Pricing custom works?

[new2woodwrk]

I'm interested in how others might price this work...

I have a formula I use for pricing some of my custom wood work from my pre-scrolling days

However, now I am being asked to make new custom items from scratch and not sure if my original formula will suffice.

My orig. formula is: Material cost + Hourly rate * hours worked = Baseline - then multiplied by ( overhead 1.15 + profit 1.25) (see below for work sheet)

I'm using a base Hourly rate of $25 which I think is a fair trade rate

I'm currently making a piece that has 12 scrolled cutouts (Small items with names cutout)

I'm charging my customer (a good customer and neighbor LOL - they so far purchased $350 worth of custom pieces) $200 as a preferred (neighborly) customer price

I'm calculating the whole piece will take me about 6-12 hours total

Using my formula and 12 hours, I come up with a price of $210 for the whole unit with Profit and $193 with just overhead

Does this make sense from a pricing perspective to anyone or is it me that thinks $200 is justified for both a good customer and neighbor?

It seems a bit high for a good customer and neighbor since my baseline is  about $168.

And yes, they are good neighbors

Thoughts?

Thanks as always in advance

Here is my work sheet

Materials	Qty	Cost		Hours	Baseline	Baseline + Overhead (1.15)	Baseline + Overhead + Profit (1.25)
Pattern	0	$    3.00	$        -
Poplar	1	$   30.00	$    1.88
Paper/Ink/	1	$    0.20	$    0.20
12" x 36; Duck Shelf Liner	1	$   16.31	$    0.45
Adhesive/Oil/Shellac	1	$    7.98	$    0.50
Total			$    3.03	12	$   168.16	$   193.38	$   210.20

Edited December 14, 2020 by new2woodwrk

[trackman]

Sounds good to me. If they keep asking you to make things tells me they like your work and price. But you are right it is hard to price things especially for friends and family. At least it is for me. 

[kmmcrafts]

Value.... It's different from one person to the next.. formulas work in your head or on paper but reality smacks you in the face... and sometimes you have to go with your gut feeling that something it valued too high or too low.. 

I have ( and I think most people feel this way ) a hard time putting a price on things that are for family and friends... Many times I will just give them the piece.. other times I charge.. Are you trying to make money at it or are you just trying to have some fun and shop time while making a couple $$ for your materials and time.. 

For my family and friends on things they ask me if I can make I will ask them "how soon you need it"?  because right now I've got lots of orders and business is busy so I have to charge you the full going price of $****.**.. If you can wait to my slow period ( spring / summer ) I'll do it for free or 50% or whatever I feel is a decent price for said work / item.. There is a fine line between offending family and friends and taking advantage of yourself.. Most times I will somehow word it so they know what the going "normal" price would be if they wasn't my friend or family.. It's good to value your customers too.. I have a few customers that have bought many many gifts from me.. a lot of times I will refund them some money and say thanks for being a loyal customer.. etc etc.. 

I don't make a flat wage off of everything I make... supply and demand come into play for pricing sometimes.. For instance Ornaments can be stack cut.. and the majority of them can be cut in 20 minutes for a stack of 5.. I sell them for $16 ( always markup as a "retail price" so you can afford to do sales and if anyone wants a wholesale price you don't have to take less than your bottom $$ ) but on the other hand I make those jigsaw puzzles and they take ( depending on the detail ) 30 - 60 minutes to make ( 1 pcs ).. yet I sell them for $25 - 30.. but they also bring in a customer and many of them shop and buy something else.. because I run a sales trick of $35 or more gets free shipping..  I guess what I am saying is the formulas don't always work for every product.. You have to find a pricing strategy that works for the market of the product that ends with money in your pocket.. There is a reason I sell ornaments at $16 while most others are $5-12..  a happy mix of items in my store makes me a decent  " over all " profit.. A candy store might send out a flier with a coupon or sale price on a specific candy that might be less than they buy it for.. but the sale gets the customer in the store and looking at all that other candy.. before you know it.. you've bought 7 different flavors of candy and the store made a decent profit off of the "other " candy you purchased.. LOL

Hard to use a formula on custom work, and arts & crafts.. Might work well with manufacturing / production, and other things.. profit isn't always made on every product.. a mix of well thought out items at various prices in a store makes the store a profit.. Custom art is high priced and most times out of reach for most minds and wallets.. and many times that artist still doesn't put much money in his / her pocket.. This is why I like production cutting rather than one offs of art.. hard to sell art for it's true value of time spent..   

[ike]

When I make for my relivities I useally charge the cost of material,or give it to them. for a neighbor I useally sell at 1/2 my retail price., or give it to them.
IKE

[edward]

I usually have standard pricing, I look at it as a hobby, I don't charge for my time. Names on a stand I sell for $20 if it has a clock inserted  it's $25. 8x10 portraits I sell for $30 anything larger I add $10 and ornaments I have a standard price of $5. Sometimes I ask my wife what she would pay for an item. I tried putting items online with a higher price and no takers. You may think I am nuts but at my age I just want to make and sell and not hold on to an item, this is only my opinion

[stoney]

You can get yourself in a precarious position when pricing projects for friends or family.   First thing than comes to mind is how well do you like the friend or family member?   Second if you sell them a piece to cheap maybe others are going to expect the same courtesy and will be offended if you charge them more.   Finally if you are going to give your work away refer back to my first thing that comes to mind. LOL

[LarryEA]

That is an impossible question to answer for me.

I find I am constantly changing my "formula" ... it all depends on ??

So my formula is  " ?? It Depends ?? "

[dgman]

I’m not a fan of formulas. Say Bob takes three hours to cut his project. He bought his lumber for the project at retail. Now, Bill can cut the same project in 45 minutes, and buys his lumber wholesale. If they use the same formula, guess who’s will sell?

the way I price is, I look at the item and decide what I would pay for it. Then if I’m going to sell it on my Etsy store, I’ll add what Etsy charges me. 
Now for friends and family, I always tell them I will give them a good deal. This tells them that yes, I’m going to charge them. For the most part, they are willing to pay full price anyway because they already know what is involved to make the item.

[Sparkey]

I guess it depends on where you live. You wouldn’t be able to sell that where I live for half that price.

[new2woodwrk]

10 minutes ago, Sparkey said:

I guess it depends on where you live. You wouldn’t be able to sell that where I live for half that price.

It was a commissioned piece so the price was what I was going to charge.

Whether they accepted it or not was different issue.

Here's the finished product

 

[Sparkey]

I have done fretwork that takes around 12 hours to cut out and can’t get people to pay more than $50. Here is an example.

[dgman]

Unfortunately, people don’t appreciate the time and effort we put into a project. They just see that they like it. They don’t care that it took so many hours to cut, assemble and finish. 

[kmmcrafts]

Fretwork and portrait type works is probably my favorite thing to cut.. BUT.. I also want to make stuff that sells.. since I'm doing this as a job / income.. I find portraits are hard to sell as is many other types of scrolled work and make a profit.. I know there  are folks making "some money" on portrait type and those other time consuming projects.. But some money isn't good enough for me to help feed my family either.. so I cut and make the things that seem to sell fairly well ( at least for me, your mileage may vary from mine ).