Costing a job/project out

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Rob Marman

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16 Feb 2006
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Sheffield, South Yorkshire
I'd be grateful if anyone could supply information regarding the best way to cost a job or project out for a customer. I've heard different ways of doing it but whats the fairest way for myself and the customer. I am not a trained carpenter or joiner but have been making things for some years and I am wanting to sell items at a relistic price. I work from home and use a workshop set up with mainly light trade use machinery. Tia, Andrew
 
Welcome to the forum. The question you ask in part, has been discussed quite a few times before. Its well worth having a look at the "search" button and trying a few different terms out.

Things like

professional
payment
pay
cost
costing
price
pricing
etc etc

Should throw up some juicy material!

Adam
 
Myself i work out the materials + 15% ( i get a 20%+ discount at the timber yard anyway so the customer still gets discount ) Then i work out how long the job will take and what i want per day . I charge £50 per day more if im in the workshop ) Tot it up and theres the price . Sometimes it takes longer sometimes not . All my jobs im asked to do so my price is my price , not sure how id go about pricing something ive already made to sell .
 
Do you guys then charge for fixings etc. as well?

I'd imagine you would charge for a specific latch or hinge, but what about ordinary screws?

I've been told at college that if you charge someone for a pack of screws or nails you're supposed to hand them your leftovers as part of the deal... :eek:
 
What I have been doing myself, is costing things out almost to the screw! I devised a sheet in exel and costed everything out by cost per unit. That bit is relatively easy, its what to charge for your time I find more difficult to estimate. Someone said to me you should work in threes - if something costs £10 to make you add another £10 to replace it and another £10 for your time and charge £30.
 
Oswaldo!":vqig9dwl said:
I've been told at college that if you charge someone for a pack of screws or nails you're supposed to hand them your leftovers as part of the deal... :eek:
Only if they're specifically listed on your billing. Normal practice is to allow an overhead to cover fixings, etc - except in batch manufacture where every single item (down to the last screw) needs to be costed.

Rob

Don't forget to add in wastage factors; for example burr walnut veneer has a wastage factor of 200 to 300% (yes, that's right you scrap twice to three times as much as you get onto the piece) whilst CNC machined raw MDF typically has a scrap rate of 1 to 3% (completed pieces, higher when routing very small components) with a sheet area wastage of 10 to 50% (surface area unused or routed away from a given sheet). There is also the thorny issue of fixed and variable overheads to deal with. And finally, if you are making to sell I trust you have between £2m and £5m product liability - not to do so might cost you dear in the long run. Overheads are very difficult to calculate in the short term - they are one of those things which need to be constantly reviewed and updated, as are profit margins.

Cost accountancy is a subject in its' own right and I know it took me nearly 2 years of running to get my costing formulas and overheads down pat.

Scrit
 
Craft worker insurance doesn't cost much, but £2m is pretty much the minimum these days. If you are doing toys I'd strongly recommend going to the higher figure - and then you'll have to consider things like the Toy Regs., etc which may apply.

Scrit
 
Rob Marman":3tg5wv58 said:
What I have been doing myself, is costing things out almost to the screw! I devised a sheet in exel and costed everything out by cost per unit. That bit is relatively easy, its what to charge for your time I find more difficult to estimate. Someone said to me you should work in threes - if something costs £10 to make you add another £10 to replace it and another £10 for your time and charge £30.

Rob,
It's quite simple really, Just think of a figure, then double it, and then never ever tell anyone how you arrived at the final amount :D
 
It also depends on where you are selling, shops have a price at which they think something will sell at. It can be hard to make a profit on small items.
I tend to use an allencompasing rule of thumb which works fairly well, its 3 times the material price, which is your rule of 3's

Bean
 
I find my prices for labour are near to the cost of material (except mdf) maybe im to cheap :cry:
 
Bean":ds1qfo5o said:
I tend to use an allencompasing rule of thumb which works fairly well, its 3 times the material price, which is your rule of 3's
Depends on what you're making. Carved products require a lot more labour than anything else, veneered ones tend to have high raw materials/wastes costs, etc. I agree that for general commercial practice it works well in many instances - but it's more useful in joinery than cabinetmaking IMHO

Scrit
 
Its a difficult one and quite personal. Are you keeping a timesheet on projects? If not then you'll not learn how long it takes to make a piece and won't know how much to charge out. Think about how much you would have to pay someone to make a piece (and then step into their shoes).

One of the dangers in the early days is keeping an appropriate work pace up if your books aren't that full. Imagine they are and work at that speed if you can to be more realistic about your daily capacity.

On new stuff I come at it two ways - bottom up ie materials + time + other overheads and top down - what do I think it could sell for/ worth. Ultimately if you are a sole trader its up to you how you divvy up the return - call it mark up on materials or labour or variable overhead costs - makes no odds to the taxman - its all taxable! I have now worked out a couple of linear rates (Aragorn's advice a year or so ago) which allows me to quickly cost up a job and sense check a figure with the client. I'm rarely more than 5% out when it comes to the detail.

Basically the more you do the more you'l' be familiar with your efficiency and financial needs. Scrit's right - I reckon its a good couple of years to do it quickly but if you are careful then you'll be fine.

JFC":3m5pc47u said:
I find my prices for labour are near to the cost of material (except mdf) maybe im to cheap

Jason - I think you may be either very quick or very cheap! I would estimate that most of my work is 65/35 or 75/25 labour/ materials. From what I've seen of your work I don't think you should be selling yourself short.

Oswaldo!":3m5pc47u said:
I've been told at college that if you charge someone for a pack of screws or nails you're supposed to hand them your leftovers as part of the deal...

Sometimes they do talk rubbish. Scrit's right - its only if its specified. I don't don't tend to detail much - not for any underhand reason but simply because there is no point. Clients have the drawings and they know what hardware etc is agreed so detailing fixings is a waste of time and paper. The only things I tend to leave behind is tins of special mix paint or an overordered handle that probably won't get used elsewhere. I'd love to know what the lecturer thinks is the value in that.

Rob - what sort of stuff are you thinking about making? Do get Insurance - £2m cover costs me c£25 pm and for peace of mind its definitely worth it.

Cheers

Tim
 
earning money from working at home is always difficult.
not least because the tax man will get you, these days even more
so than before, he chases people who go to car boot sales,
and even those who buy special number plates, so you have to allow for that in your costings.

you can drive a bus in london, and get £8.00 per hour with no overhead costs, so you should think about that as a base line for the minimum labour charge. i know you enjoy making things, but you have to be realistic.

everybody has given good advice, but forgotten the most important advice which is that practice improves your ability and capability, so sometimes things are easier to cost than others.

you need to keep a tight handle on the time you are taking to make something, be pessimistic rather than optimistic to ensure that you actually charge for the time you have actually spent.

also you have to replace your tools or the consumables thereof, and how do you cost that?

finally the old story.
woman goes into a woodworking shop in america,says to the carpenter, i love that chair, how much does it cost he thinks and says 75 dollars, so she says i want twelve, how much, he says 1500 dollars, she says that's way over the cost of 1 he said, you're right, but one is fun, 12 a pain in the a**e.

aim for the highest price you can get, it gives you more time to enjoy yourself.

good luck
paul :wink:
 
Agree with a lot of what has already been said.
I charge £100 per day for my labour costs,more if extra staff need to be brought in(Getting on a bit to lift 10ft cabinets on my own).Generally I write everything that will be used before the job is started and add to it as the work progresses, everything from glue to calls to the client are included and then multiply material costs by three. This may appear odd but clients often change their minds and as I allow them into my workshop to see work in progress add ons are not unusual. If a client wants an absolute price before work starts you must know your market area and charge accordingly i.e Mayfair will pay more than The Old Kent Road. Just Monopolising, Damn wish I hadn't said that :oops:
 
I will probably repeat a lot of what has been said before but here goes, I only do jobs that fall into the following criteria 1. I want to do it 2. I have the time to do it 3. the customer has not got on my tabs to much :lol: . I tend to get all my work through word of mouth and repeat customers but basically it just a hobby in the evenings and weekends. The pricing method I follow (and remember I don't have to make a living from this) is

Cost of materials + 5-10% (there is a very handy wood pricing program in the sticky's)

Time at £5 an hour (give or take as you have to work out what the item is worth to the customer)

An additional charge which is dependent on what I'm making which is to cover the hidden costs such a glue used drill bits that get broken fixings etc this can be anywhere from £5 up remember it it the hidden costs that soon add up so don't under price it.

I may also add an extra charge if I don't fancy the work etc.

But remember even though this is a hobby they are buying you and your time so do not under charge people as it only dose a dis-service to you, your skills, and in the long run the professional in the trade who’s prices have to go to go down to compete with you.

Also think about registering with the tax office as a small earner even if you have a full time job as you will be able to off set losses and the VAT on purchases against it and it keeps the tax man happy (I know I should not live with an accountant)

Simon
 
This is an interesting thread particulary since i will be leaving college in a year or so, so i will be having to increasingly think about these issues. It's great to get info on how people go about running there work.
Could i ask how many people rent workshop space and how many work from shop space at home. Is it easier or harder working from home because at the moment thats where all my equipment is setup. Iknow at some point in the future i will have to rent a space.
Anothere question how did you get your first cutomers? Did you have to shell out for advertising or was it through friends and family and word of mouth.
very interesting thread
thanks
 
srs":3jbah6tg said:
But remember even though this is a hobby they are buying you and your time so do not under charge people as it only dose a dis-service to you, your skills, and in the long run the professional in the trade who’s prices have to go to go down to compete with you.

So why are you charging your time at less than minimum wage then! :roll: :roll:

Cheers

Tim
 
bad_hypertension":2c15b6g9 said:
Could i ask how many people rent workshop space and how many work from shop space at home. Is it easier or harder working from home because at the moment thats where all my equipment is setup. Iknow at some point in the future i will have to rent a space.
I rent workshop space, but as I make kitchens I need a fair bit of space, and I don't have enough where I am at the moment (about 900 sq ft and another 700 sq ft storage).

bad_hypertension":2c15b6g9 said:
Anothere question how did you get your first cutomers? Did you have to shell out for advertising or was it through friends and family and word of mouth.

I started with cards in shop windows, but now I spend significant amounts on advertising.

John
 
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