Somebody's working cheap!

[sofadoc]

Hey zansongs> My advice is: Don't charge a lot less than the going rate. Your competition will hate you, and your customers will only take advantage of you. And at the end of your career, you'll look back and regret all the money that you "left on the table". Get all you can while you can.
I don't know any upholsterer that's has trouble sleeping at night because they think  they charge too much.
Since you have a background in custom cabinetry, I'm sure that we will appreciate your input on wood finish related problems. Welcome to the forum, and don't hesitate to post questions when you get into the upholstery end of things.
Good luck.

[hidebound]

Thats real good advice sofadoc is giving I dont run an upholstery business at this time Im trying to learn trade but, I have done electrical work as a side business for 12 years. When I first started I thought because my overhead was small and I was just working partime I could charge a lower rate than the "big Boys" Im here to tell you it ate me up. I still had to pay for insurance and taxes, buy tools, do bids for free, run after materials, etc. ect. The short version is I worked my butt for about a year and couldnt figure out where all that money went. I wore out my pickup for no charge. I wised up and figured out the "big boys" were alot smarter than me.

[Kathy0701]

I used to chuckle at my dad, when calculating what he needed to charge.  He'd say, "You know, when I get to retirement age, I can't go back to my customers and say 'Hey, I didn't charge you enough way back when, so will you give me some more?'"

I sure miss him and his sense of humor.

[Gregg @ Keystone Sewing]

It's imperative (my word of the day) that you know the going rate for work being done in your area.

As stated here on this thread, there are ways of finding out.

If someone is showing up with 1/2 the cost, and it's less than you can afford to do the work for, there MUST be something going on.  Either you overhead is too high, you work to slow, or something!  It's your professional job to do the investigative legwork to get to the bottom of things!

I've seen issues like this in the past, and always found out later what was up.  In fact, someone here has already left some clues.

  Nobody hides from the internet, or the Upholster Message Board!

[Kathy0701]

As I previously stated, I wrote a Business Plan about a year ago.  Part of the plan entailed analyzing your competition (my plan must have been OK because I won an award with it).  Part of that analysis included finding out what other people charge, as well as advantages/disadvantages they have, their targets, their sales...you get the picture.

The beauty of a Business Plan is that is a living document, and needs to be updated and adjusted often.  I suppose it may be time to tweak it?  Perhaps...

My overhead is low, so it's not that.  Do I work too slowly?  ABSOLUTELY.  But I don't bid that way.  I wouldn't be competitive if I did.  So I bid on what time it SHOULD take, then work like a bat out of you know where to make my time.  It might not be the best way to do it, but that's how I do it.  I figure I will speed up, and I am.

A couple things come to mind.  I was trained pretty "high-end".  When I look around at some of the work being done, I can see where some people would definitely be cheaper.  But I'm not going to do that.  On the other hand, I am all about learning some new techniques that might save time/material without doing sub-par work.  One of these is to learn patterning, something that has been discussed many times on the boards.  I learned the blanket method, which typically uses more material than patterning, but I'm thinking I want to put patterning into my repertoire.  There is a place for both.

Remember, I've been at this for just under two years, so I've got a long way to go.  But I do bid carefully, I know what my competition is doing (other than the loose cannon described above, if he even EXISTS), and I love, love, love learning!  That's why I come here.

So, my point is (and was in starting this thread) that: a) some people are willing to work for almost nothing OR b) some dealers will tell you anything!  I wasn't and am not complaining, because I am plenty busy and don't need the work.  That is another reason that I'm sure I'm not pricing myself out of the market!

"Nobody hides from the internet, or the Upholster Message Board!" Not sure what this means - should I be scared?

Cheers!

Kathy

[Mojo]

I have a rule...........never tell anyone what your labor rate is. I have better things to do then go into a long drawn out explanation of why my labor rate is so high. Customers simply cannot see all the costs associated with this business and equate your labor rate to what they are getting paid.

When I bill or quote a job I do it as a total with no mention of labor or hours involved. Most of my customers could careless anyways. All they are thinking about is what the total bill is going to be.

Chris

[mnc2fan]

Tons of labor pricing tips! I'll be sure and have things like this while I'm writing my business plan.

I can speak from the consumer side of things as far as labor rates go. Until a few years ago (young thinking) was if I ever got into any labor business, I would charge cheaply. But now that I know what is involved with cost, there is no way I would charge cheaply, as in no competitor could compete. The older I get it seems my time becomes worth more. And I'm not afraid of not getting business by not charging  "competitively".

I've learned that "competitive pricing" doesn't mean pricing you competition out of the market, but being up on what the competitors charge, and pricing accordingly.

[baileyuph]

To the question:  "working too cheap?"

I never know until I am done, most times it takes a little longer to do a job than I estimated.  There can be so many variances to a custom shop job, even the repair work. 

I just read an article in the Restoration and Rods mag and what came out in one persons experience that in the business climate today (probably yesterday and tomorrow) is there isn't much room for margins.  You have to bid it close and do it the best way and quality as you can hoping to come out close to the bid hours.  In there words, it is the nature of the beast, the difficulty of bidding accurately (your hours) on every job. 

I can identify with that article because of the variances in my jobs, simple things like the machine is messing up and I have to take time to go through the routine required to get it back in good working order.  The phone, gosh I like new business but can't they wait until I get this job done. ;)

Kathy, sure wish I could read that award winning business plan you have, I am sure it would be informative and offer better understanding of estimating cost.  Is is on file somewhere?  Stick to your guns, sounds like your on pretty solid ground, ground your father would have or does approve. :)

Doyle

[hdflame]

My goal is to NOT be the cheapest, but to be the MOST EXPENSIVE  :o with the BEST quality.  I want to do the kind of quality that when someone sees my work, they will go out of their way to find me to work on their project. 8)

Kathy, I'd be interested in seeing a how to for a business plan too.  That's something I never sat down and tried to figure out how to do, but sounds like it would be very beneficial in projecting your costs and profits.

[Kathy0701]

Bobby,

"My goal is to NOT be the cheapest, but to be the MOST EXPENSIVE   with the BEST quality.  I want to do the kind of quality that when someone sees my work, they will go out of their way to find me to work on their project. "

That is exactly what I want as well.

In January 09, I took an Entrepreneurial Training Class through our local Business Development Center.  It was a class developed by NxLeveL (www.nxlevel.org) and ran 10 weeks.  At the end of that class, we had two months to complete our business plan.

The class cost $1,000, but Wisconsin had a grant available for $750 of that, provided you turned in a viable plan.  The best plan not only received the grant, but a cash prize and an advertising package.

Looking back, I don't think I'd have needed to take the class, although there is so much information there and I really did learn a lot...but there are lots of places you can go online to write a plan.  The most amount of time isn't in writing it as much as researching it.  I think I almost did nothing for six weeks than work on it.  I'm pretty good with numbers, but my financials were a bit of a mess until my college sophomore Accounting Major son helped me with it.

The most interesting aspect of the plan I turned in is that, one year later, it doesn't look a whole lot like my original plan at all! That is not unusual.   BUT the value is in the research - how many boats are in your area and what type, how much is spent on customer's boats, how much your competitors are doing, how many employees they have, etc.  It forces you to look at who your customer is going to be, even to their education level and income, how many kids, etc.   Like I said, it was pretty comprehensive.

The other eye-opener was completing the financials - cash flow projections really wake you up!  Since I spent a lot of time on those, those are actually pretty accurate, even though you are estimating.

If you want to write a plan, it might not hurt to visit your local Small Business Development Center.  They will guide you in the right direction and if you want to do a plan on your own, it won't cost a thing.

I have not published my plan because there is a lot of personal information in there...my own personal financials are part of the plan, my financing plans, and juicy tidbits about my competition ;)  Well, ok, not juicy tidbits, but stuff that I would prefer not to publicize!

Best of luck!  And even though it'll make you want to tear out your hair, I think you'll ultimately know your business in a way you didn't before (we had lots of current business owners taking the class, too!)

Kathy

[Mike8560]

I had a guy tell me he had prices way higher and lower then me the other day. he still working out a warrenty issues so i didnt get a yes or no :-\

[chevman57]

Many years back i had a customer tell me another guy would do the job cheaper than me. I told them thanks for the oppurtunity to bid it but good luck on their job. A while later i had the chance to see some of the competitors work, needless to say it gave me a good chuckle. A simple door panel, no pleats or different materials and it was wrinkles and loose.  Needless to say i never worried about being outbid by them again. Being in a small town, 60-80 miles from the bigger cities, upholsterers are few and far between here. So not really anyone to check on prices with that are close.
Terry

[hdflame]

Kathy,

Thanks for the info.  I will check to see what is offered locally through the small business center.  I think I remember a few years back that a friend of mine said that the Jaycees taught it's members that kind of thing, but I'm 10 years past the Jaycees cutoff age! ;D  I always looked at the local Jaycees as more of the partying crowd than the working crowd anyway.

The nice thing about starting a business part time, while continuing to work full time, is I can afford to make a few mistakes while learning.

[vu]

To add to $25 per hour conversation: nobody mention the time you spend on working with customers, paperwork and ordering parts and materials - this is the biggest expense if you do not have anybody handling it for you. The other day I realized that I have spent 2-3 hours on actual upholstery work, working with customers, giving quotes and other stuff that had to be taken care of. So at $25 per hour I would make $75/day minus all the usual expenses. I found this remark that $25/hour is plenty - SHOCKING.

[sofadoc]

Hey "noname", where you been? You burst on the scene a few months ago with some interesting rants, and then vanished. At the time, I sensed from reading your posts, that you were beginning to sour on the upholstery biz. Thought  maybe you moved on to something else. Still banging on couches?