So, you actually want to make money by doing woodworking? That sounds like a fantastic idea, but how exactly do you maximize the profit from the wood that you are paying for?
It is not rocket science, and it sounds quite easy when it’s laid out. There are some general rules to follow when choosing the types of products you should offer to your customers, in order to maximize the value of your work.
In this article, we are going to take a short look into the art of making more money all while spending the same time and effort on a project.
And just to be clear, I am not going to recommend specific products that you should make. It depends on where you live, what type of customers you want to serve, and what type of person you are inside… Deep - I know.
What I will do, however, is outline the common traits that profitable woodworking projects have in common. So if that seems like something you want to learn, then keep on reading.
Quality of material
The type and quality of the material you choose can make or break any project. If you want your customers to pay premium dollar for your woodworking products, you need to choose materials that are worth paying for.
The world is filled with an abundance of cheaply made products, created from particleboard and melamine. And you cannot compete in that segment of products.
So unless you’re considering taking on IKEA as your arrival, you should focus on creating products made from quality materials.
Having a good amount of money invested in materials can sound a little scary, but the thought of having bought loads of crappy material without the ability to sell it - That is even scarier.
Remember to always do your homework and research which type of materials are trending right now. It shifts over the years, going from dark shades such as Maple and Ebony woods. Over two lighter colored wood such as oak and Ash.
This is what your customers are paying you for! It is transforming and refining the raw material into something that they find useful.
So when we think about the concept of transforming materials into something useful, that your customers want. How can we then do this in the most efficient way possible?
When I talk about transforming materials, I’m referring to all the things you do to the actual material. Cutting, planning, sanding, these types of tasks.
Some transformations are fast and efficient, like cutting a plank to the correct length with a circular saw, and some transformations are very slow like creating finger joints.
You see, oftentimes 80% of your time goes into details and other non-essential tasks that don’t really add any significant value to your project.
Having a plan on how you are going to transform the material into the finished product, and the minimal tasks needed in order to make that product a reality, can significantly reduce the amount of time you spend on a project.
It will give you a clear path on what to do and how to effectively create a proper product that your customer wants.
So whenever you start a new project you can break it down like this;
- What end result is my customer expecting at this price point.
- How can I achieve that result with the minimal time and effort spent?
- Will my customer be satisfied if I choose only to do the necessary tasks listed above?
- Will I be satisfied with the project if I choose only to do the necessary tasks?
When you have laid out all the necessary tasks and found clarity around when your customer and your “ego-self” are happy with the result, you’ll have an efficient project on your hands.
Small vs large projects
You should always strive for creating larger projects.
The reason for this comes down to the actual product and project handling. Whenever you interact with a customer you are actually not creating any real value for them. I’m not saying it is not important for you or for your customer to have a nice dialogue about what they really want and desire, but the actual value of the product is only created when you’re in the workshop doing actual work.
Let’s take a cutting board versus a large wood slab table. If you’re creating a customized cutting board for a customer, you would probably spend 30 to 60 minutes interacting with the customer before the project is finished.You might sell this cutting board $100 with a profit margin of 50% so that’s $50 profit minus production time and then minus the time you spent talking to the customer.
If on the other hand, you are creating a customized wood slab table for a customer, you might need to interact with them for two hours maybe even 2 1/2 hours. But you can also sell this product for around $2000 with a profit margin of 30 to 40%.
That’s $800 in profits minus production time, minus the time spent on your customer.
You see how the price is disproportionately higher in creating larger projects? And that’s why you should always strive to make larger projects instead of small ones.
Small products (low value) only have high profits in high numbers. Sorry for ruining your cutting board dream.
Standardized customization is key in order to boost your profitable Woodworking
Standardized customization might seem like a contradictory concept. Let me explain why this concept is vital for any woodworking shop that wants to make real profits.
The idea of standardized customization is to take a product and define which parts of that product your customer can customize.
If you give customers all the options in the world, you are very likely to be creating all the products in the world.
Customers will choose from the options they are given, that is why it is one vital for you to define what areas of a product can be customized and which cannot.
Furthermore you need to define the options and the ranges of customization. Let’s take a wood slab table for a phone example.
If you do not define that you can deliver this kind of table from 150 cm up to 400 cm. People will ask for tables which are way longer and way shorter and you will spend a lot of time trying to create these projects than the “average” custom projects.
In the wood slab table example I would have 4 or 5 parameters that the customer can customize. Length, width, height, slab thickness, and oil.
I would set the height width and length in intervals, give two types of thicknesses, and give 3 to 4 oil options.
But what do you do when a customer comes in and asks if he can get something out of the defined boundaries?
First I would ask them why they would need something outside the boundaries that were set. Just to get an idea of the person’s intentions and mindset. Then I would say yes it is doable, and I would then explain why the price would be much higher if he chooses to go outside of the defined boundaries.
If he still wants the more customized project/product, then he knows the price will be higher, and you have both agreed to that situation.
When you start getting the feel of how to standardize your customization your life will become infinitely more easy.
You will be able to quote faster, produce your products faster, which in the end will result in happier customers, more mental clarity and more profits for you.
And if you would like to see what the digital future of custom woodworking will look like.
Then head over to Furniture Game Changer and sign up for the free membership.
Inspiration video for future products to add to your portfolio
Let’s talk about materials for a minute here. The material defines a project, it is the project. You can have a smashing design but if you use the wrong material everything will seem boring and bland. Cheap materials can actually be more expensive than quality materials Let’s say for example that you build a shelf…Read More