The Business Of Handmade Furniture, Part IV

Pricing The Work

I am about to offer you a really great career opportunity. To realize this opportunity will require at least 3 or 4 years of initial training. You can get your training by taking night classes at a community college, going to an expensive private school, or working under someone who is an expert in this field. Eventually you will want to go out on your own. To do this you will need a work space and $10,000 in equipment. $20,000 would be better but let’s start modestly and then grow the business. Starting out will be tough but with talent and ten years of dedicated 60 hour work weeks, you could be making as much as $30,000 (USD) annually. Out of this $30,000 you will need to pay self-employment taxes (16%), income taxes, and health insurance. You will have to pay for your own vacation and there will be no compensation for sick days. Unless you raise your prices, your financial picture will be the same in another ten years. Great opportunity, right! It’s great because you get to be a furniture maker, congrats!

I think I have created an accurate picture of the “successful” custom furniture maker. I can’t be entirely certain, though, because when furniture makers get together they don’t like to talk about what they really make. They say things like, “I claim a lot of business deductions so I won’t have to pay so much in taxes”, or “Money is not everything. Doing what you enjoy is more important.” Actually, I think a lot of furniture makers make less than the figure I just quoted, but like I say, they are very quiet about it; so are the woodworking magazines, the trade publications, and the schools. What we really make is the elephant in the livingroom that everyone is too shy to talk about. How is it that talented, ambitious, creative people cannot do any better than this in business? The answer is pretty clear. We don’t have the courage to charge what we need to to make a good living. So, how much do we need to charge?

Over the years many people have contacted me inquiring about how they can become full-time furniture makers. These have included airline pilots, business executives, high tech engineers, military officers, and a Wall Street broker. I usually ask them how much they expect to be making after a few years in the business and the most common answer has been a six figure income or something close to it. So I tell them let’s “do the math”.
I usually take this coffee table as my example and “do the math” on it. Rather than detail every step of the process let’s just say there is time spent with the client, design work and drawings, sourcing materials, building the piece, finishing the piece, delivery, and book keeping. At the end of the process there will also be a messy shop to clean and tools to sharpen. All together I have about 110 hours in this table. How do I charge for it? Let’s figure a modest shop rate of $40 an hour plus materials and expenses. To put this rate into perspective, it is far less than what plumbers, electricians, mechanics, and most all trades people charge for their services. I took my lawn mower into a small engine repair shop to get it fixed and there was a sign posted on the wall that said $95 an hour plus parts. OK, I am obviously not as smart as those guys. I am just a humble furniture maker and $40 an hour is the rate I currently use to price my work. Let’s now do the math; it’s easy. $40 X 110 hours = $4,400 plus materials and expenses, which is about $800. This means I need to charge $5,200 for the table. That’s a lot for a coffee table, but that is what I have to charge if I want to make a modest living at this.

Let’s apply the same rate to a complex case piece like the dresser below which took 240 hours all together. $40 X 240 = $9,600 plus $2,000 in materials = $11,600. If I can keep my overhead and business expenses down, $40 an hour shop time will result in an annual income of around $50,000. If I charge less, I will make less. If I want to make more, I have to charge more. If I want a six figure income I will need to nearly double these prices. Fine handmade furniture is labor intensive to create and has to be expensive. But that coffee table and that dresser are wonderful works of design and craftsmanship. The clients who own them are very happy. It is exceptional furniture that is easily worth the money.

Pricing The Work And The Lies We Tell
The way I price prospective work is by building a piece in my mind and on paper, breaking it down into units of labor, determining how many hours it will take me to accomplish each unit until I have accounted for all the time it will take to build and finish the piece. I then add in time spent with the client, design time, time picking out and purchasing materials, and delivery. I then throw in a few more hours to cover mistakes (yes, I make them) and miscellaneous things I may have missed. I write all this out where I can see it on paper. When I add up all those hours and then multiply by my hourly rate and then add in the cost of materials, I am always shocked at what I will have too charge. It’s too high, I tell myself. They will never go for this! Then I start telling myself lies.

Lie #1: I over figured how long it will take. If I stay focused and disciplined, I will really be able to do it faster. That is a lie! When I was starting out an old cabinetmaker told me, “Figure how long it will take you to build a piece and then double the hours. That’s how long it will really take.” I thought he was joking, but as I got into actually building pieces I learned he was dead on. It always took twice as much time as I thought it would. Never convince yourself you can do it faster and can therefore lower your price. In reality, it almost always, without fail, takes longer than you estimate.

Lie #2: If I am very productive and put in longer hours, I can still price it lower and come out ok on the job. The truth is you will come to the end of the job exhausted and still poor. A friend of mine has a saying, “I lose money on every job I do, but I make it up in volume.” That just about sums up lie #2.

Lie #3: If I give them a good price now, it will lead to more work in the future. Never believe a prospective client who tells you this and never believe it from yourself either. You don’t need more work, you need more money. You are providing a special service and an exceptional product. Price accordingly! If you give someone a cheap price, they will come back again only if you offer another bargain.

Of course raising prices will usually narrow one’s market and we makers fear our businesses will suffer the result, but in the long run our businesses will suffer even more if we don’t raise prices. There is a fear factor we have to get over, the fear of people saying no, the fear of people turning us down, the fear of rejection. I have this fear, too, but the more people say no, the easier it gets and it frees me up to concentrate on the people who say yes. That’s right, there are good clients who understand and say yes, but you can’t find that out unless you step out and ask for more.

And there is more coming; more about pricing, more about find the right clients, more about marketing. Let me know if any of this resonates or you want to hear more.

You can also visit my website.



6 thoughts on “The Business Of Handmade Furniture, Part IV

  1. Excellent article Louis. I’m back in a shop again trying to make some extra money in “semi retirement” while also doing engineering consulting work.

    I will remember the part about “the more people say no, the easier it gets and it frees me up to concentrate on the people who say yes.”

    1. Very nice to hear from you Danny. I will be at the Texas Furniture Maker’s Show in Kerrville this weekend serving as one of the judges and putting on a conference about making a living as a furniture maker. Preparing for this conference has sharpened my thoughts on the subject. I am going to come back and revise some of these blog posts as I clarify my thoughts. Thanks for commenting.

  2. Louis, I am glad I found your website again. I am loving your blog here on The business of Handmade furniture. I contacted you a couple years ago, as I was trying to decide if I could start my own shop. You gave me some good advice and encouragement and some books to read which all helped me in my process of woodworking. Since then I have been living as a woodworker, but I cheat a bit. I fill in extra time between projects with handyman work, but I really enjoy being in my shop. I have a long way to go in learning this craft, but I am enjoying it along the way. This blog is just what I needed to read. Helps me to keep grounded on what to expect money wise. I am looking forward to the next entries.

    1. Hi Kevin, really nice to hear from you. It’s exciting to see you stepping out to pursue your dreams as a craftsman, and it’s ok to cheat a little! You are creating your own path. Went to your website. Your work reminds me a lot of when I was starting out. I learned joinery and using hand tools on a whole lot of yellow pine. Glad you like my blog posts. I hope to have something new up soon. All the best!

  3. Hi Louis. I read all four. I can definitely relate to most of that. The way I am able to come out ahead is by having a few employees and and using some plywood and melamine. I know that wouldn’t work for you, but for me it is the compromise I have to make to make enough money to be comfortable. Shane

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