Commissioned work advice

[njohnston924]

Hi All. I have a question about doing commissioned work. I recently finished building a murphy bed and have had a few folks interested in putting one in their house. It would probably be a similar design to the one I made with a few tweaks. A rough estimate for wood/hardware would be around $600ish. Once i get a better idea of what the people want I would be able to give a better estimate. for reference, here is the one I made: https://www.ncwoodworker.net/forums/showthread.php?t=64347&highlight=murphy+bed

My question is, how much might be a good amount to charge for profit? (this would be my first commissioned piece and it would be for a co-worker or a family friend, so I'm not expecting to make a killing on it, but not expecting to do all the labor for free either)

Thanks!

 

[Raymond]

Well, Nate, you have a good idea of what you have to do, what you have to buy, and how long it will take you to make the bed - all you really have to decide is what is your time worth. If you say your time is worth $25 per hour you have the final piece of the actual cost. now just calculate how much of that total labor you are going to pass on to your co-worker or family friend. Let them know what the total value of what you are doing is worth and what you are going to charge them - that way they know you are giving them a financial break on something that if they bought it commercially would cost xx amount more.

Edit: Also, ask them to keep your price as a secret between the two of you.

 

[Henry W]

Nate

Labor and profit - two different things

Labor - X hours x Rate ($/hr) is labor - only difficult thing here is to determine is what rate to charge
Materials - cost + X% (the +X% is because you have to pickup and store materials before you start the work in your shop, unless you have them delivered)
Overhead - your 'cost' of doing business - taxes, cost/depreciation of tools, vehicles, insurance, fuel, etc (obviously can't charge all cost of tools into one job, but any specialty bits or blades would be)
Profit - over and above all the rest.

Not difficult to see why some goods and services, especially CUSTOM work (i.e. fit to the space and designed to go with decor) is expensive.

Now if all these beds are basically the same, except the trim on the outside, then you ought to get some cost/time savings in speeding up the build.

'Standard practice' is 50% of the total cost as a non-refundable down payment ( although I have not practiced this for custom work I have done for good friends - but I will start now). This should at least cover materials, so that if someone backs out you are not out cash.

Hope that is a start. This does not put numbers to your work - that is something you have to do.
If you want to build for a friend for the cost of materials - by all means do that. If you want payment for your time - you have to determine what your time is worth ($5, $35 or $75 per hour or somewhere in between).

 

[njohnston924]

Thanks. Raymond, I was thinking about doing something similar - figure out what kind of design they want, then try to find something similar (some of those are upwards of $2000) then give them an estimate of $XXX

Henry, since i'm not running a business/production shop, I'm basically viewing my labor as my profit generator. I'm not planning on upcharging for materials, gas, tools, etc. since it's just a hobby right now (maybe/hopefully in the future it will be more). But I will follow your advice and others that i have read about getting a portion/down payment upfront to at least cover materials.

As for what my time is worth, I'm not really sure how long it would actually take to make this. I only have a few hours during the week and a few on the weekends to woodwork in the first place, so it will probably take a few months to get it done

 

[Mike Davis]

There is one cost that nobody ever takes into account and that is the cost of these materials taking up space in your shop for sometimes months, the cost of these plans weighing on your mind all that time, and the cost of worrying about something going wrong. Those costs can be greater than the total price of the job and even greater than the friendship of the person you were doing a 'favor' for.

 

[Tom from Clayton]

I have read there is a homeowners insurance issue if you use your shop commercially. Will that impact Nate?

 

[Skymaster]

NATE. =2 on 50%, figure ALL the costs of material including your time for figuring it out, going to get, stocking in your shop. THAT PLUS a day of your time is THE ABSOLUTE MINIMUM DEPOSIT, OR 50% OF TOTAL JOB, WHICHEVER IS THE GREATEST, NO LESS. Over all the years I have worked for myself this is what I charge. The reason is from experience, if the customer cannot or will not give that amount,then plan on working for free because it is a sure sign they cannot afford the job and sure as you breathe air you are going to have a major problem getting paid.

C A S H ONLY. NOTHING TRACEABLE TO YOU, if big brother sees it you do not want the nightmare that come with it

 

[marinosr]

There is one cost that nobody ever takes into account and that is the cost of these materials taking up space in your shop for sometimes months, the cost of these plans weighing on your mind all that time, and the cost of worrying about something going wrong. Those costs can be greater than the total price of the job and even greater than the friendship of the person you were doing a 'favor' for.

EXCELLENT point. I remember showing my friend how to rewire his kitchen (for free) thinking it would take 4h or so, and it did only take that much time in his house, but the mental energy I put into it, thinking about how to lay stuff out, looking up nitpicky code details, spacing out at dinner while worrying about potential problems, took up probably 6h extra of mental space.

The real savings when you're a pro is that you have the experience to avoid that extra 6h of mental labor.

 

[nn4jw]

C A S H ONLY. NOTHING TRACEABLE TO YOU, if big brother sees it you do not want the nightmare that come with it

Whether or not you take that route is entirely a personal choice that has both pros and cons no matter which way you choose.

In the 90's I did computer consulting on the side and chose to run it as a sole proprietorship business, complete with accounting (manually) and dealing with the IRS. Since I had taken accounting courses in college I was prepared for the book keeping overhead. All my i's were dotted and t's crossed and I never had any problems with tax issues.

One of the biggest pro's in doing it that way was being able to depreciate equipment and take the allowed business expenses against income. Didn't lose any sleep worrying about big brother either that way.

My point is only to show that the decision to go into business includes quite a few other things to really think about and gear up for than most people realize.

 

[Skymaster]

From Nates post it sounded like he was doing this as a side program, IF he is going into BUSINESS than I am 100% with you

 

[tri4sale]

I have read there is a homeowners insurance issue if you use your shop commercially. Will that impact Nate?

Sadly, yes it can. Commercial use equipment / items used for profit (and even items you lose money on if you charge) may not be covered if you suffer a loss (fire, flood, etc.) - I know this from experience. Now all policies are different and that maynot be an issue for some, but also have to be careful, just calling and inquiring if it's covered can have an impact, once again learned the hard way, carrier decided to not renew after we inquired if we were covered - technically they didn't cancel our policy, they just choose not to continue it when time to renew came up.

 

[danmart77]

Nate
You have some good advice from others here. If its a one time effort for a friend and a chance for you to see if you want to do woodwork for others staying off the books makes sense.

If you decide to do this on a regular schedule getting on the books and deducting expenses is a must.

A couple words of caution for an undecided woodworker:
- always get a deposit before you start. try to be nice and you'll get burned

- repair work usually pays better than custom work and you get paid quicker

Lots of other advice but I'll let others jump in.

When someone walks in your shop or calls and begins the request with --" I wonder if you could build me a simple xyz" you probably won't make any $

 

[Graywolf]

Nate, one of the formulas that I have used in the past is material cost X 3, some guys just double the cost. It's not a perfect formula but it dose give you a number to work with. If you are going to do one off projects from time to time, say two to three projects a year I would say you can play this as a side gig. If you increase much more and are wanting a part time business then you will need to set up as a hobby business and start you bookkeeping as such. That would include business licenses and insurances appropriate to your circumstances. One other piece of wisdom, if you want to call it that, you're not just trading your time for money, you are trading your knowledge and experience for money. You have to quantify a value for that, and it's not always easy. I do hope this helps and good luck.

 

[danmart77]

One other piece of wisdom, if you want to call it that, you're not just trading your time for money, you are trading your knowledge and experience for money. You have to quantify a value for that, and it's not always easy. I do hope this helps and good luck. GW advise.
That is golden Richard.

Most folks today really don't care about skill sets connected to the trades. They ask me more questions along the lines of when it will be done and how can they do it for less and finally can I get this at IKEA?

Not to keep repeating an experience I've had but my best customers are folks that I did repair work for and then a commission followed. People who are willing to spend money on furniture need to feel confident about your work.

Richard speaking about experience, I find it amusing these days how many customers will walk right past my son who is doing the work to talk to me first. Why? I am old. Its funny but in many cases, they want to speak to the old guy.

I worked part time in a shop about 5 years ago. People would come in the shop and ask where the old guy was and ask the boss for my cell number -- they had some questions. It happens.

 

[Graywolf]

Dan, I agree, most folks are always looking for faster and cheaper, and I and others as well get compared to Ikea and the other cheaper faster venders out there. I used get offended. I just can't anymore for a multitude of reasons.

Over the past five years I have learned to fire my customer. I've also learned it's ok for the customer to ask for a better deal, I just don't have to give them one. In these past few years, most of not all of the customers that I explained to them that was time to part ways, they have come back asking for my services. Out of that group I have had a couple that brought back in as customers.

In this industry you are only as good as your last project. In that, it is very subjective, what you or someone else says is great workmanship may appear to be junk by another. So having a thick skin is something that is a must, if you take any of what you hear good or bad to personally then this will eat you up.

And on on another note, speaking of experience, about twentyfive years ago or so I was working as a kitchen and bath designer. I had only been out of the service a couple years and was clean shaven, something my boss liked, but the customers had no confidence in my abilities even though I was giving them good work my sales figures were deplorable. I grew out my beard which had a little salt and pepper in it and within a few months I had turn things around. I shook my head then as well as now, of how perceptions still rules the decision making in lot people's lives.

 

[bob vaughan]

I'll throw in a stab just looking at the previous project.
Making it from scratch

$500.00 150 BF of good wood wood
$60.00 sheet of plywood
$400.00 hardware and other supplies

$1000.00 roughly for supplies.

Since its a finished project that requires a good bit of engineering and experimenting plus time consuming fitting of the articulating parts, a good rule of thumb would be materials x 5 so that would put the piece in the $5K range. If the project's engineering dimensions and components are known already, then maybe materials x three.

...then there's delivery and installation. Going up attic stairs into an attic room converted into an extra bedroom? That can be a very quick deal killer.

Just some thoughts based on past experiences. Material costs times any given number is a good way to double check an actual estimate just to see if things are kept between the fences.

Doing jobs for friends and relatives often doesn't end as well as you like and you run the risk of losing a friend.

 

[DSWalker]

There is one cost that nobody ever takes into account and that is the cost of these materials taking up space in your shop for sometimes months, the cost of these plans weighing on your mind all that time, and the cost of worrying about something going wrong. Those costs can be greater than the total price of the job and even greater than the friendship of the person you were doing a 'favor' for.

I"m finally in final stages of finishing up my sisters table and can say AMEN to this statement. I have worried, cursed, stressed worried ad darn near cried when I had the top coat issue causing me to re-sand and start staining over. I will be so glad to get it done and outta the shop!

I've only done one commission piece, but think that when quoting a price in the future I might offer to let them purchase the materials. I don't think people understand the cost of materials and different types of wood. Then just charge for the labor. Only problem with them buying the materials is you get what they provide and it could be 'crap'.

 

[Skymaster]

NO WAY is the answer to them providing materials quickest way into a nightmare. YOU provide, this way you control how you work, get the best, straightest,of everything needed, that way your angst,aggravation, worries etc are at a MINIMUM:gar-Bi

 

[junquecol]

Because you will be charging labor, don't forget to register with the NC dept of revenue. They will want sales tax on your labor. You will get a "tax ID number,", and a stack of cards to send in monthly to report the sales tax you collected, which you will have to forward to the revenue dept. Sales tax amounts to an income surcharge tax, in the 7+ % range. But don't worry, you will be able to sleep at night knowing that the sales tax on your labor keeps millionaires from paying sales tax on yachts and aircraft. When you add in the sales tax, you effective income tax rate becomes around 13%.

 

[Jeff]

Doing jobs for friends and relatives often doesn't end as well as you like and you run the risk of losing a friend.

True friends should understand that you shouldn't be expected to do the work for a pittance as well as understanding and agreeing to 3x-5x up front.