Prepare thyself for long post - you have been warned, but I hope this helps someone; (No TLDR)
I was in the business of manufacturing custom wood furniture for 6 years – last 2 years I been very grateful for driving a desk again (drafting work for a civil engineering company specializing in traffic engineering).
@PandaAttack1 is 100% correct with why so many guys and girls think a “gap” exists in the market. I’d like to add a few things you just HAVE to take into consideration before you do go down this path (fuck I’ve desperately tried to help 2 separate individuals with this same advice, and I can see their worlds slowly falling apart because they obviously reckon I have no fucking clue what I’m talking about – whereas if they had just followed my advice they might still have a fighting chance to change the course they are on.
You are not selling your product – you are literally selling your time.
There’s a silly little formula amongst some of the players in this game. Unit Price = Cost of Material x 2.5 (some guys use x3) assuming this will cover all overheads and give them little bit of a profit margin. Often, costing this way will result in pushing you in the red (without realizing it) – other times it will get very close to break even and, on a few occasions, it might bring in a profit.
The RIGHT way to cost your items, according to me is below;
Figure out your target hour rate. Using this thread as guide, you indicated this would be more of a side hustle to bring in a little extra every month. How much extra per month? You need to be realistic and brutally honest when figuring this out. Do this wrong and you are wasting your time off the bat. Let’s say R4000/month for the sake of my “lecture”.
How many hours would you have at your disposal every month for the side hustle? Let’s assume 10 hours every weekend for 4 weeks for a total of 40 hours.
That brings your hourly rate to R100/hour. You have 40 hours sitting on your shelf at the start of every month – it is these hours you are trying to sell not your “product”.
I realize this is a very simplified example.
My hourly rate had to cover all
fixed monthly expenses – rent, insurance, salaries, fuel, phone, marketing etc. My hourly rate was sitting at about R800/hour before I shut the company down.
Why “custom” is a slippery slope and your own product is king
Every custom piece has additional time overheads attached to it – even before you have lift a tool from the bench.
Consultation (1hour), drawing up plans and revisions (1-3 hours), new bill of quantities for materials, prototyping etc. etc. These hours add up frighteningly quick – and you need to bill them. If not, you are the one paying your customer so you can keep “busy” for his benefit.
On average a custom piece added about 5-10 man-hours to my cost (i.e.R3200 - R6400 before I even ordered a piece of lumber or sandpaper at my R800/hr. rate)
With enough time and experience/skill it becomes easier to “ballpark” an estimate of hours for a custom project. But you must monitor and log your times like a fucking hawk to ensure you do not exceed the time you have allocated for your custom project – otherwise you are bleeding.
Selling your own pieces (i.e., non-custom) saved my customers a bunch of money right out of the gate. My plans, jigs and bills of quantities were ready to go, and I could hit the floor running as soon as the deposit hit the account.
To this day I know I can take raw lumber and turn it into an 8-seater table in 8-12 hours total (from the moment the lumber hits my workshop floor – to final product).
Where MY profits came from
My bread and butter were my “hours”. If I sold my quota of hours every month the lights would stay on, my staff and I were paid our salaries, and all was good – BUT that would just break us even.
My profits came from a 20% markup on the raw materials (don’t forget to include your sundries, which is often overlooked, nuts, bolts, screws, fixtures, sandpaper and paint aren’t free).
Summary
Get your costing spot on or you will waste your time.
You are selling hours (not products) so every minute must be tracked/billed for (including your consult times and driving to pick up supplies)
Put a reasonable markup on your raw materials for the “jam”.
Using this thread as an example
Custom Desk
Design 1.5hr
Consultation 0.5hr
Build Time 5.0hr
Total 7.0hr (@ R100/hr = R700)
Steel R400
Wood R300
Paint R100
Nuts Bolts R100
Material Total R900
Markup 20% R180
Final Desk Price
R1580 (R700 + R700 + R180)**
** LOL I fucked it up! R1780 total (R700+R900+R180)
