Pricing

2 Simple Steps to Price Your Woodworking in the Sweet Spot

by Adam

This is another installment in the Pricing Your Work series.

Isn’t it just nerve racking trying to find the right price range for your work?

Too high, and people run away. Too low, and you’re looked at with an eye of suspicion.

It’s stressful, I know. There just has to be an ideal spot, somewhere, for your woodworking, price-wise. But why does it seem so hard to find?

You’re tired of guessing, you’re weary of wondering, and you’re absolutely nauseous from running the numbers over and over again. Where has it gotten you? Probably a few steps closer to massive indigestion and total hair loss, I’m guessing.

As you’re traveling the path to going pro here on the Journey, it hit me that there’s something I neglected to tell you that would take a lot, and I mean a lot of guesswork and stress out of figuring just how much to charge for your woodworking.

It’s not a complex formula, hidden trade secret, or ancient magic spell.

I’m talking about asking two key questions whose answers will tell you exactly where your prices need to fall. Find the answers to these questions, and you find clarity regarding your pricing.

Who else is making what you make?

Somewhere someone is in their shop designing and building something similar to you. It may not be exactly like yours, but it’s very similar. Why? Because you both are influenced by similar sources of inspiration, and because you share similar values, the work, or expression of those influences, ends up being very similar too.

Now, before you get all bent-laminated out of shape (did you catch that) let me explain that this is a good thing. Why?

Let’s say you want to start making reproduction 18th century Early American furniture. And for the sake of example, let’s also say that this has never occurred to anyone ever before to recreate this style of furniture. (I know it has, but we’re pretending here. Remember?) Now, before you start thinking this would be open season on hungry customers, I urge you to stop and think again.

If it’s never occurred to anyone to even start remaking this style of furniture, then more than likely, it’s never occurred to anyone to ever want to own that style either. Now do you see the problem? Yeah, you could eventually turn that into an advantage, but not after working ridiculously hard to convince people they wanted and needed to own that style of furniture. It’s doe-able, but it will more than likely burn you out before reaching success.

However, if you are entering a niche where people have been demanding reproduction Early American furniture, and the demand is growing so much that the current woodworkers can’t keep up, then you have a much better chance at making a great living filling the need and desire. No trailblazing, no convincing, just meet a small group where their desires intersect your abilities and furniture. Much easier. Trust me.

So, take a look around. Whether that means around the net, or around your immediate area, take a realistic look at who is making similar types of furniture and woodworking. These aren’t necessarily competitors, so don’t go looking to pick a fight or anything. You just want to get a firm grasp on what other people are making and why.

Also take a look around at related services revolving around your type of woodworking. Are there antique restoration services nearby? What about shops doing high end modern finish carpentry and specialized built-ins?

As you discover people that make what you do or make something similar to you, make a list of who they are, their contact info, and what similarities you two share in your work.

I like using Google Docs, but good ole’ pen and paper work wonderfully for this.

What you’re actually doing here, is getting a read on the demands for woodworking in your area or the area you want to serve. (Thanks to the Internet, you no longer need to rely on local demand to make woodworking your full time living.) Finding these fellow makers means you now have a terrific resource on what’s selling, where it’s selling, and also…

How much are people already paying for what you make?

As you’re discovering who’s doing similar woodworking as you, take a look at their prices.

If you’re on the web, you should be able to see all the prices right there on the web site. If not, email them, ask for prices, and remind them that they need to list their prices online (Tell them Adam said so).

If the people you found in the first step are local, why not pay them a visit and get a price sheet? Woodworkers are always thrilled to meet fellow makers. We’re a fantastic community in that way, aren’t we? I love that.

Also, as you’re checking out the related services around you, take some time to ask those folks what their customers are typically spending on furniture similar to what you’re making. Believe me, these people will know. Or at least, they should.

Go back to the list you made earlier, and put down the prices next to the woodworkers and service providers they correspond with. Get a good feel for their price range from highest to lowest, and make a note about what products and pieces are at each end of the spectrum.

Do you see any pieces that represent the type of woodwork you provide? Take a close look at the highs and lows of those particular prices. I find it helpful to write those out so I can see them apart from the others.

Now comes the realistic part.

Take a good look at you and your work. Consider your design process, woodworking methods, and finishing process. Look at it from an outsiders perspective. It’s very easy to downplay the value of your expertise and knowledge. It’s tempting to degrade yourself and your work and not believe you deserve to get paid what you desire.

But, that’s not you anymore. You’re past that selfish state of mind. You’re better than that now because you know your worth and you realize the value you deliver to your customers.

So looking at the price scale, where does your work belong in there?

Are you making pieces superior to what’s already being offered? If so, then maybe you belong slightly above the highest price bracket. Maybe you’re not quite the highest of high end with your skills, but you’re certainly not the worst of the bunch wither. In that case. find where you belong in the middle. But do that with the intention of going upwards in quality and price. Never find contentment just being in the middle.

Once you find a place to price your woodwork, I just bet you’ll have to raise your prices to meet this new found pricing sweet spot.

Like I said, you used to undervalue yourself. No more. Believe me, it’s better to go up than down. Besides, you now have proof right in front of you of how much you need to be charging. It’s right there in living color because someone else is doing it and people are paying for it.

Your last step is to change all of your previously posted prices in all of your media.

If you have brochures, flyers, price books, etc. go and change all of the prices and get things reprinted. Better yet, do away with all that paper and redo your web site to include prices and maybe even toss in a “Buy Now” button or two.

Finding that sweet spot for your woodworking prices isn’t as hard, frustrating, and torturous as you were making it out to be. It’s really just as simple as asking these two questions, and letting the answers do all the work for you. So, stop worrying, wondering, and guessing. Start aksing, observing, and succeeding.

So, is this a method that’s worked for you? Would you even want to go out and try this? What have I left out that you’ve discovered for yourself?

A Little Pricing Secret You Probably Overlooked

by Adam

In the first installment of the Pricing Your Work series, we looked at how adopting an hourly rate pricing structure is actually keeping you from making a better profit from your passion by becoming a slave to the clock.

In this second part, I want to reveal to you an often overlooked pricing technique that does indeed allow greater freedom in your work and keeps you from being a slave to the demands of the clock.

Oh, and it helps with the profit end of things too!

Are you charging for the process or the product?

When you use per hour pricing, you’re basically charging people for the process of making their furniture. Seems logical right?

We need to cover our costs and time. Yes, but you’re overlooking the end result.

The final product is a combination of your design expertise, artistic vision, refined skills, and the client’s desperate needs and fantasies. So, what you end up with is more than a table. It’s a collaboration of skill, desire, and need. So what you really end up with is an object that brings value to the customer.

Whether it was commissioned or a speculative piece, there is an inherent value that the final product possesses. It’s a value that occurs on several levels. So, when most woodworkers set out to price their work, they often overlook or outright ignore the end value that the furniture will have and provide.

How do you even begin to price this…value?

It’s pretty obvious this can get a bit foggy because we’re not dealing with the usual concrete steps that most woodworkers are used to.

So to begin to understand this value, you have to understand the one person who truly determines it – your customer.

You see, when people buy, especially luxury items like hand made furniture, they have price as a secondary concern. Actually most folks have it further down the list of importance.

What is at the forefront of the buying decision is what’s known as perceived value.

This is the value that the customer places on that beautiful piece of furniture. But the perceived value isn’t just about the piece itself. It comes from other factors like, the ease of transaction, overall experience with you and your work, and not to mention what your furniture can and will do for them.

So , where do these customers get the idea of perceived value? Guess what? It’s you.

It’s all in how you communicate.

Marketing is simple communication – communicating benefits and offering solutions in ways that really hit home with your ideal client.

Everything you do regarding your furniture and your business is a form of communication, so therefore it’s really a form of marketing.

Design, construction methods, wood species, finishes…these all are a part of marketing, believe it or not. And these areas that you think are just part of the process, are really areas that add benefits to your final product.

Perceived value is also based on the benefits of using and having your products. The customer has to see these clearly over and over in order for the perceived value to be obvious and worth their precious time of acquiring your pieces. That’s where you come in.

It’s up to you to communicate those benefits clearly and often so that the ideal customer sees you have them in mind. Communicating these benefits is what builds the perceived value of you and your work.

So now to the pricing. Obviously, the better you are at telling ideal customers about the benefits they receive working with you, the higher your prices can go…to a certain degree.

Just because perceived value is at the top of most customer’s lists, doesn’t mean price isn’t a factor. Your prices need to match the value people recieve and that can’t happen unless your work is up to the highest standards it could possibly be.

The worst thing that can happen is for a customer to become disenchanted with you and your work because the level of craftsmanship didn’t meet the level of price they paid. FAIL!

So when setting your prices, you have to have a clear understanding of who you serve, how you serve them, and how good your work is. It’s a gut check for most woodworkers because we’re famous for undervaluing ourselves…constantly. But, it’s worth the time to get very clear on your true value and worth as a craftsperson and stop selling yourself short.

You’re not being humble when you devalue yourself. You’re selfishly denying your customers, your business, and yourself the benefits and long term rewards that come from knowing your true worth and going out and getting it.

By taking a long look at the value and benefits your work provides, you can then begin to see where your prices need to fall.

I’m willing to bet for most of you, it’s higher than you thought (and if your first response to this is that your customers would never pay what you think you should charge, then you need to fire your existing customers and get better ones. But that’s a different topic).

As you can see, in order to understand how to price for value, you have to begin understanding yourself and your customer.

Gaining clarity on these two individuals opens up the doors for you to grow and fulfill not only the customer’s desires, but yours as well.

What overlooked value does your work bring to the customer? Have you been factoring that into your pricing?

Confused About Pricing? It’s Because You’re Buying Into a Lie

by Adam

This is the first in a series of posts covering the topics around pricing your work.

What’s the most confusing and painful aspect of woodworking?

Mentaly speaking, I mean. (We’ll not get into the physical pains associated with our craft.) I’m willing to bet that for most of you it’s the quest to disocver the answer to the ever-present question:

“How much should I charge for this?”

Pricing is one area that woodworkers can really get it all wrong.

Even with all the discussions, blog posts, articles, books, and forum threads dealing with this subject, we’re still seeing more and more people throwing their hands in the air out of total frustration and confusion. And with all these apparent discussions going on there still apears to be a lack of resources on the subject. We haven’t seen a book published on the subject in almost ten years.

Strange? Well, maybe not considering most of the advice being drolled out is irrelevant, outdated, and based on a big fat lie.

It’a a lie that keeps woodworkers from really growing and doing their highest most valuable work, while breeding complacency for just being active. And there’s a pretty good chance that you’ve been buying in to this lie for a long time.

Before we expose this giant falsehood, let’s take a look at what’s being passed around as the common pricing formula for woodworkers:

What you consider the end-all is really just a starting point.

Here’s a version of the standard answer to “How do I know what to charge?”

Shop rate  x  number of hours  +  cost of goods  +  15-30% “profit”  =  what I should charge.

Look familiar? I bet you’re using something very similar to this right now. I sure did when I first started out.

This is what’s widely accepted as the end-all pricing formula for anyone making furniture or selling related services. But, there’s a flaw.

It’s just a formula for covering your costs, not for making profit.

Now before I appear to rip this all to shreds, let me say that covering your costs is a very good thing. If you’re going to make a living selling your furniture, then you have to know your overhead costs, material expenses, and what your time is worth.

Using this formula will help you get a foundation for making sure your time and expenses get covered. But that’s it. That’s all it does. This isn’t a pricing structure that is designed to bring in real profit and make every pass of the plane and chop of the chisel a valuable action.

If you’re looking to make a living creating beautiful high end furniture or related work, then you have to come to a point where you no longer accept your time as anything less than precious. Every movement must produce the highest value and bring about the greatest of results. Each moment must be used on the most important work you could ever be doing.

An hourly based pricing formula like the one above, doesn’t allow for your time to be used on only the most important game changing tasks.

Instead, it holds you prisoner to the clock. Time becomes your master, when in reality, you’re the one who’s supposed to be controlling time.

In order to start making life easier on you and bring in profit that allows you to grow, you have to move away from a per hour pricing structure. Before doing that, though, you have to become aware of the un-truth that’s holding you back from living and working at your highest level.

Time ≠ Money For The Small Shop

You’ve heard the overused archaic saying, “Time is money!”

We all grew up hearing it, believing it, and praciticing it. Well, guess what? Time DOES NOT equal money.

This is one of the greatest untruths for the creative small shop woodworker that exists in society today.

The idea of time equaling money is based on old factory and mass production mentalities. You had a certain number of products to make and move and 8 hours of production time was found to be the most effecient for maximum results.

Now, if you’re reading this than most likely you’re a small independent shop with anywhere from one to just a few people doing the work. You create beautiful objects of distinction and provide unique services that can never be reproduced in mass quantity. Everything about you says high quality work with careful attention to details. And yet, you’re adopting a production mindset with how you approach your work and your pricing.

In reality, for a small woodshop, time doesn’t equal money. Time equals time. That’s it. Plain and simple.

It’s always going to be a constant struggle if all you do is try to squeeze in as many billable hours as possible in a day.You WILL NOT make money trying to beat the clock completing projects. You will only find yourself overworked, exhausted, stressed, and still grossly underpaid. Is that the life you envisioned having as a woodworker? So why are you still tolerating it?

The reason time does not equal money for the small shop woodworker is because your time is too precious and your product is too valuable to be sold at an hourly rate only.

What if you only had four hours at the most  in your shop everyday? How could you maximize that time so you made money? Is it even possible to do that?

If your income is dependent on billable hours, then no, it isn’t possible.

Your pricing is dependant on working “X” number of hours for “X” number of days a week. (For a lot of you that quickly turns into 7 days a week, doesn’t it.) If you stopped believing the lie that time equals money, then you free yourself to be able to do the highest and best work in a shorter amount of time. Did you catch that? Work less earn more. Yes, that’s what I meant to type.

Let’s say you did indeed only have four hours a day to work in the shop. Imagine trying to make a profit if you worked 4 hours a day at a certain amount per hour. Also, I would be surprised if you were even able to have all four of those hours be billable time anyway.

Shop cleanup, maintnence, fixing mistakes, etc all take away from doing the work that pays. Every second of that time needs to be devoted to the most imprtant work possible. The work that maximises your skills and talent to produce pieces of the highest possible value. Setting your prices by the hour simply wouldn’t allow you to get ahead in this scenario.

Freeing yourself from the lie of time equals money allows you to begin working on the most important life changing tasks and projects.

It gives you total control over your time and makes room for delivering the highest possible value in all you create and getting paid for that value. It brings you into the space to reclaim your time as your own.

It means you’ll never be duped again by society’s limitations on work and life.

So, what are your thoughts on time and money? Is there a disconnect in how you’re pricing your work and how long you spend in the shop? Is this simply the post of a dreamer?

Tell me all about it down below.

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