Charges for shop rental to other makers

[CarrieCarpenterChick]

Hello All!

I have a fairly large and equipped shop with a few folks who I know that are interested in using some space, equipment and general supplies to work on their own projects
on the side. I started with one GC who was building some furniture pieces for a client. We agreed on $50/ hr for my help/consultation, $30 a day for shop use, $20/ week for general supplies (cost of sharpening blades, paper towels, gloves, stir sticks, scraps for jigs etc). If he was working 4 hours or less I’d just charge a half day. It worked well and I did make some extra $$. He brought his own drills, router, sander, extra clamps etc. I have another person who does some contract work for me but also does his own thing on the side. He’s wanting me to charge by the hour- works out to $3.75/hr!! He brings no tools, keeps wood in an extra storage container outside the shop, has a pile of projects in the back. I’m trying to be equitable and fair but it’s not worth me working around him and his pile of stuff for $3.75. Even for $30 a day I’m feeling taken advantage of.

What are some general practices you have found to work well if you rent your shop? If you rent from someone else, what are the terms? Thankfully he’s only worked a handful of days so far this year but I have to have something solid in place in contract form.

Details: shop is in 3200sf finished pole barn on my property. I’m renting the entire thing, including house and an acre of land for $2900/mo+ utilities. It’s my primary residence, friends own it, and I’m eventually purchasing the property.

Thanks in advance for your input. I read a lot here and have garnered a lot of knowledge and tips. Keep up the great work!!

Carrie

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[kevin clifford]

My first thought is you are opening yourself up for a lawsuit. Your shop, your liability. Someone has an accident, you're on the hook.
  Second thought, nobody will care for your tools and shop as well as you do. There isn't nearly enough of an upside to having other folks working in your shop. To me, I would say it is too risky. Especially for less than a cup of coffee.

 

[Sheik Maboutie]

l agree with Kevin 100%, the guy you have is already taking liberties....they will keep coming

 

[DynaGlide]

Cut them loose and stop trying to make money from it. If a friend of yours wants to stop by for help on a project on a one off basis then sure by all means. This is just going to be at best a headache and drain on your emotional wellbeing. At worst, a lawsuit as pointed out above.

It's your space you have no reason to work around other peoples stuff or schedules for any amount of money.

 

[cpw]

Even ignoring liability [which is important], you are charging way too little.

There is a lot of value in flexing the space.  If you rent a house for a year, you might pay $2500/month.  If you rent a hotel room for a day or a week, you might pay $200/night for 1/5 of the space.  You should be charging for that flexibility. 

You have to cover not just the rent of the space, but also the capital cost and wear and tear on your tools, etc. as well.

 

[John Beauchamp]

Don't worry about what anyone else does. Figure out what it's worth to you to lose the space for a day or week and charge that. If you already have liability insurance as a contractor you can probably operate under that, otherwise make them provide a certificate of insurance. Might want to talk to your insurance man about it. It sounds like this might be about relationships as much or more than money. I help anyone and everyone whenever I can and don't worry about  lawsuits, but that's just me. I refuse to live in fear about what might happen.   

 

[kevin clifford]

While I agree with you John and help others whenever I can. I married a lawyer, seeing what they see would sway anyone's opinion.

 

[sancho57]

Ya gotta be careful letting people use yer shop / tools. As been noted here already.

What I do is build it for them.

That way you make a few bucks and dont have the liability.

saves a lot of problems.

I dont even loan my tools out.

id rather do the work for them then let them borrow them.

 

[semenza]

With additional insurance, covering your overhead (heat, AC, electric, etc), and set up to not have to do your own work less efficiently with others in the way ..........................  at $30 a day or $3.75 per hour , I think you must be losing money.

Seth

 

[JRD]

I had a shop that I rented out space for 25 years. It was a 9100 sq ft building with about 6000 shop and 3100 of office and storage space. It was a great way to have a large shop and share the expenses. When I closed it about 5 years ago I was renting  spaces 10' x 14' for $ 850.00 a month and we shared the large machinery. Each person had their own hand tools.  I only rented to people who made a long term commitment. Most had their own business. This way it was in their best interest to take better care of the tools if their livelihood depended on it. People always asked me to rent for short term, one project or so it was never worth it.

 

[CarrieCarpenterChick]

All good info so far. I do have insurance, both for the building and contents as well as commercial liability. I am not utilizing the entire space. The guy in the OP really wants to make some hobby income and learn the trade. I’m too busy with work to make anything for him. His stuff is not my style either. It’s almost kind of like a MakersSpace arrangement.

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[CarrieCarpenterChick]

I had a shop that I rented out space for 25 years. It was a 9100 sq ft building with about 6000 shop and 3100 of office and storage space. It was a great way to have a large shop and share the expenses. When I closed it about 5 years ago I was renting  spaces 10' x 14' for $ 850.00 a month and we shared the large machinery. Each person had their own hand tools.  I only rented to people who made a long term commitment. Most had their own business. This way it was in their best interest to take better care of the tools if their livelihood depended on it. People always asked me to rent for short term, one project or so it was never worth it.

Exactly. This is where I am leaning right now. We could easily have 2 additional crafts people in the space if we did something similar.

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[CarrieCarpenterChick]

There is a lot of value in flexing the space.  If you rent a house for a year, you might pay $2500/month.  If you rent a hotel room for a day or a week, you might pay $200/night for 1/5 of the space.  You should be charging for that flexibility. 

You have to cover not just the rent of the space, but also the capital cost and wear and tear on your tools, etc. as well.

Good point on the value of flexing the space. I’ve been considering overhead as well: Sharpening/ replacing blades, replacing sanding belts, filters, even wear and tear on the overhead door etc.

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[xedos]

I don't know anything about your operation, but I do know that $3.75 doesn't really cover very much of your overhead.  Especially considering you're not collecting the 3.75 eight hours a day, five days a week.

Heck, $3.75 doesn't even cover your expense for producing and sending the invoice. 

 

[jeh]

All good info so far. I do have insurance, both for the building and contents as well as commercial liability. I am not utilizing the entire space. The guy in the OP really wants to make some hobby income and learn the trade. I’m too busy with work to make anything for him. His stuff is not my style either. It’s almost kind of like a MakersSpace arrangement.

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You might have insurance, but does it cover others using your shop in the arrangement you have? Your insurance company needs to made crystal clear that you have others, who are not employees, working in your shop. I know in my wife's business, a dance studio, the insurance company made it clear that no one except employees can work at the facility, unless their job is unrelated to dance such as repairmen, janitors, etc. My wife would like to bring in temporary teachers, but her policy strictly forbids it, except for individuals (or companies) with their own liability and Workmans Comp insurance that we have to provide to her insurance company to make sure it meets their requirements.

If a customer of yours who is buying your work, such as a cabinet and they trip over a rug and brake their wrist (bad example, but you get the idea) you and your insurance company will be on the hook, but it would be a covered event thereby transferring the liability to the insurance company. However the same will not be true if your insurance company does not know that the nature of your business now includes facility rental to use your shop tools. I'll equate this to the auto repair shop owner who has the sign that says no customers beyond this point (in the garage area). There is a reason and it is their liability policy which definitely does not cover customers being in there or definitely not working on their cars.

I expect your insurance company will require those, such as the GC you have let work, be listed as an additional insured on their liability insurance. Same for anyone working in your facility unless you want to change the type of coverage you have. I'd hate to see someone such as yourself, who is trying to make an extra dollar while helping people out others, get sued and be held personally responsible. Also, if your space is leased then the landlord has a vested interest in making sure you have the proper insurance coverage. You city/town/county might also be interested since there are different rules for private facilities versus those who are now public.

All that said the cost may not be that much more, but I would not be surprised if it is not more only because of the potential for life changing injuries.

Let us know what you find out. The risk is definitely not worth the reward and given what you are charging I doubt it is even worth the hassle.

 

[zapdafish]

I'd get a lawyer to draw up an agreement releasing you from as many liabilities as you can think of and even then if he gets hurt some lawyer will prob be willing to sue you.

 

[semenza]

Sounds like you could actually set part of the shop up to have ' x ' number of maker spaces to rent.  Maybe even rearrange a few things to divide spaces for semi privacy.  Cubicles for makers.

Regardless of the details.

Start charging real money. The "reorganization"  to really set up for that purposes would be a good opportunity to make changes to existing users pricing. eg ; I am making this into a real rental business so here is the new deal for spaces.

One other thought .....................  you said that you are currently renting the whole property?  What about sub-letting restriction in your lease, and stipulations by your landlord?

Seth

 

[Wooden Skye]

The first thing I would do is familiarize yourself with the real estate market.  Find a shop space for rent, look at it and get basic per SF pricing, plus CAM, taxes and utilities.  This will give you a baseline of what a person can expect to pay if they want shop space.  Find a way to set up defined spaces, put tape on the floor, hang tarp or plastic walls, build actual walls, charge by the square foot.  If you want to share equipment, factor in some cost for that above rent and get in writing you aren't liable for their use, since you don't own the building both you and the owner will be liable.  I'm not saying you need to charge actual market rents, but $3.75 an hour is way to little and varies to much.  Draft up a quick lease.  If the person isn't willing to commit even on a month to month basis, move on.

 

[capww8]

Friends are friends, clients are clients, and never the two shall meet.

If I trust someone enough to let them use my space and tools, then I couldn’t bring myself to charge them for the privilege.

If I don’t know someone well enough to trust them with my space and stuff, the amount of money it took to overcome that gulf would make the whole arrangement impractical.

The other thing is that once money starts changing hands I have to start thinking about treating the thing like a business, and my shop / tools exist purely as a hobby or outlet... it would definitely stop being fun in the same way if I tried to make it a business.

 

[CarrieCarpenterChick]

All good info so far. I do have insurance, both for the building and contents as well as commercial liability. I am not utilizing the entire space. The guy in the OP really wants to make some hobby income and learn the trade. I’m too busy with work to make anything for him. His stuff is not my style either. It’s almost kind of like a MakersSpace arrangement.

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You might have insurance, but does it cover others using your shop in the arrangement you have? Your insurance company needs to made crystal clear that you have others, who are not employees, working in your shop. I know in my wife's business, a dance studio, the insurance company made it clear that no one except employees can work at the facility, unless their job is unrelated to dance such as repairmen, janitors, etc. My wife would like to bring in temporary teachers, but her policy strictly forbids it, except for individuals (or companies) with their own liability and Workmans Comp insurance that we have to provide to her insurance company to make sure it meets their requirements.

If a customer of yours who is buying your work, such as a cabinet and they trip over a rug and brake their wrist (bad example, but you get the idea) you and your insurance company will be on the hook, but it would be a covered event thereby transferring the liability to the insurance company. However the same will not be true if your insurance company does not know that the nature of your business now includes facility rental to use your shop tools. I'll equate this to the auto repair shop owner who has the sign that says no customers beyond this point (in the garage area). There is a reason and it is their liability policy which definitely does not cover customers being in there or definitely not working on their cars.

I expect your insurance company will require those, such as the GC you have let work, be listed as an additional insured on their liability insurance.

VERY good points I need to consider. For now, everyone else using the shop is on hold until I have questions answered.

Thank you for the input.

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