Working for Friends
One method is to add up all of your material costs (don't forget glue, screws, etc.); add up all of your labor including design and delivery time, include your overhead costs (electric, shop rent, insurance, or whatever applies), then add on a markup for profit. Yes, even on the raw materials. They didn't magically appear in your shop did they? Count all of the labor: design, picking up materials, client meetings, actual woodworking, all finishing, delivery, installation (if it applies).
Another word about your costs: My clients never see any breakdown of materials, labor, etc. They get a delivered (or installed) price. If they want to make changes, then I compute a new price on the new project. Also, if I can buy wood at a wholesale price because I have established myself as a professional business, obtained a business license, insurance, hired an accountant, hired an attorney to set up my corporation, etc., then I am sure not going to pass along the benefits of receiving a lower price to someone else. So, yes, the raw materials do get marked up.
You may be tempted to lower the price for a friend, but if you expect to be treated as a professional, then run your business like a professional. I lowered my prices for a friend when I was getting started for a short period of time. It helped me set up my shop and get some of the bugs worked out. Once that was done, I conducted business professionally, even with the same friend. There has not been any strain on our friendship. If you do not want to work for $4/hour then do not do so. It is your business. You get to set the rules.
From contributor B:
I use the same pricing for all (except close family). I don't give clients a breakdown. I've had a few walk because I either won't give them a price break or a breakdown but that's their loss. I say up front that's my price and don't ask for a cheaper price. Once you do it for one you'll have to do it for all.
From contributor C:
I would treat them as I would treat anyone else. Let them know what your lead time is looking like, have them sign a contract for design and final product, and give them a bid. If they want you to do work for them because they think they can get it cheap, pass on it. I have read many posts on the same type of subject. I have also had numerous offers of a similar nature. My personal theory is this - if they want it cheap because you can make it and they want it - pass. If they want it from you because you can produce the finest quality product – charge them for it.
From contributor D:
I think this is more of a personal issue that may not have any one good absolute answer. It depends upon the nature of the friendship and the purpose of the item (i.e. we need some cabinets for our investment property). For casual friends, I treat them as another customer. If we are talking over supper I may be happy to draw some sketches for them and do some design work for them gratis. Pricing and schedule remains constant, however.
For close friendships that have included sacrificial help I am happy to cut them a deal. These very close friends are usually rare - but there have been a few who have treated my family in such a way that I feel that I would not be able to pay them back. For these dear friends I am often happy to do things for them if they desire. Of course, true friends are unwilling to take an advantage of you, so usually they approach you desiring to pay. Sometimes I will knock myself out to make the project more than they expected.
From contributor E:
Real friends wouldn't try to make you work for less than you're worth. Is your time not as important and valuable as theirs? If they are real friends you'd be telling them to put their money back in their pocket - not them pulling it out of yours.
From contributor F:
I too have struggled with pricing jobs for family. In my shop I have found that it is much easier to just gift it to them or maybe just charge for materials. That way, you don't feel like you've been taken advantage of and it's also easy to tell them that you can't get to their project for six months when you're busy.
From contributor G:
There is lots of good advice from these guys. I always cringe when a friend asks me to build something for them. It seems it's always, "if I buy the materials will you build this for me?" Most have no idea what it takes to put something out the door like you're talking about with your bookcases. If you do stuff like that you burn up valuable shop time that could be producing. Like the others have said, figure out what your shop rate should be and figure the job just the way you would for any other customer. If they're real friends, then they shouldn't want you to go without so they can get a good deal. I can tell you I've made more than one friend mad.
From contributor H:
I try to shy away from building for friends, but I do once in a while for gifts, during Christmas or other special occasions. If someone asks me on a big project, though, I have to charge him full price.
Don't forget to treat your neighbors well, though. I saw up a sheet of plywood for a retired guy down the road once in a while; he builds furniture in a tiny shop and hasn't the space or a cabinet saw. He brings me all his wood scraps now to burn in my shop stove.
From contributor I:
First, if you are only charging him $350 each for labor, he is already getting a deal. I just finished a window seat and two bookcases in oak and we charged $2300.00 for them. Assuming that is a finished product, your prices are much lower than a full time shop. To meet your labor at $350 each bookcase, my shop would have to produce the pair in about 9 hours total, from initial design to final install. I could not do that. I encourage you find out what other shops in your area are charging labor and go from their. One way I've found to get a ballpark price is to look at a comparable piece at Ethan Allen. If you are charging below that, you are not high enough.
Based on my current costs, you're marking up the wood. That is good. There are costs involved in getting it in your shop that are not covered without a materials markup. One rule of thumb that seems to work in most shops is material is someplace between 20-30% of the total cost of the job. That is for a quick estimate. All formal estimates get a work up. And this mahogany versus maple distorts the 20-30% material to total ratio - but only on the mahogany end, not the maple.
I break down each step from initial design to cutlist to milling to sanding to assembly and so on, until I get to install. Then I estimate time taken at each step until the project is complete then total time up and multiply by the shop rate. The reason I'm going through this is because if you are a part time woodworker who is doing this professionally, and you have all the tax stuff and insurance etc., then you are worth much more than you are charging. Commercial shops charge $50, $75, $100 and more per hour of labor. I know you have much lower overhead than they do but pocket the money, not undervalue your skills and abilities. It hurts not only you but all the full-time shops in your area. You will find that even at such an outrageous price, if you are good, you will have more work than you want.
Of course, all this assumes that your part-time business is a true business endeavor and you really want to make money doing this. As far as doing work for friends, that is a personal choice as to what you charge. I found that one of three things happen: full price, materials only or free. If they change from mahogany to maple, the labor is the same, so only reduce the price by the material change.
From the original questioner:
Thanks to everyone for all the great responses. It all makes sense. I emailed my friend the adjusted price for the maple with the same labor cost and I will see what happens. I also mentioned to him there is a woodshop/woodworking store that rents out shop time. I believe their shop rate is about $40/hr.
From contributor J:
Friends pay the same as regular customers. Family pays double.
From contributor K:
If it is a close friend, and real money is involved, I would turn it down on principal. You could offer your expertise as a consultant; review the bids, offer suggestions on design, materials etc., and maybe even offer referrals to other shops. That said, I have done work for friends. In one case, the friend was a metal worker. I designed and built a really nice dresser for him. The deal we worked out was that he paid for all of the materials (at my cost) and I kept track of all of the hours that went into designing and building the piece. At some point I will use him to do some metal work for me. I will pay for the materials at cost and I have a credit for 50 some hours of his time.
As to pricing breakdowns, why should that be a secret? If you are a professional then by definition you are in it to make a living, and also to make a profit. Why not show somebody - this is my cost for these materials, this is the mark-up, this is my shop rate, this is how many hours I think it will take, this is my profit margin? I think that most people can understand this, particularly other professionals like architects or contractors. I can see where refusing to show this could make someone feel they are being cheated. I have at times used my bid sheets to support my price, i.e. this is what it takes to do this work to the standards that we hold to, and if they are getting a lower bid elsewhere, where are the other bidders cutting corners. If they want a lower price, it has to come from simplifying the design or substituting materials, not from my margins. For example, if someone sees that you are allotting 15 hrs to do the bow front on the center section of a vanity, they may decide that it really isn't that important to them after all. Think of it as a way to educate your clients as to the value of what you do, and what is involved to make it happen.
From contributor L:
No family, no friends, no neighbors is my rule. There's plenty of other work to keep me busy. Keep your business and personal life separate. There is no reason to mix the two, it will just cause you heartache.
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