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Reply by lblankenship

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Posted on Calculating Overhead & Shop Rate

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lblankenship

53 posts in 1151 days


#1 posted 05-07-2019 01:08 AM


I ll be happy to try and help you, as I ve been self employed for 30 years. I honestly can say I have no idea what you re talking about, though.

It sounds like you are trying to come up with some phantom way of calculating an overhead expense of your business that doesn t actually exist.

My advise to you is to try and not over complicate the accounting. As you said, you have fixed costs, and variable costs. The more you work in your shop, the more your costs will go up, but hopefully, so will your commissions.

Focus on what you can charge for whatever your product is (cabinets or furniture, or ?), and subtract your actual hard costs for your workshop, utilities, glue, screws, etc….and whatever is left is your labor. If you re not making enough, and you can t work faster, then you need to charge more to survive.

Don t let the accounting get in the way of making your business work. Calculate your exact costs, and know what they are, and account for them. You will very quickly be able to adjust your fees if need be.

- Jeff Heath

Here is an article from Rockler that is pretty much the method I am attempting. I looked around at various methods though to see the advantages and disadvantages of each and I just sort of fell on this method.

https://www.rockler.com/how-to/set-price-woodworking-projects-home-workshop


Blankenship: what have you placed your bid on ?
what kind of projects will you most likely be doing in the future ?

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- John Smith

I quote a wall mounted media console. The console is 48”(W)x10”(H)x14.25(D). The console would be made of 1/2” maple ply doubled up to be near a 1” overall thickness then the edges would be covered with 1/4” thick maple strips. The console has one partition with an adjustable shelf and the whole thing will be mounted to the wall on a french cleat. I’ve added a picture of my rendering. Example bid 1 is what the quote I came up with for this piece.

$100 materials + $140 labor ($35/hr @ 4 hours) + $48 overhead + $33.60 profit = $345.60 pretax.

My plan is to focus on indoor residential furniture (dining/coffee/side tables, built in cabinetry, benches, chairs, book cases, etc.). However, I’m not against doing outdoor furniture or branching out into working for more commercial type clients. The later just wont be my focus starting out.


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