How To Price Out Your Projects!

One of the most controversial topics in woodworking is how do you price out your project? It’s a topic most people deal with in private, people don’t want to broadcast the amount of money they’re making. But it’s topic that newcomers and clients alike would like to know. What are you charging for the work and what does it go to? In this article I’m going to discuss the details of pricing out projects. At the end of the article I’ll also provide a screenshot of an example quote I put together for this article. 

The first and most obvious factor that you need to consider when pricing out your project is your materials. The first thing you need to do when accounting for materials is to put the project together in your head by either making a 3D model on the computer or old fashion pencil and paper. By seeing it visually you will be able to account for your materials, and are less likely to overlook something. Once you’ve accounted for everything, make sure you also include sales tax for your materials. This is often overlooked and for the larger projects the sales tax adds up. The final thing in the materials category to remember is that going to get materials is something you need to consider. Whether you are going to Lowe’s or Home Depot or to a distributor, you’re going to spend a decent amount of time getting the materials. If you were to send an employee to get materials you’d pay them, so make sure you pay yourself, the employee, for going to get the materials. 

The next part of the equation is labor. Labor is one of the things that requires you to look in the mirror and honestly assess your skill set. If you’re a beginner, do not charge like you’re a seasoned pro. Charge for the value you’re providing. The better you get at your craft the more you should charge. Always try to think like you’re the boss, how much would you pay you? You’re a business owner, treat your labor as if it’s an employee. 

The next category is the fixed costs that are required for you to run the business. If you’re running a business you will have costs that are typically monthly or annual costs that are not part of the individual projects. A few examples of these costs are; rent for your shop, internet, gas, insurance, consumables (nails, screws, sandpaper), taxes, and more. These things are often overlooked and can sneak up on you and will make you wonder what happened to those margins you had built in? These things can add up and as mentioned above they are typically fixed so you should be able to account for them each month. How I work these into the estimate is by creating a line item called shop cost. I add up all of my fixed cost, divide it by the number of work days in the month (typically 20), and that will provide me with the daily rate I need to charge for make sure all of the bills get covered each month. Don’t skip this step!

The final thing you need to include in your pricing equation is profit. Why add profit if you’re already charging for labor? Because the business needs to make money, and you’re owning a business not your job. By including a profit in your price you are giving yourself some wiggle room incase something were to go wrong. If you were to get hurt, break something and have to replace it, need a new tool, or if you want to be able to go on vacation once or twice a year you need to include profit in your pricing. It’s typically to be around 10-20% that you will add on to the project. If you don’t include profit you are going to be constantly waiting for the next job to collect another check. This is not a greedy money hungry thing to do, it’s part of owning a business. 

Below is an example of how I price out projects. The most important part of pricing is delivering the quality product that you’re charging for. Take care of your customer and they’re take care of you!

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