You can take your passion for woodworking and turn it into a profession as a professional woodworker. But, can you ensure that your woodworking business will remain profitable? There is a distinct set of business skills needed and your woodworking smarts to remain profitable in the woodworking business. While you may love making new wooden products, you must ensure your business stays healthy and profitable while enjoying your work.
Woodworking is a profitable business that requires constant effort and good attention to the numbers. You must make sure to put your business in the front seat and make informed decisions to run a profitable business.
You will be putting on many hats while you run a woodworking business. You must embrace the new challenges that come along with running a profitable woodworking business. There are business needs to attend to, and you must pay careful attention to your market changes. You will have to get good at bookkeeping and make good decisions with your cash flows. As you get more projects and keep making smart decisions, you will be well on your way to running a profitable business.
Is Woodworking a Profitable Business?
You can make a good living with woodworking. You will have to be ready for a few challenges to tackle and make many well-informed decisions while running a woodworking business. Some of the things might be new to you since you’ll be making the transition from enjoying woodworking to depending on it to make a living.
We will look at some of the most important things to be wary of while running a successful woodworking business. You will have to pay close attention to these things as your business will benefit a lot if you can do these well.
1. Pricing for Profit
Woodworking is profitable. But you will have to price for profit. Do not shy away from pricing your products to make a profit. Remember that you have to remain in business to fill a gap in the market and give customers the high-quality wooden products they deserve. To remain in business, you have to price your products for profit.
It is usual to put a 30% to 60% profit margin on wooden products. You will have to decide on the rate that suits you. Remember, the more experience you get at pricing your products for profit, the better you will get at it.
2. Be Prudent with your Money
Do not go for big workshops or fancy tools and equipment. If there is no pressing need to buy something, do not buy it. You can save a lot of money by making friends with people in the woodworking community and paying a small amount to do a one-off task that might need equipment that costs a lot of money. This might not be a repeated task, and you might only need the equipment for one time. It’s better to turn for help to your woodworking community here.
There is a lot you can do with your small garage workshop. If there is no need to move to a bigger space, don’t do it. As your business grows and you get more orders, you might hire a few woodworkers and then consider a move. Bootstrap, and don’t spend money on things you don’t need.
Make sure you work with woodworking tools that are reliable and that you have. You don’t have to get more tools as you start your business. Stick to the tools you have and get more as the need arises. Do not spend if there is no need. You have to be wise with your cash. Be prudent and save money. You will thank yourself for it later.
Even if the season is busy or even if it is dry, don’t forget to market your company and brand. Marketing does not end. You cannot be complacent with the existing base of customers and not look for new ones. You need marketing to get the word of your brand out to the audience who are interested in your services.
Be sure to try all the various free methods of driving traffic to your woodworking website. Produce good quality content on your website/blog, maintain a YouTube channel, and be active on social media by sharing useful information related to your industry. All these will put you in front of your customers, who will consider your services when they’re in need. Open an Etsy store if you need to.
You can make a few wooden products for your friends and family and let your products speak for themselves. Word of mouth is a powerful marketing tool, and if your products are loved, they will be spoken about a lot.
If you can constantly work on these important aspects of your woodworking business, you can expect your business to do well and remain profitable.
How Much Can a Woodworker Make?
The money a woodworker can make depends on a few factors. It depends on the area of operation, the reputation of the brand, and the woodworker’s experience, among others. We will understand how these can have an impact on how much a woodworker can make.
The average salary of a woodworker is around $35,000 per year. This is the average salary, which means that woodworkers can earn much higher than this. On the higher-end of the spectrum are woodworkers who earn more than $100,000 per year, and some woodworkers earn under $20,000 per year in the lower end of the spectrum.
The money that a woodworker can make also depends on time preference. Some may want to work 40 hours per week, while others only work 25-30 hours per week.
Area of Operation: Woodworkers in large cities might get a constant stream of orders. They can make more money than woodworkers living in small cities and towns. However, there is the downside of a higher living cost when operating out of large cities.
Reputation: The business’s reputation is a factor that comes into play in determining how much money it makes. Businesses established with an excellent reputation can make a good amount of money because customers are willing to pay a little more to a business with a strong track record of delivering on its promises.
Experience: An experienced woodworker will charge more because the woodworker has an established portfolio and has made good connections with many clients. As woodworkers get better with every new woodworking project, an experienced woodworker will make good wooden products that match the customer’s requirements.
How Do You Price Woodworking Jobs?
It is essential to price your woodworking jobs right. This is because if you price your jobs too high, you will not get any customers. If you price it too low, you will be losing money and soon go out of business.
So, how do you price woodworking jobs?
The best way to price your woodworking job is to split the individual costs for the job.
Here’s how you can do it.
For every woodworking job, you can split your job into the following costs,
- Material Cost – actual cost of the wood and supplies that you use.
- Labor Cost – how much your labor is worth per hour.
- Overhead – the industry average for overhead is a 15% markup.
- Profit margin – the average profit markup is 10% in the industry.
- Selling and shipping – Average is about 15%
- Retail markup – A retail store will mark up the price by 100% than offering the item at a discount.
Remember to add a profit margin to the total cost.
The material and labor cost for woodworking jobs can be further subdivided based on individual tasks. Let us understand this with an example. For example, you are building a custom wooden shelf, you might get the wood needed to make the wooden shelf. The cost of the wood will be your material cost.
You can add the individual tasks that you do with the material you’ve purchased to create the end product, which is the wooden shelf for labor cost. The labor cost should be determined by splitting the labor into individual tasks based on the time taken to do each task. For example, you can split the labor cost in this example into,
- Shopping – 1 hour
- Cutting Shelf – 1 hour
- Polishing edges – 1 hour
- Finishing with varnish – 1 hour
- Assembly of the shelf – 1 hour
You can put your hourly cost to arrive at the total labor cost. A quick cheat sheet for the hourly cost is to multiply your hourly cost by 2000 to arrive at your total earnings per year. This is if you plan to work 40 hours per week.
So, using this, if you plan on working 40 hours per week, you will make $20,000 per year if you charge $10 per hour and $40,000 per year if you charge $20 per hour.
Fix your price accordingly.
Also, add the overhead cost of running your business into your hourly cost.
Finally, add a profit margin for your business, and you will get the total cost for your woodworking job.
What Woodworking Items Sell the Best?
While you might love working on custom handcrafted toys, you will find it hard to get a buyer if there is little demand for them. Even though there are many woodworking items you can work on, a few of them sell really well, and if you can focus your attention on these items, you can earn good regular money that will keep your business profitable.
1. End Tables
End tables are trendy and easy to make. You can make them in small and medium sizes and customize them according to customer requirements. They fit well in different homes and size spaces. Since they come in different heights to get the requirements for them and make them, you can also add a bottom shelf to these end tables.
2. Serving Trays
Serving trays are quite popular among customers. They are highly customizable, and you can get a lot of orders with a good portfolio of satisfied customers who have purchased serving trays from you. Since they are easy to make, you can save time and make many of them and get orders for them.
3. Step Stools
Step stools are versatile and can be suitable for both kids and adults. With this functional wooden product, you can grab a lot of attention. If your product satisfies the customer and has a neat finish, you will get many orders for it. They sell very well since they serve many purposes inside homes.
4. Coffee Tables
Coffee Tables are trendy. They come in various sizes and shapes. Many households are looking for good quality coffee tables, and you can build customized ones that don’t take a lot of effort. With the right wood and finish, these tables make the living room look good. You can sell them easily from your shop and online.
Shelves are simple and constantly in demand. There are a lot of customization options possible with shelves. You can add in some designs according to the requirements of customers. If you can get your hands on reclaimed wood, they will add a nice look to the shelves. Your craftsmanship can win you a lot of orders for wooden shelves.