Pricing your services

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Desert_Woodworker
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Re: Pricing your services

Post by Desert_Woodworker »

Leo wrote: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.
I like your advice and sharing of your experiences- makes the most sense to me. Also, I like that you added a laser. I wish that i could make it to your retreat, regrets.

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dealguy11
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Re: Pricing your services

Post by dealguy11 »

I generally charge a fixed price for most of the work we do, unless it's something like cutting parts from sheets, in which case I charge a per sheet cost plus a setup charge. I suppose I'm a "Joe Big Business Man" in TReischl's terms, but the reality for me is that I have a machine lease, rent, utilities, insurance, several payrolls. etc. etc. that I have to cover each month, so for me if it doesn't cover costs and and provide a profit, it isn't worth doing in my shop. I have a tremendous amount of respect for the hobbyists and small business people on this forum who do beautiful work, and sometimes I'll take on a low-margin job just because I want to do it. For me, though, CNCing is a business, not a hobby and if a job doesn't provide a decent return, then someone else can do it.

Things to consider in pricing, some of which has been covered already, include:

- Material cost, including waste - you should make some margin on all the material you use
- Design and setup time
- Machining time - both machine and operator
- Wear and tear on bits - bits have a definite life and you need to build replacement into your price
- Finishing time and materials
- Other overheads, which will vary depending on your shop
- Opportunity cost - are there other things you could be doing instead that would make more money? In my case, I need to spend a certain amount of time selling new work each month to keep the shop alive. The balance between working in the business and working on the business is tough to find sometimes

Taking all this into account, it makes no sense at all for my shop to take on a $30 plaque if that's all the market will bear and I turn this work down regularly - not because we can't do it, but because we'll go out of business if we do. The good news for pricing is that as you gain experience, the time component of many of these cost factors will go down and you can make money on smaller things. In addition, people in some regions are willing to pay for very custom work if they can't get it anywhere else. I may take on an elaborate custom carving and I will charge accordingly for it...if it takes a week to model then I expect to be compensated for that.

I guess it depends on your perspective here. If you're retired and doing this for fun and a few bucks here and there, then you'll price one way. If you are responsible for several people (including yourself) keeping food on the table and a roof over their heads, then you'll price like a business. If so, then you need to find a product niche where the pricing model isn't too badly distorted by folks who don't need to make a profit. Again, not putting them down...they are gaining value from their work in some way that is important to them. Just don't try to compete with them, and learn to say "No" with a smile when a job doesn't make sense.
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TReischl
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Re: Pricing your services

Post by TReischl »

dealguy11 wrote: I suppose I'm a "Joe Big Business Man" in TReischl's terms,
Nope. I was speaking of folks who contact someone like YOU or ME and do the whole "I am so important therefore you should do some serious . . . . because I might spend a few dollars with you."

Give ya a fer instance. I have some lettering on the back of my utility trailer "Dirty Deeds Done Dirt Cheap". Guy stopped me in a parking lot the other day, said he liked it, could I do something similar for his trailer? Seemed like a nice guy, so I said "Sure." He asked how much? I told him I would cut the letters out for about $4 a piece.

Then he went off about how he could go buy letters at one of the "craft" stores so much cheaper, blah, blah, blah. So I asked him "Well how come you have not gone over there and bought some, why did you stop me?" Oh, well, they do not have any good styles of lettering, plus he was not sure they would not just rot away because they were made from who knows what.

Soooo, I said, THAT is why you would pay me $4 a letter. You get the font you want, it will not fall apart and you will be all happy. Here it comes. . . .

"Well I think that you are too expensive!"

Answer? "And you sir are some kind of cheap."

Then he wanted to tell me about how he negotiated BIG business deals all his career......I cut him off and asked him "And what made you think I was trying to sell letters, is there a sign anywhere on my vehicle or trailer? Nope."

That ended that silly conversation.

BTW, Mr Deal !!!! I am one of those hobby guys who does not go around looking for work and doing it any price just to make a buck. That helps guys like you who are trying run a business.
"If you see a good fight, get in it." Dr. Vernon Johns

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dealguy11
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Re: Pricing your services

Post by dealguy11 »

Fair enough and we've all run into people like that. I appreciate that you're not trying to put us out of business! At this point, though, I've come to the realization that there are certain kinds of artistic work that, no matter how good we are or how much we love doing it, it is just not going to pay the bills. My approach now is adding artistic things to cabinetry as a way to add value (and price). People might be willing to pay a few hundred dollars more for a high-end cabinet, but not the artwork by itself.
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ohiococonut
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Re: Pricing your services

Post by ohiococonut »

TReischl,

I agree with both of your post.

This is a hobby for me which I've invested several thousands of dollars because I enjoy it and I will not let it become a business where it dictates how and when I have to make something.
I can appreciate those that do this for a living or try to make a living doing it but that's not for me, I do this for myself, period. When I retire in a couple of years it will still be a hobby and that won't change my way of thinking, it will just give me more time to enjoy it.

Granted, I've sold a few things simply because someone wanted what I had made or wanted something made because it is unique. I find it very difficult and almost despise putting a price on something I make. If someone is really interested, I state my price and that's it, there's no negotiating. If you could find it elsewhere you wouldn't be asking me. You want my services, you want me to create something unique just for you, you're taking time from me. And since I use mostly exotic wood it is going to be a one off and no one will have anything like it. I try to match the wood to the engraving or carving so they compliment each other and I see the beauty in both. Your not just paying for a carving, you're not going to buy this from a store, you're getting a piece of my life.

I look at it this way. "When buying from a craftsman, your buying hundreds of hours of failures and experimentation. Your buying hours, days, weeks and even months of frustration, and moments of pure joy. You aren't just buying a thing, you’re buying a piece of heart, part of a soul, a moment of someone's life. Most importantly, you are buying the craftsman more time to do something they are passionate about."

An older gentleman has a workshop next door to me and makes small chairs and furniture, etc. and occasionally wants names engraved on them. We trade work and don't deal with money and we're both satisfied. He's told others that have asked about engraving/carving what I do but has also made it a point to let them know that I don't do this for a living and may or may not make something for them. Some have called, some haven't, I'm good with that.
This is MY hobby and it has no schedule or deadline. My profit is the satisfaction I get from creating something whether it takes me 80 hours or 15 minutes and it even makes it to the table. I'm not a starving artist, I have no business and I have no competition. But, what I do have is a passion for what I do and you can't put a price on that.

This forum isn't only for businesses to learn or expand their trade, it's about the journey and passion of getting there. I've seen some exceptional work posted here, and in the short time I've been a member the one thing that stands out is everyone's willingness to help regardless of why we're asking.

I'm sure there are other points of view, that's just mine :)

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TReischl
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Re: Pricing your services

Post by TReischl »

Ohio, thanks...though it is a bit scary that someone agrees with me!

I have been going through all my old WoodSmith/Shopnotes magazines lately. When I come across something I want to build I put one of those little sticky tags on it. I have the pdf files for all the mags, so I print out those pages and put them in a box hanging on my shop door. That is so when I am looking for a "project" I do not have to page through the mags again.

WOW! The number of things I want to build is just plain HUGE. My better half has added some stuff in there she would like too.

So I have lots and lots of things to do. Then there is the whole "shop improvement" thing.

It is funny, the couple across the street are real nice. One of the other neighbors gave them a pair of rockers that they had let sit outside and of course the tenons on the legs have rotted out. She asked me if I could fix them. I said Yup, be happy too. That was six months ago. What I find funny is that her hubby has all sorts of time to play Nintendo or whatever. But does not seem to have the time to haul those two chairs across the street to my shop. I sure as heck am not going to go over and pick them up, LOL.
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Dclifton2
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Re: Pricing your services

Post by Dclifton2 »

I would slowly increase your prices to a point that you have just enough work. Don't want to give it away but don't want to run off business.
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Re: Pricing your services

Post by redwood »

Some great points here and from different perspectives. I guess I fall towards the middle, definately leaning towards the hobby stage. I feel Steve, the deal guys point because I was a self employed carpentry contractor for 38 years and my business required all the points that Steve brought up. Competition in a lot of areas, were areas I tried to stay out of.

Now I'm retired and don't really need the money, unless I live beyond where I expect to. I'm not sure it there is another CNC machine within a hour of me. The only other sign maker is a 1/2 hour away and he works out of a trailer on the main highway. He does great work with routers, by hand. I really respect that and I don't try to compete with him. In fact we are distant friends.

The majority of my signs go to my neighbors for free, a couple of realtors for fancy address signs and 3 restaurants that I make signs in exchange for free meals. I don't think that I am impacting anyone else.

As far as pricing goes, I think I'm well beyond fair and I certainly wouldn't do it if I didn't enjoy it or need to live off of it. By the way, my signs don't approach Leo's level, in quality or pricing.
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gkas
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Re: Pricing your services

Post by gkas »

TReischl wrote: I have been going through all my old WoodSmith/Shopnotes magazines lately. When I come across something I want to build I put one of those little sticky tags on it. I have the pdf files for all the mags, so I print out those pages and put them in a box hanging on my shop door. That is so when I am looking for a "project" I do not have to page through the mags again.
I'm now retired, and your schedule sounds much like mine.

I have a small hint for you. If you are printing pages from a pdf, you can select "print to file". That file can be another pdf. The good part is you can print selected pages. That way you can print one page of tips, or just the article. I split the files up into two or three directories: tips, projects, or cnc. I also print any particularly good threads from here into "Vectric Tips" and "Vectric Projects" folders. Also, when I save one of the shared projects from here, I also save a pdf of the thread it came in.

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TReischl
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Re: Pricing your services

Post by TReischl »

Thanks for the tip. What I did was just select the pages/page of the article I wanted and printed that.

This is working great btw. This afternoon I was "in between" bigger projects so I pulled out my stack of stuff from the door mounted in box and actually did two of the smaller shop tips.

For those of you who have not read those mags (WoodSmith and Shopnotes) they are really, really good. No ads whatsoever, understandable plans, serious and easy stuff, something for every woodworker. You can get all the back issues on a thumb drive for a very reasonable price.
"If you see a good fight, get in it." Dr. Vernon Johns

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Re: Pricing your services

Post by Will Williamson »

Then you have guys like me. Professional working in the top of their field.
I get the kind of high profile, high paying, prestigious, projects most craftsmen, dream about.
On a good day, we are making any where from 3 to 11 dollars a minute. Some times higher.
My base price price for doing sheet work is 40 to 80 dollars per sheet'
My cycle time is any where from 3 to 4 minutes a sheet to 20 minutes per sheet.
I have a seven position tool changer and 18 horse Becker vacuum.
My machine is set at 1640 IPM for G00 commands and 1200 IPM maximum for G01 commands
All my stuff is paid for. so If my machine sits a month, it does not bother me.
I'm 63 years old with 46 years in the trade.
And I have a complete mill shop to feed the beast.
I am a perfect example of the small one man shop, taking work from, some of the biggest names, out there.
I can do it better, faster. And since my machine is not tied up doing, repetitive low value work.
I jump on those jobs and the client is amazed, at my turn around time.
Thank you all for sharing, I value our common bond.
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TReischl
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Re: Pricing your services

Post by TReischl »

WOW! Just WOW!

Must be the building in Capac with the oversized doors!
"If you see a good fight, get in it." Dr. Vernon Johns

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