A potential client asked me if I might give him some ideas to furnish his office - desk, standing workstation, possibly a credenza - all in solid wood. He has tired of the standard fare.
I have limited experience in negotiating an agreeable price for custom work. Is anyone willing to share their process?
I am thinking about how to ask for a budget, what to do when the budget is too low, and particularly about how best to estimate the amount of labor it will take me to design and build a one-off piece which does not follow a well-worn production path.
Pricing custom furniture pieces is a challenge. I usually take a guess at the time involved based on other pieces I've done that have some similarities. I figure in materials and profit, then look online for prices of similar work from other custom builders, and see where I'm at. My experience is that the highest prices are too high, and the lowest prices are too low, so if my estimate is around the middle somewhere, I'm in the ballpark. Custom furniture pieces can be a crapshoot to price, so you have to figure high enough so that even if you underestimate your labor, you don't take a bath. If your customer starts pulling out prices from furniture manufacturers, you might as well just walk away, because you can't match it and make anything.
Thats always a tough one , the few times I have asked for the budget I did not get it . Maybe another approach would be to straight out ask about how much they want to spend on this project . If they say $1500 and you say $15,000 then you know .
Why spend time designing something out of the budget ?
I like the term " design with budget in mind " saves a lot of time .
Your cost is your cost. The only negotiation is if you want to do the job for less. Why do you need to know their budget? Just bid the job for what you need to make a profit, and submit it. If they don't want to pay that much, walk away or lose money.
Wow Dave, how long have you been in business? You guess at it and then you adjust to something in the middle of what you can find on the internet? Sounds like a method towards a short path to closing your business!
I usually straight out ask. I tell potential customers how often I get plans sent to me by architects and designers that are not designing within a budget. When the client sees the bids from several shops they are often blown away and the design process starts all over (of course the architect and designer get paid for the "revision") you have the advantage of knowing how to work within a budget because you are making it. I guess the architects and designers either don't or don't care.
I also tell them to go visit houzz.com to get some ideas. Used to be I'd tell them to tear out some pics in home magazines...thank god that's over.
In my limited experience with negotiating a price for custom work, I have seen the face of sticker shock. I have also bitten off more than I can chew, to where I chalk it up to the cost of an education.
It seems to me that others may have already learned what I am learning.
Monte , another approach show pictures of other jobs you have done and let the client know how much each job basically sold for so they have a comparative idea of what real costs may be based on the volume and content of the job.
In sales especially custom work for me one of the first and most important steps is to qualify the client before you spend too much of anyones time make sure they want what you build and are willing to pay for it .
I ask several questions up front ,such as
were you referred by a client ,have you seen my work ? Then I ask how they feel about low cost materials pb and such , when they say we don't want any pb or others then they realize it costs more for quality products .If they say pb is fine with us , you have your answer as well.
Develop your own set of questions that work for you.
Monte - You use the word 'negotiate' to describe your pricing. I don't think I would use that word since it implies a variable price. Often, what we do is based upon real numbers, so 'negotiating' implies either an inflated price to be lowered, or a real price that may mean less profit.
I am similar to Dave Nauman in that I do the calculations based upon how I would make the thing, then I look around to see if I can find comparable pricing, then I just look at it and see if I can come up with a price. 99% of the time, I use what I calculate, since that is the only sure thing I have. The other two methods just reinforce my method, but help with the gut feeling also.
The internet will often represent the very worst of our craft in quality, therefore pricing, so it is not too helpful in the research. One often does not get to see the price of, say Frank Pollaro's or similar level of work, so we don't get to see the range.
I do try to get a price range mentioned during the first contact, to be sure the prospect knows what we are all talking about, and whether the conversation should continue or not.
While you may not be brave enough to ask for a budget range, after the prospect talks about what they want, you might ask something like "How much do you think something like this should cost?".
You'll almost always get a number from them at this point. Then you say something like, "That's interesting. What happens if instead of $X, it ends up costing $Y. Would you still want it?"
The number 1 reason people don't buy is that the cost of a project is lots higher than they expected. That is different from they can't afford it. It just means it costs more. A prospect will almost always freeze when faced with figures that are much higher than they expected and you have little chance of closing the sale at that point. Better to let the real cost settle in...maybe for a few days or weeks..., and then return to see if the prospect can figure out a way to pay for the extra cost, assuming they still want what they said they wanted at a realistic cost.
Unless you have a range to work within that the prospect can deal with, you're wasting their time and yours. Move on to the next one, and don't look back.
Are we talking about qualifying customers here, or are we trying to figure if we can charge them more than normal estimates? Or are we talking about getting help from the customer because we don't have a handle on what it will take to make the furniture and what to charge? Seems like the responses are all over the place.
Sales 101,Ever get a price from them that is higher than you would estimate? I've never interviewed a customer that would give me a high number. If you get a low number from them, they will probably get embarrassed and the sale may go badly.
Often it seems hard to determine what someone wants. Problem is usually they don't know. It can be a real time killer. At the first meeting determine in general what they want to accomplish. Offer 3 quick sketches (assuming you can draw.) Within the realm of what they have indicated: the first sketch has most of the bells & whistles noted, materials (careful with the all solids thing there are places where veneer is better. If you are working with a designer/architect that wants AWI premium, solid panels in frame & panel work won't pass.) Your top of the line product should include higher margins because the client will expect perfection.
Next is your mid point sketch: This should meet custom norms, use your normal construction and detailing practices, two component finishes as an up charge option. 3rd sketch this one is actually not your preferred method so again up your margins a bit. Standard commodity veneer panels, no matches, cheaper hardware, lacquer finish, sapwood not a defect, plywood drawer boxes.
Once you get these explained, a price range for each established (keep the price range fairly narrow) and he has picked what he wants, you should by now decided if this is worth more time or not. This process shouldn't take more than an hour of your time. You can now spend the time it takes to get a fixed price and a more detailed sketch. Don't put enough detail in the sketch that he can use it to shop. If he wants a lower price you just have to offer things that can be removed to get there. Never cut you price w/o the client giving up something. If it is a go, get your up front $. At this point you can put it into your schedule and set a delivery date. For some people you can reduce the meeting time by having a list of options, no more than 3 choices for each option and limit the options to just a few. Nothing worse than an overwhelmed prospect.
What I do if I'm hungry is:
Charge $500 for a "3D CAD" design WITH measurements in Sketchup which goes to the purchase price based on what the client likes on sites like houzz, remodelista, etc. In other words its free if I get the work. If not, I keep the $500 and they can use the drawing to shop with. Guess what happens 99% of the time?
Included in the drawing are 2 minor revisions like door or drawer layout, shelf thickness, molding type, etc.
If I'm NOT hungry and slammed like I am now I charge around $500-$1000 for the drawings/design on top of the piece Assuming this is a project upwards of $2-3K
I'm with Dave, and David, I have a similar routine. I think Rich is missing the boat by a mile. The scenario Dave outlined works extremely well as long as your a decent estimator. I suppose this could be a pitfall for someone new to the game, but I can usually gut shot a project before the first sketch though I never let on to the customer. Your costs are your costs but especially with custom work look at comparables can help to keep you in reality.
I agree fully much of the custom work, and even bread and butter, can be fairly substantially, to drastically, overpriced.
My general routine is to roughly go over what the customer is looking for in an initial conversation. Even if they ask I do not provide any pricing information. I tell them to let me to a rough initial sketch. After a very quick initial sketch I have a relatively good idea of what the ball park on the project will be. I show the customer the sketch (for our customers at least, our idea of a rough sketch is a full drawing to them) and generally they are excited. At that point I simply tell them what my feeling is on a range depending on details and decisions. That either sits well with them or it doesnt. If it blows them out of the water the conversation ends. If a little information/education is needed it happens. But at least Im only out a short initial meeting and a quick sketch.
I dont ever concern myself with what "they think" the price should be because inevitably they dont have an idea, or if they do they are going to start behaving like they are on the lot at the car dealer.
Thank you all for your posts, especially to those who were willing to explain their process as they work with a client to come to an agreement.
Perhaps negotiate is the wrong word. I am thinking more along the lines of adjusting the scale/materials/joinery of the project to meet the client's fiscal limitations than of giving away some or much of my labor for free.
I am not the best at estimating the labor it takes to build something new to my experience. Think of it this way; if someone brought you a picture of a Philadelphia highboy and asked you to build one like it, would you have any difficulty in estimating your labor?
Philadelphia highboy. Museum grade reproduction I would not touch a project such as this for under $100,000. Price may be substantially higher than if I decide to involve an expert woodcarver in the project.
"cabinetry" grade casework built in the style of a Philadelphia highboy. $8,000 - $20,000 depending on how elaborate we get, and what materials we use. Construction methods would be more production oriented and appropriate for high residential cabinetry. Carved details done in house with a CNC router, or purchased.
Anything below this, I would honesty refer a client to a local antique shop where they might find something for anywhere from $500-$5000.00 I can't compete with this.
Something I hav aslo learned is to make sure people are not price shopping before they head to Ikea.
I learned the hard when I spent a day designing a small book case (simple project) making revisions, and preparing a bid. Only to be told the price tag of about $650.00 was far to expensive and that they were only checking with me before they went to ikea. This was a well to do client as well.
If you can get $100,000.00, more power to you. Just my opinion, but $25,000.00 to $30,000.00 is more like it. Factory grade is worth maybe $8000.00,
but I don't know anyone would go to a custom shop for something they could buy off of a showroom floor.
I know of a maker that when he was obscure, working in a chicken coop with carpenter grade tools, made Highboys for about $28,000 each, and was glad to get it.
Then he got himself on the cover of the most influential wood furniture magazine with one of his highboys. His work is very good - all surfaces are handplaned, drawers are hand dovetailed and hand fit, brasses are custom cut, etc. His designs are from real examples in museums and collections.
His prices went up close to $100,000 each, and he found a whole new client base. He now teaches mostly and gets a sizable income from that.
I don't think the term 'negotiate' has entered the conversation since he left the chicken coop.
In 33 years we have learned how much time each custom piece of furniture will take us to build. I apply our hourly rate plus materials and that is the price. If they don't like the price they will ask for a reduction which I rarely give. I am very busy again after the depression so I will likely kick the hourly rate up a few dollars.
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