If you’re in the business of creating custom products, you know how increasingly difficult it can be to put a price tag on your labor, skills, and expertise. If it was so easy, there would be a standard price guide for every industry but because only you know the amount of time and heart that went to it, only you can be one to determine its worth.
The following five tips will help you with pricing your custom work. It can be very easy to undervalue your work when you’re first starting out. Learning how to properly price your custom goods and services will make it easier for you to appeal to a certain demographic.
Here are some ways to develop a pricing system for your business:
- Consider the cost of materials and add 10% for your time acquiring said materials. When a customer contacts you about doing custom work, you need to factor in the cost of each item that it is going to take to create the product. Once you have a general idea of what supplies are going to cost you, add 10% to that figure to account for the time it takes to order or purchase, transport, and convert those supplies into the desired product. The same can be said about services. Factor in transportation, gas, tolls, etc. if you plan on bringing said services to your customers.
- Think about how long it is going to take you to create the item. Cut down big projects into smaller projects to best estimate cost. This suggestion made by the WoodWhisperer.com illustrates how a custom cabinetry job could be priced. The owner of the site suggests breaking down a cabinet into 8 sections. He suggests factoring in the time spent “cutting carcass and door parts, joinery for the case, assembly of the case, joinery for the door, assembly of the door, edge treatments, finishing, and hardware installation.”
- Determine how much your time is worth. Note that you’re not going to win everyone over with your pricing. That should not be a reason to short change yourself, however. When it comes to doing custom projects, think quality over quantity. There is a lot to consider in terms of equipment, supplies, and skills that need to be acquired before taking on a big project for a client. If they truly value your work, they’ll see the worth in your pricing.
- Factor in the cost of advertising and shipping (if relevant). As mentioned before, time and labor are not the only things you’ll need to consider. There will be additional costs that you need to think about. For example, most custom project require electricity. How much did you consume creating the project for your customer? Although this might seem like a minor expense, think about how much it can accrue over time after multiple custom projects have been completed.
- Send a price quote to the customer before starting the project. Once you have a general idea of what you’re going to charge, send a price quote to the customer to review. This will give them the opportunity to see how you break down costs so that there isn’t any question about your integrity later on. Draw up a contract between both parties as an added layer of protection. It never hurts to be on the safe side of negotiations. Add a clause to the contract about revisions. Changes to the original design will cost more because of labor and additional supplies.
Now that you have a better idea of how to value your custom work, pricing in the future shouldn’t take too much time. You’ll be able to ask for and get what your products or services are worth. That means less stress and more profits for you and your business.