Consider your audience and material if you're planning to profit from handmade furniture, here's how we calculate the profit margin on handmade furniture.
The Bureau of Labor Statistics projects about 28,400 job openings for woodworkers each year over the coming decade, primarily due to the retirement of older workers or workers who move into other occupations. Overall employment of woodworkers is projected to grow at an average pace of about 8 percent from 2020 to 2030.
With the median annual wage for woodworkers being just $33,750 in May 2020, it’s easy to understand why a woodworker might want to do some custom handmade furniture work on the side for a profit.
The actual profit margin will depend on your costs and what buyers are willing to pay.
Due to overseas production and automation, most furniture is made quickly and cheaply and sold at affordable prices for most. We expect a smaller market for handmade furniture at a premium price.
So, if we are planning to profit from the sale of handmade furniture, we need to consider our audience carefully. They will be a special breed of people who are willing to pay the premium for natural wood and expertly cut dovetails.
These people want to purchase something worth handing down to their children and grandchildren. We also have to consider the extreme increase in lumber prices over the past two years. Before 2019, the numbers would have looked quite different than they do today. Lumber prices have tripled in the past two years. The prices will probably never return to pre-pandemic levels.
But let’s assume we have a buyer. Jeff Bezos still has money, so let’s assume Mr. Bezos places an order for a handcrafted dining room table. The first thing we will need to do is secure a deposit from Mr. Bezos. Then we need a plan, as in a blueprint.
Blueprints for Woodworking
As skilled as we may be, we are not going to fashion this to spec from nothing but imagination, and we want our customers to approve of the plan before we purchase the materials we’ll need to complete the project.
We can find plans for all kinds of woodworking projects online. Here we have 500 woodworking projects for just $15.
Types of Wood for a Handmade Dining Table
Oak is a common choice for a dining room table because it’s hardwood that will hold up over time. Elm is another good choice, as is beechwood or walnut.
Even though it is economical, pine isn’t the best choice for a table; it is generally too soft.
Another option is to use reclaimed wood, and this could be from any source; an old fence, a demolished home, or an abandoned playground, to name a few examples.
Let’s suppose our customer requests hickory wood and seating for eighteen, just to keep things interesting.
Asking Price for Handmade Dining Table
If we were an Amish furniture maker, we might charge something like $6000 for such a fine piece of work.
Tools Needed to Make Handmade Furniture
Now that we’ve got our plans and we’ve named our price, it’s time to get to work. This job is going to require some tools.
We will need:
Carbide-tipped crosscut saw blade
Use this with the table saw for the cleanest cuts.
These are for cutting mortise and tenons.
Miter Gauge Attachment
Use this tool to cut small pieces at perfect 90 degrees angles.
This is for trimming small things.
These are for making holes with a drill for dowels into the ends of boards, or into legs, or anywhere else where extra strength is needed to keep parts together.
8 – 10 clamps
The size of the table for seating eighteen will be 42″ x 204″. For this, we will need to acquire approximately 150 board feet of hickory, which will run between 5 – 7 per board foot, so let’s call it $6.
Alright, it’s time to add all of this up to see our total cost.
Materials cost for Handmade Hickory Dining Table to Seat Eighteen:
Mr. Bezos has agreed to pay $6,000 for the table, so that leaves us with a net profit of 3459.06. Net profit is the net profit divided by the revenue, so in this case, our profit margin is 58%.
The most significant expense moving forward will be the wood. Since we had a customer lined up before we started the work, we didn’t have overhead costs like marketing, but since this was our first table, we had to purchase all of the tools which we wouldn’t have to do for future tables.
Now that we have the tools, we have options.
We can take custom orders, meaning that we won’t purchase materials out of our own pocket. Instead, we’d get a deposit from our buyer. If we want to invest a bit in our business, we can also make a few furniture pieces and then find buyers for them on platforms like Etsy. for example. We won’t need to spend as much on marketing as we did on these tools to start, so the profit margin should still be excellent.
Let’s walk through it and see:
Reverse Engineering Hand Made Coffee Table from a Real-Life Example
So let’s say we decided to make a coffee table. I found one for sale on Etsy for $1,350. The wood used for this coffee table is walnut and the dimensions are 45 inches X 24 inches. So we just need to price the wood. We’re going to assume the thickness of the wood on the top of the coffee table is 3 inches so we can figure out how much wood we’ll need.
To determine board-feet, we need to multiply the thickness (3 inches), the width (24 inches), and length (45 inches) of the coffee table we want to make. That is 3240. Now, we divide this number by 144. So we need 22.5 board feet of walnut wood. It’s wise to add 30%, so that means we need to find 29.5 board feet of walnut for our project.
We will probably need a slab if we want the table to look like this one. A slab of walnut wood is expensive, which is why a table like this is priced as it is. Here’s a 47 x 28 slab that will work for a coffee table. It is $800. Thank goodness we don’t need to buy tools. This slab probably just needs a bit of polishing up, and we’ll need to cut some legs from something other than this walnut slab. In this case, we can still use walnut wood, but we don’t need a large slab for the legs.
One board-foot is 12x12x1. Four of these should suffice for the legs. Most walnut wood right now is selling for about $8 – 10 per board-foot, so we can estimate $40. So we are at $840 for our materials now. Some transparent stain and miscellaneous, and the whole thing should be ready for under $1000.
I see similar coffee tables priced a bit higher than the Etsy example. If we bet and are correct that we can sell our table for $1500, that will net us a profit of $500, a profit margin of 33%, which still isn’t bad.
Even so, we might want to consider other types of smaller items we can make and with less expensive wood if possible.
Now that you know how to calculate the number of board feet you’ll need for a project, you can figure profit margins for any piece of furniture as long as you know the dimensions and the type of wood you’ll use.