Pricing & deposits
How to price custom furniture: a pricing formula for small studios
Updated · 7 min read
This guide is for makers who build furniture to order in a small studio, alone or with one or two others. You already know how long a mortise takes you. The harder part is turning hours and timber into a price that pays you, keeps the workshop running and still lands with clients.
We walk through a full cost model, line by line, then add margin. There are three worked examples with the arithmetic shown. You can run your own figures in the free pricing calculator.
All numbers in the examples are illustrative. They are not market prices. They work in any currency, so read them as euros or dollars.
Key takeaways
- A flat "materials times three" rule ignores labour, so it breaks as soon as two pieces use the same timber but take different hours.
- Your overhead rate is your annual fixed costs divided by your annual productive hours, and productive hours are fewer than the hours you spend in the workshop.
- Add a waste allowance to timber cost, and price subcontracted work, delivery and installation as their own lines.
- Margin is profit as a share of price, so price equals cost divided by (1 minus margin): a 20% margin means dividing cost by 0.8.
- A 50% margin needs a 100% markup, which is why mixing the two terms leads to underpricing.
- Quote a range from minimum and maximum hours until the design is approved, then fix the price.
Why "materials times three" fails
The rule of thumb is old and common. A Fine Woodworking forum post from 2002 describes it as working out material cost and charging "3x that amount". The same post points out the problem: the same design in a cheap and an expensive timber would produce very different prices for the same work.
The multiplier also hides labour. A tall chest in poplar with hand-cut dovetails uses little timber and many hours. A plain slab table uses expensive timber and few hours. One multiplier cannot price both. Use it as a sanity check at most.
The full cost model
Work through these lines in order. Each one is a cost you carry whether or not you price it.
Materials and waste allowance
Price timber, sheet goods, veneer, hardware, finish and abrasives from current supplier quotes. Then add a waste allowance for defects, grain matching and offcuts. Set the percentage from your own cut lists: a straight-grained board job wastes less than curved parts or book-matched tops.
Labour
Estimate hours per stage: design detailing, timber selection, milling, joinery, assembly, finishing, fitting and delivery. Multiply by the labour rate you want to pay yourself. This is your wage, before the business takes anything.
Overhead rate
Overhead covers costs that do not belong to one piece: rent, power, insurance, tool wear and replacement, software, accountancy, vehicle, marketing.
Overhead rate = annual fixed costs ÷ annual productive hours
Productive hours are hours you can charge to a commission. Admin, quoting, sharpening, cleaning and sales calls are real work but they do not appear on any one invoice. Count yours honestly for a year.
Example studio: annual fixed costs of 24,000 and 1,100 productive hours. 24,000 ÷ 1,100 = 21.82, so call it 22 per hour. With a labour rate of 35, the combined shop rate is 57 per hour.
Subcontracting, delivery and installation
Veneer pressing, spraying, upholstery, metalwork, glass and stone are separate costs. Add the supplier's quote plus any time you spend managing it. Price delivery and installation on their own line, including van time and a second pair of hands.
Risk buffer
A small percentage on top of the subtotal covers the unknowns: a board that moves, a client who wants a second finish sample. Use a larger buffer for new designs and a smaller one for pieces you make often.
Margin
Margin is the business's profit, separate from your wage. It pays for new machines, slow months and mistakes.
Price = total cost ÷ (1 − margin)
Margin vs markup
Markup is profit as a share of cost. Margin is profit as a share of price. The same profit gives a smaller margin figure than markup figure.
| Target margin | Equivalent markup | Price on a cost of 1,000 |
|---|---|---|
| 20% | 25% | 1,250 |
| 25% | 33.3% | 1,333 |
| 33.3% | 50% | 1,500 |
| 50% | 100% | 2,000 |
If you add a "20% markup" to a cost of 1,000, you charge 1,200 and your margin is only 16.7%. The conversions are markup = margin ÷ (1 − margin) and margin = markup ÷ (1 + markup).
Design and consultation fees
Early conversations are part of selling. Detailed drawings, timber samples and finish boards for one client are design work. Many makers charge a design fee at that point and credit it against the order if the client goes ahead. Write down what the fee covers, how many revisions are included and who keeps the drawings if the client does not proceed.
Quote a range, then fix the price
Before the design is settled, you cannot know your hours. Estimate a minimum and a maximum and price both ends. Give the client the range with a short note on what moves it, such as timber choice or drawer count. Once the design is approved, fix the price and put it in writing. This also gives you a clean point to take a deposit.
Worked examples
All three use the example studio: labour 35 per hour, overhead 22 per hour, shop rate 57 per hour. The figures are illustrations of the method.
Example 1: oak dining table
A 200 × 90 cm (79 × 35 in) table, solid top, four legs with aprons. Expected 44 hours.
| Line | Calculation | Amount |
|---|---|---|
| Timber | supplier quote | 650.00 |
| Waste allowance | 25% × 650 | 162.50 |
| Finish, hardware, consumables | 60.00 | |
| Labour | 44 h × 35 | 1,540.00 |
| Overhead | 44 h × 22 | 968.00 |
| Delivery | 120.00 | |
| Subtotal | 3,500.50 | |
| Risk buffer | 5% | 175.03 |
| Total cost | 3,675.53 | |
| Price at 20% margin | 3,675.53 ÷ 0.8 | 4,594.41 |
Rounded, that is 4,600. Quoted as a range of 38 to 48 hours with the same method, the table comes out at about 4,150 to 4,900.
Example 2: walnut sideboard
A 180 × 45 × 80 cm (71 × 18 × 31 in) sideboard with veneered doors, two drawers and pressing done by a subcontractor. Expected 60 hours. More fitted parts means a larger buffer.
| Line | Calculation | Amount |
|---|---|---|
| Timber and veneered board | supplier quote | 900.00 |
| Waste allowance | 20% × 900 | 180.00 |
| Hardware | hinges, runners | 140.00 |
| Finish | 50.00 | |
| Labour | 60 h × 35 | 2,100.00 |
| Overhead | 60 h × 22 | 1,320.00 |
| Veneer pressing (subcontract) | quote | 280.00 |
| Delivery | 150.00 | |
| Subtotal | 5,120.00 | |
| Risk buffer | 8% | 409.60 |
| Total cost | 5,529.60 | |
| Price at 25% margin | 5,529.60 ÷ 0.75 | 7,372.80 |
Rounded, that is 7,375.
Example 3: ash dining chair, one-off or a set of six
Each chair takes 16 hours. Patterns and jigs take 20 hours once. Materials per chair: timber 90, waste 35% (31.50) for curved parts, finish 15, seat weaving by a subcontractor 85. Delivery is 120 per trip.
| One chair | Per chair in a set of six | |
|---|---|---|
| Hours | 16 + 20 = 36 | 16 + 20 ÷ 6 = 19.33 |
| Materials | 136.50 | 136.50 |
| Seat weaving | 85.00 | 85.00 |
| Shop time at 57/h | 2,052.00 | 1,102.00 |
| Delivery share | 120.00 | 20.00 |
| Subtotal | 2,393.50 | 1,343.50 |
| Risk buffer 5% | 119.68 | 67.18 |
| Total cost | 2,513.18 | 1,410.68 |
| Price at 20% margin | 3,141.47 | 1,763.34 |
The one-off chair carries all the jig time. That is why a single chair often looks expensive to clients. The set of six comes to about 10,580 in total.
Check your numbers after every build
Log actual hours against quoted hours by stage. After a few commissions you will see where you under-estimate, which is often finishing and fitting. Feed that back into the next quote and recalculate your overhead rate each year.
Sources
- CHARGING, Fine Woodworking forum (2002): the "materials times three" rule of thumb and the problem with it across timbers
- Furniture mark up, Fine Woodworking forum (2009): makers noting there is no fixed markup rule for furniture
- Margin vs markup, Xero glossary: definitions of margin and markup and the conversion formulas
Questions this guide gets asked
What hourly rate should a furniture maker charge?
There is no single right figure. Start from what you need to earn per productive hour, then add your overhead rate on top. If the result is above what your market pays, look at productive hours, overhead or the kind of work you take on before you cut the rate.
Should I charge for my time spent designing and quoting?
Many makers charge a design fee once a project moves past a first conversation, and credit it to the order if the client goes ahead. Small amounts of quoting time belong in overhead. Long design work for one client is real labour and can be billed as such.
Is it fine to show the client a breakdown of hours and materials?
You can, but it invites line-by-line negotiation of your hourly rate. Many makers share the total and the scope, and keep the breakdown for their own records. If a client asks, explaining what the price covers in plain terms is usually enough.
How do I price a piece I have never made before?
Break it into stages you have done before and estimate each one, then add time for jigs, templates and problem solving. Use a wider hour range and a larger risk buffer. Record actual hours so the next quote is better.
Should I charge less for a set of chairs than for one chair?
Per chair, usually yes, because jigs, patterns and set-up time are shared across the set. The total for the set still rises with each chair. Price the set-up once and spread it over the batch.
How often should I review my prices?
Review your overhead rate at least once a year and whenever a big fixed cost changes, such as rent or a new machine. Compare your quoted hours with logged hours after every commission. Timber prices can move faster than that, so price materials from current quotes.