Estimating formula

      Methods of estimating how much to charge for your work. March 20, 2001

Q.
My pricing has always been materials x 3 for laminate work, or 3.8 for wood and finishing. Does this sound like a good system? What should I mark the retail items up to?

Forum Responses
This is a very dangerous way to estimate. I worked for three years for a shop which bid this way, grew very fast and then crashed and burned, largely from getting the wrong jobs at the wrong prices.

The only way to be sure of getting the right price for your work is to figure the materials, and then break each task down into labor hours, in as great a detail as you can bear. This starts with labor hours for drafting, field measuring, then making cut lists, cutting, machining, laminating, assembling, loading the truck, driving to the site, unloading and installing. Then you need to add your labor burden, overhead and expected profit. Every job has a different mix of these elements and the one that you misjudge may kill you.

The AWI cost book is a great help getting started. A rudimentary spread sheet cuts the time involved by a factor of ten as you create templates for the things you do over and over. Then there are some off-the-shelf programs that cost money but have done some of the legwork for you.



Try pricing a job with your 3x material factor method with all particleboard and then the same job with the most expensive plywood and lumber you can think of. See what happens?

Absolutely figure your time and charge for it. I messed around too many years thinking I was "competing" by using that formula deal. Charge for what your work is worth. People will pay for it if you're both serious. Be prepared to forego some of the jobs.

Figure your hourly shop rate based on a year that contains, say, 36 to 42 weeks per year. That gives you a cushion for everything else you have to do to have a cabinet business--all those hard-to-measure-the-time tasks.



Retail items? 20% markup.

Would you like to add information to this article?
Interested in writing or submitting an article?
Have a question about this article?


Have you reviewed the related Knowledge Base areas below?
  • KnowledgeBase: Business

  • KnowledgeBase: Business: Estimating/Accounting/Profitability

  • KnowledgeBase: Business: Sales

  • KnowledgeBase: Knowledge Base


    Would you like to add information to this article? ... Click Here

    If you have a question regarding a Knowledge Base article, your best chance at uncovering an answer is to search the entire Knowledge Base for related articles or to post your question at the appropriate WOODWEB Forum. Before posting your message, be sure to
    review our Forum Guidelines.

    Questions entered in the Knowledge Base Article comment form will not generate responses! A list of WOODWEB Forums can be found at WOODWEB's Site Map.

    When you post your question at the Forum, be sure to include references to the Knowledge Base article that inspired your question. The more information you provide with your question, the better your chances are of receiving responses.

    Return to beginning of article.



    Refer a Friend || Read This Important Information || Site Map || Privacy Policy || Site User Agreement

    Letters, questions or comments? E-Mail us and let us know what you think. Be sure to review our Frequently Asked Questions page.

    Contact us to discuss advertising or to report problems with this site.

    To report a problem, send an e-mail to our Webmaster

    Copyright © 1996-2016 - WOODWEB ® Inc.
    All rights reserved. No part of this publication may be reproduced in any manner without permission of the Editor.
    Review WOODWEB's Copyright Policy.

    The editors, writers, and staff at WOODWEB try to promote safe practices. What is safe for one woodworker under certain conditions may not be safe for others in different circumstances. Readers should undertake the use of materials and methods discussed at WOODWEB after considerate evaluation, and at their own risk.

    WOODWEB, Inc.
    335 Bedell Road
    Montrose, PA 18801

    Contact WOODWEB











  • WOODWEB - the leading resource for professional woodworkers


      Home » Knowledge Base » Knowledge Base Article