Basic vanity with a question

[NYC Tiny Shop]

Jason,
Where are you located? This also has a bearing on what your fees should be. I think that the advice, so far, has been good.
Other than researching your prospective fee from an international blog, have you done any local research? What are the local  rates?

 

[Jasonj888]

Jason,
Where are you located? This also has a bearing on what your fees should be. I think that the advice, so far, has been good.
Other than researching your prospective fee from an international blog, have you done any local research? What are the local  rates?

I'm located in North Dakota, just a few miles from the capital city of Bismarck. That creates part of the problem, for construction trades, N.D. Is currently the land of milk and honey. Because of the booming energy economy and huge population influx, Lots of folks are waiting a year or more to get work done. The local cabinet shops have jobs stacked up.

My lumber supplier also does custom staircases and some millworker and he's constantly bringing on additional people and adding space to his shop.

I think that's one of the reasons my neighbor approached me - I would finish the project in weeks instead of months.

He picked up the vanity Thursday night and we talked a little. After some haggling he gave me $325 and said he thought he had bid the piece too low at $400 total. He was planning to have someone else finish it for him as well. I told him that next time I would do it all from the first cut to the finish, but the price will be higher. We'll see if he calls me again.

You are right, I have to get some info on the local market. That could be challenging since local builders treat that info like its national security secrets. I like the idea of establishing a base price per foot, at least that would allow me to do quick estimates.

Any advice?

Thanks for the help everyone.

 

[NYC Tiny Shop]

So, $325... What were your total costs? How many hours did you spend producing this? What was your hourly wage? What was your profit? This should all tell you if it was worth it. 

 

[duburban]

$325 is outrageously low. i'd imagine that you purchase good equipment to do such tasks since your on the festool forum. when you factor in your actual costs, i doubt theres much left. remember that home depot and lowes service the cheapo market, its not a good idea to compete with them.

 

[wow]

First let me apologize about the length of this post, but I'm going to try to give you a good runnng start.

If you want to be accurate, you need to figure out what is called your 'fully burdened shop cost' as if you were running a full-time shop. Do you have an accountant? They could help you do this, but it can get very detailed and costly.

Here's a VERY 'quick and dirty' way to get a 'ballpark' idea for a one-man shop:

1. Add up the replacement cost of all your tools and equipment. If you have an inventory for insurance purposes, that's a good starting point. Let's assume that number is $60,000 - which may be way low or much too high for your situation.

The IRS will allow you to amortize this over as little as 3 years. That means

Tools and equipment cost =
$60,000 over 3 years =
$20,000 per year = $9.62 per hour (assuming 2080 hours per year)

2. Estimate the square footage you would need if you had set up shop somewhere. Now, check your local newspaper, real estate listing, craigslist or whatever to see what a space that size is renting for. This will vary widely, but in your case it will be VERY COSTLY because of the boom situation. Let's assume a space will cost you $3600 per month and includes utilities to simplify our calculations.

So Space cost = $20.77 per hour (assuming 2080 hours per year)

3. Add the costs of an accounting system (software and computer and printer to run it on), telephone, internet, etc. Let's say that the accounting system costs $6,000, so

Accounting System = $0.96 per hour (assuming 2080 hours per year)

Let's say that the services - internet ($50) & Telephone ($50 - you have a cell phone, don't you?)  & garbage ($20) & accountant ($100) & business insurance ($400). Monthly services cost = $620 per month so

Monthly services cost = $3.58 per hour (assuming 2080 hours per year)

4. Vehicle - may or may not be needed. For simplicity, we'll assume a 3 year lease with all repairs covered by warranty. Assuming a medium sized truck, van or SUV, Monthly = $1,200 (yes, that's a real number!!!) so

Vehicle lease = $6.92 per hour (assuming 2080 hours per year)

And this does not include fuel costs!!!!

*********************************

We could keep going and getting into more detail, but I think you get the idea. So far we know that your hourly 'fully burdened shop cost estimate' is $41.85 per hour, broken down as follows:

Tools and equipment = $9.62 per hour
Space cost = $20.77 per hour
Accounting System = $0.96 per hour
Monthly services cost = $3.58 per hour
Vehicle lease = $6.92 per hour
--------------------------------------------
Fully burdened shop cost estimate = $41.85 per hour

Insert your own numbers, make your own assumptions, and figure out a good 'guesstimate' to begin working from.

Hope this helps!

 

[overanalyze]

Very well said. There is a ton of costs that people overlook in small business.

 

[Bob Wolfe]

at 41.85 you still are not eating yet. Add on what you need for an annual income and see why shop time to fix your car is 80.00 an hour.
Sometimes scary to think of the costs every morning when you unlock the door....

 

[NYC Tiny Shop]

Wow, this is a good way to break-down the numbers.   [wink]
So, for this example, shop costs are about $333/day. Add on an hourly rate and all other production costs  to find the base-rate for the project. Don't forget to plan for that X-factor...the unforeseen issues that invariably come up.  [eek]

 

[Wonderwino]

I just finished overhauling a BORG cabinet that I'm sure our home's previous owner bought for about $300.  It is put together with staples and particle board except for the face frames.  It is a POC that I'm going to replace with my own custom cabinets - soon!  I only put a new bottom in it to get us by for a few months until we get ours done.

Living in ND, you can probably charge as much a you want near the oil patch.  Those guys are making above average wages and can afford to pay you what you're worth.  Don't sell yourself short.

 

[Jasonj888]

Thanks for the info and support guys, you are made many very good points. After the advice and some thought, I do think he's aiming at Lowes price for custom cabinet quality.

I've built lots of pieces for a variety of customers, generally people I already know and the prices have varied widely. The difference with this project is that he is going on to make money from my work. That feels a little different than building something that is sold directly to a consumer that is incredibly excited to get it.

I've been thinking that I primarily do this because I enjoy it. Building a vanity isn't as fun as some projects and because of that I should be compensated a little better.

Thanks again! Hope to post a couple photos of my newest project tomorrow. I'm pretty sure nobody on this forum has built what I'm working on ...