What are you worth??
I was recent reading a thread on the Wood Net Forums about what a certain table was worth. The poster said that his friend was thinking about buying a dining table from a furniture maker for 12,000 dollars. This poster’s question was “is this table worth 12,000 dollars?” So this got me thinking…
How do we determine what something is worth? Easy enough, add the material cost with the labor cost and about 10-20 % mark up and “bob’s your uncle”. Well it’s not that easy at first. Whether you are a hobbiest or a professional, if you are going to sell your work you need to come up with your hourly rate. This can be done many different ways, but what I have done is look at my expenditures. How much money do I have going out every month. When I say how much I mean everything, you choose what you want to spend. If you want to buy a coffee everyday, then you need to add that in. Add what your shop cost, what your machinery cost, and if you want to upgrade sometime. With this all together next you have to figure out the total amount of hours you want to work in a given year. So there are 52 weeks in a year, let’s say you want a 2 week vacation and the 10 holidays about the same in possible sick days (now remember that you are the owner operator, therefore holidays and sick leave are yours to figure out.) So that leaves you with 48 business weeks that you have to work a year. At 40 hours a week that makes 1920 hours a year you have to work. Divide 1920 by 12 and you get 160 billable hours a month. Lets say that you need to make minimum 5000.00 a month. Divide 5000 by 160 and you get 31.25, now that is the minimum amount you need to charge an hour to break even.
So lets say that I have decided that I am worth 55.00 dollars an hour. In that 55.00 an hour I have worked in not only all of my overhead, but also my profits that I want to make. When I go to bid a job I take the material cost with the amount of time it will take to make and there you go. So for example my last project was my “Hollow” entertainment unit, it breaks down like this:
-MDF for foam core torsion box… 50.00
-Veneer… 200.00
-Glue… 20.00
-Castor Feet… 45.00
-Oil Finish… 30.00
-Labor…(100 hrs) 5500.00
Total… 5845.00
That is what I need to get in order to make any money on the project. That price doesn’t account for what a gallery is going to add on top. So if you work with galleries you need to know what they mark up. Because if you sell this same piece to a customer privately for your wholesale price, the gallery will never display your work again. But that is an entirely different subject. So to some that seems absolutely absurd, some might think that I must be crazy. But remember that Mr. Sam Maloof gets 50,000 dollars for one rocker.
I think that as makers of furniture we under value our skills and talents. We all know the stories of the customer that saw a piece at IKEA and wants the same thing except made out of solid hardwood and for cheaper. You and I cannot compete with China, we have to offer something that China cannot, that is quality and customization. So is a 12,000.00 dollar dining room table worth it? I say YES IT IS. What do you say?
January 7th, 2008 at 10:05 am
hi Kaleo
In my experience as craftsmen we under estimate our worth. From looking at your gallery of work it can definitely be considered Art especially the `table with no name`. It is a beautiful piece of design. What price do you put on art ?
January 7th, 2008 at 11:07 am
hey Kaleo…….
I get your point of figuring out skill value, and I’m with you that yes a dining table can be worth $12,000.
But alot has to do with who is making the table, sometimes you pay a premium for name. Without seeing the said table, is the $12000 going to the builder on top of a designer fee, or is the builder also the designer and $12000 is a bargain. Until this woodworking internet community understands that the key to profit is to design and build with all materials, a $12000 table will always be misunderstood, because the talent base of those who are active on-line and the many more we are unaware of who build, can make that same table for less.
What about making 3 $5000 tables in less time than 1 $12000????
January 7th, 2008 at 11:24 am
Damn right!!
January 7th, 2008 at 12:42 pm
The huge problem with this, and therefore the custom/craft furniture market, is that the threat of substitution is astronomical. It seems that most Americans at least will either settle for “it’s functional” or “It LOOKS expensive”. China can do both of these very adequately, and sell the end result for less than we can buy the wood for.
Also, fashions change so fast, that many consumers are hesitant to sink a substantial amount of their income into something they may not like in five years or less.
The housing boom also encouraged people to overbuy on their house, stretching themselves too thin, and being house poor (big house, nothing in it). The subsequent credit tightening has exacerbated this issue.
And this, I think, is why guys like david marks make art now instead of furniture. People don’t complain about the price of art, because it is seen as an absolute luxury, as opposed to furniture, which is a necessity, and “who do you think you are charging that much for a necessity?”
Good post btw.