In this article I will focus on how to price your small wood work pieces, as opposed to larger contracts such as kitchens and built ins. If you are selling woodwork pieces, whether it be a one off bird carving, a kitchen table, or production scroll saw copies, it is sometimes difficult to come up with a reasonable price that customers will pay, but at he same time, a price that doesn't sell you short.
The way you price your work might be similar to how art is priced. So I recommend also doing a search on how to price art appropriately.
There are two main methodologies in how businesses price their work. One is 'cost plus' pricing, and the other is 'value based' pricing. Cost plus pricing is the method of pricing your product or service by totaling your materials, overhead, time, and profit.
There are problems with this method. This formula does not always produce a price that a customer is willing to pay however. If you spend many hours doing very detailed work, and expect to pay yourself a high hourly wage, then you might never be able to sell your woodwork because the price is too high. On the opposite side, sometimes using this method, you will be arriving at a price that is much lower than what a customer would have paid.
Value based pricing takes into account what the product or service is worth to the customer, not what it costs you to make the product. Basically what this method of pricing focuses on is what is the customer willing to pay for your work. Sometimes this 'value' can be considerably more than the cost plus method. Consider a chair made by Sam Maloof. He was able to sell his chair for many times the value of what it would have been than if he just considered his input costs.
If you are creating woodwork that is more on the artistic side, then the value based method may be more suited to you. If you are more towards the production line type of woodwork, producing many pieces of the same model, then cost based pricing might be more suited to you. Of course, when coming up with a price, you have to be realistic. If you are still new to woodworking or learning a new technique, you cannot expect to be paid at a high wage for your time while you learn on the job.
One last note that pertains to both the woodworking artists and small wood product manufacturers out there. If you plan to put your pieces in galleries, or have a retail store sell your product, understand that they will mark up the price a large percentage, sometimes up to 50%.
This means that you will have a retail price and a wholesale price for the same product. You cannot expect to sell to a retail store at the same price that you would sell directly to a customer. The retail store or gallery needs to mark up the price, but then it would be competing with you if you sell a similar piece directly to the customer at a lower price.
Hopefully this overview of woodwork pricing has helped you think about the various ways of how to price your product.