbors/relatives on request. Catch that "on request"? That is because as soon as someone wants an item made, they figure they should manage it. So, things I make for friends, et al are gifts that I did not consult with them about. It is a lot more fun that way.

Interestingly enough, there are not enough hours in a day. I used to have more "free time" when I was working! So I sure as heck do not need some low paying "job" in my backyard.

In other words: The only fixed commodity is your TIME. Spend it wisely.
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Re: Pricing your services

Postby redwood » Thu Apr 20, 2017 11:58 pm

I'm sort of a retired carpentry contractor. On retirement I sold my house and moved to a area of cheap housing and laid back folks. As a gift to myself I purchased a CNC. Originally it was purchased to help cut furniture pieces. Unfortunately, this area is a little poorer then I am and I sold very few furniture pieces, despite their top flight construction a rock bottom pricing (to me). The week I received my CNC, I was offered a job at a local hardware store for minimum wage. I was new to the area and needed to meet some more people, so I took it. I then decided to try making signs on my CNC. The hardware store allowed me to display some signs without cost. It's worked out pretty well, but I don't really make much money per hour. I will never pay off the CNC or probably even the software making signs, but that's kind of OK, it's a good hobby for semi retirement.
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Re: Pricing your services

Postby Leo » Fri Apr 21, 2017 12:23 am

I think I have done well. I make money on signs, more than anything else. I make 3D signs and they get painted like professional signs do.

I made enough to entirely pay for Aspire, 51"x51"x 10" CNC router with water cooled spindle, and 8" rotary, PLUS now I am buying a 24x36 laser engraving machine(laser is not paid for yet, but I have jobs in the works) -- All fully paid for with money made in my small workshop. I do need to hustle sometimes, but I like that.

Depending on location - the money is out there.

I am pretty good at saving. Any money I make, even $10 goes into my hobby account. If I am saving up for something, I will NOT spend that money.
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Re: Pricing your services

Postby Xxray » Fri Apr 21, 2017 6:40 am

I get the feeling my CNC is paid for, have no way to know but I have sold an awful lot.
Some guys like to keep track of every cent, every minute, every kilowatt of electricity used, wear to bits ect. I am just the opposite and hardly keep track of anything. Individual projects sure, I'll calculate materials cost this much, labor this much, so I need to charge that to make it worth my while ,,, But the big picture, only god knows.

I am a splurge, impulse buyer, I can blow through $2,000 before I even know what happened. Before I know it, packages are arriving at my door and I think, Oh yeah, I ordered something thats right, half the time not even remembering what it was. I bought a $500 3D scanner for the ipad more than a year ago, took it out, looked at it, hooked it up for a few minutes, put it back in the box, and there it has sat, haven't touched it since. Went on a run with guitars too recently, bought 3 before I could stop myself, but there is a 4th I have been lusting over trying to resist.

Usually though its a tool that will make me more productive, or a gizmo that will make my life more enjoyable, thats what its all about.
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Re: Pricing your services

Postby mezalick » Fri Apr 21, 2017 11:02 am

The real way to know how to price your work is not to have any outside income,,,at all.
No job related paycheck, no retirement funds, no spouse ( or other) to help with the bills,,,,,then see if you can live off your own work....

That will speak volumes....

Selling one item for 1 million dollars is great, when it happens ,,,, but selling 1 million items for 1 dollar each should keep you fed.

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Re: Pricing your services

Postby T.R.MacMunn » Fri Apr 21, 2017 11:46 am

I make signs full time ..... I have a CAMaster CNC, a decent set of German chisels, lots of chisel writers ( lettering brushes), a new plotter & an old one I use for cutting sandmask. I'm in a very rural area in Canada, but I have about 130 million people within an easy day's drive. I specialize in dimensional signs .... about 50% of which are residential, since there are a lot of "summer" homes on the lakes around here.
I've been doing this full time for over 20 years & we all struggle with pricing..... mine has been fine-tuned over the years.
So, I have a base charge, plus an amount per square foot. Depending on the intricacy of the artwork, both the base & the sq.' can change. Other "value added" options, like gold leaf, carved appliques, etc., are added on as well. You have to think of it like your buying a new vehicle .... you have your base price, plus the packages, plus the extra options.
Design time has to be factored in there too .... and that's a difficult one anymore, since so many people have rudimentary design programs at home . Most don't give any value to the design, which is, by FAR, the most important part of any sign. A poorly designed sign is both ugly & useless, no matter how fancy your carving is .... but a well designed sign will look good painted, printed or carved, on any substrate.
The hardest thing anymore is getting a "design" deposit ....people won't open their wallets until they actually see their "name " on the design. So, you just have to build "unsold" designs into your overall pricing. I don't much like it, but that's the way it is here in the 21st century.
IF you only want to do multiples of the same design, prepare to carry an inventory & prepare to sell cheap.
IF you're willing to do "custom" work, your inventory will be materials you need in stock, cutoffs, paints, etc...
If you don't want to compete against everyone else "fighting for the bottom", you'll need to offer a warranty.
I don't want to post my formulae here, but the average price for my dimensional signs is about $750 US. I'm posting a couple of pics ....
Keep in mind, "cheap" doesn't guarantee sales. There are people with money, who will always have money. During the last recession in North America, luxury car sales actually rose!
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Re: Pricing your services

Postby TReischl » Fri Apr 21, 2017 3:07 pm

You guys all work too cheap!

I just finished the following project:

Bench2.jpg


And was paid exactly (1) German Chocolate Cake WITH coconut/pecan frosting.

Money, who needs money when there is German Chocolate cake to be had!

BTW, T.R., that is some REALLY nice work there!
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