The Business of Chair-Making

      A cold look at the hard numbers for furniture building. Between rock-bottom overseas competition at the low end, and popular established competitors at the high end, it's hard for a small shop to find a profitable niche. April 21, 2011

I really like modern design. I went to college for furniture design, but have been primarily building cabinets for the last 17 years. I was looking at a very popular furniture companyís web site and called to get pricing on some of their tables and chairs. I was shocked at how much they were. Chairs ranged from $640.00 to $935.00. Tables ranged from $2500.00 to $4000.00. The table and six chair set that I liked would cost me almost $8000.00! I had a slow day, so I built a prototype chair similar in design but different. I figured if I built twenty of these chairs my cost for material/fabrication/finishing/and overhead would be around $150.00 per chair. With a retail mark up of 100% that would be $300.00 per chair. Still a pricey chair, but 1/2 of the popular furniture company that is making a lot more units.

So, I guess my question has a few parts. Do any of you build small run furniture projects (like chairs or tables)? If so what is your cost per unit and what is the retail mark up? How could I best market a product similar to others for half the cost? Or better yet, how could I market similar products for the same price?

At this point I am looking at building around 20 plus chairs. My thought is that if I were building 100 plus pieces my cost would go down around 28% on fab time and 7% on materials.

Forum Responses
(Business and Management Forum)
From contributor Y:
The table and chair prices you quoted were possibly full retail, but they likely sell far more at a heavily reduced trade price to designers. I think you may be underestimating the time it will take to completely build and finish twenty chairs relative to the prototype you've built. On the few occasions when I've made multiples of something I made one-of previously, I expected some grand economy of scale to magically appear. But I found there were only small gains, mainly in the initial steps of fabrication - cutting and machining parts. In a small studio furniture shop setting (one or two skilled workers) there is virtually no gain in assembly processes and perhaps modest gains in finishing.

Producing multiples also introduces unexpected labor and logistical issues, like moving/storing multiple parts and assembled items in the shop, dealing with the boredom of repetition, shipping, etc. The threshold for significant gains in economy has more to do with the means of production (lower skilled labor in a factory vs. higher skilled labor in a shop) than the number produced. Then there's the market for chairs in the $300 range - very, very small considering all the available product from china in the $50-$100 range.

From contributor G:
If this is an older company that specializes in modern furniture they have likely paid the price to get where they are. They can run expensive ads in architectural/design mags for these professional trades.

They may have a large, national or international workforce of representatives, who spend their time visiting architects and designers offices to keep the industry up to date on their offerings. They may have the capacity to fill a huge office building with workstations, reception areas, waiting room furniture, conference tables, file cabinets, etc. They are probably getting/making these pieces for far less than 25% of the listed price.

From contributor S:
How many hours did your prototype take to go from design to rough materials to finished product? My shop rate to break even at the end each day is $50. That is not including a profit margin. There is no way I could produce a finished chair in three hours. A simple well designed chair made in multiples is going to run $800 per chair. I don't think you are taking everything into account when coming up with your price. A good well designed chair that can also be mass produced is no easy feat.

From contributor J:
I build chairs, but I usually make most of my living on custom cabinets. I avoid building tables because they are space hogs and a pain to ship and a million others make fine tables. Chairs are a challenge that I like. I know you cannot make your chairs in the US for $150 and make anything more than a poverty wage.

Good chairs are expensive and people will pay for quality. Restaurants, for one, do not want to constantly replace cheap chairs, so they will gladly spend $400-$700 per chair or stool. It really hinges on your design and ability to market it. Just because you love it, it doesn't mean anyone else will.

It gets really complicated on pricing, though. How do you want to sell it? If you sell direct, then price it as you wish, but expect limited sales. Most will figure out what their minimum price is, then give it a list price two times higher or more so they can sell it wholesale to retail stores.

There's also the designers discount, which is generally 30-50% to the trade (some of the larger retail stores do a smaller trade discount of about 10-15%). Some decorators will not consider your products unless they get at least 30% off list. Interior designers spending someone elseís money are the other likely purchasers of $800 chairs, so be nice to them.

Basically, build a set of four and see what your real costs are. Package them and price them for shipping across the country. Take that total price and mark it up 60% (divide that number by .4) and that's a good starting point for a list price.

From contributor G:
I have also run into the same questions/problems you are having. When I meet with customers who want chairs made, and asks for a price, I explain about the economy of mass manufacture and that I as a one man shop do not compete with their market. I also explain if they are looking for a chair that will last, thatís what I do! I can manufacture a product to their specific need and styles and do so using quality wood and parts.

I am not a mass manufacturer so donít think that you can get a chair for 150$ by me because thatís not what I do (this goes for all my furniture even the P lam stuff). I manufacture to a customerís specific needs, custom size, custom design, also means custom price. Small shops just canít compete in the mass manufacturing game.

From contributor R:
One big item not touched on in previous comments is the amount of time spent on things other than building pieces. I have found over 30 years of work that I spend 30-40% of my time doing accounting, marketing, wood/material sourcing, more PR and more PR. There are loads of office jobs that require your time and talking with clients is another that must be factored in. Then you have to do (or buy) your CPA's time for taxes and fun things like that. I'll also echo one other's comment: for the small shop with artfully done furniture, economies of scale don't appear at small numbers.

From contributor Z:
I've built a lot of chairs, some of them simple, most of them not. I've been in a limited production setting building 40-60 at time. We even ended up having parts made on a $250K 5 axis, chair specific Busellato CNC machine. There is no way to build a chair for $150 if you value your time at all. If there is we would have found it.

In my solo shop now, I wouldn't build a chair for less than $800-and that would be a simple chair-cut and shaped parts, m and t joinery, and a slip seat. If you wanted bent laminations, rolled shaped parts etc it would be a lot more. You'd be spending half of that $150 on material wouldn't you?

From the original questioner:
I got busy with an order for a bunch of cabinets, but finished the chair. All joints are mortise and tenon and all solid cherry. I have to admit I was a bit low at $150 pr chair. After finishing this chair, I processed all the parts for eight chairs for myself. I have yet to assemble and finish, but having already done that process I figure the cost for this chair will be more like $220.

A funny side note. I was building some furniture for a local shop that was behind schedule on a large project and told them about my chair project. They said they just had a request for ten chairs that were priced at $900 a chair but were too busy to meet the delivery date. I said "let me take a look at it."

Below is an image of the prototype I built off of a 1.5" X 2" pic provided to me. This chair took me 12 hours to design/build to the point you see it at. At $50-$80 hrly shop rate that is $600-$960. All the fixtures for fabrication are made and I am excited to see how long it will take me to fabricate a few for myself, if I get the time.

I am currently looking to outsource the curved solid back for the second chair. I can do veneer/vacuum but would prefer having a solid back (like a radiused slab door).

Click here for higher quality, full size image

Below is the other chair. I forgot to mention that I used the seat from one of the first chair prototypes for the back for this one. I had to make it wider and re-cut sides.

Click here for higher quality, full size image

From contributor Z:
Like your design on the first chair. Clean. I think you'll find that the assembly, cleanup, and finishing is a lot more work than you imagine. Isn't that always the case with this work? You do need to address you seat though, it is going to break the mortise and tenon joint of your front rail when it expands, or its going to crack the seat when it shrinks.

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