Author Topic: Increase your price or increase your workforce?  (Read 2631 times)

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Offline online421

  • Posts: 129
Increase your price or increase your workforce?
« on: May 22, 2019, 05:31 PM »
Hello Festoolians

I wondered if some of you have experienced similar situation as I am facing now.

I am at a stage where my hobby has become a source of income and I can not cope with the amount of order coming in.

I have a daytime job and I work alone in my workshop on the weekends or after hours, I have a young family to feed and I am the only one working, my wife is a full time mother as our children are 2 years old and 5 weeks old.

If you were in my situation or if you have been in my situation, do you increase the price of your item or do you increase workforce?

Being where I am, NZ, our laws and regulations are quite protective of the employee than the employer, there are tons of things you need to do for your employee (insurance, training, health and safety....etc), therefore I am biased towards increase the price of my item. however, there are competitors on the market I am afraid if I increase my prices I will drive them away? my prices are higher than them as of present.

I am keen to hear your ideas. whether increase price, increase labour force, or anything else.
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Offline Slowlearner

  • Posts: 62
Re: Increase your price or increase your workforce?
« Reply #1 on: May 22, 2019, 06:47 PM »
Are you quitting ypur day time job? If not id raise prices or maybe have a friend that can help and work for cash pn the side?  Problem i find is workers dont have same pride as you wpuld and if they do you're paying top dollar and raising your prices anyways
 

Offline elfick

  • Posts: 530
Re: Increase your price or increase your workforce?
« Reply #2 on: May 22, 2019, 08:30 PM »
I know your question was A or B, but do you have any other options? Could you increase your efficiency? Waitlist or decline orders?

Offline ChuckM

  • Posts: 1192
Re: Increase your price or increase your workforce?
« Reply #3 on: May 22, 2019, 10:59 PM »
Would you consider a third option? subcontract your excess orders to one or more of your "competitors" that have spare capacity. Of course, you keep your client information to yourself, and you are just a customer to them. Since you said your prices are higher, you can still make a profit while keeping your "excess" clients happy, without any worries about the labor/employment laws, managing your employee, etc.

Offline jobsworth

  • Posts: 5800
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Re: Increase your price or increase your workforce?
« Reply #4 on: May 22, 2019, 11:20 PM »
Depends on what your goal is. Do you plan on going into a full time business?

Also if your that busy, You may not be charging enough. Figure out how much the cost is Shop rate, labor, material cost, profit etc etc. You may ot be charging enough.

Just something to think about


Offline Cheese

  • Posts: 6383
Re: Increase your price or increase your workforce?
« Reply #5 on: May 22, 2019, 11:49 PM »
You increase the price of your product if it’s only you that produces the product. Singularly manufactured items are in demand.

If you hire on a staff of people to produce the product, understand that’s there’s a huge difference between what your standards are and what your fledgling staff of workers are capable of producing in a manufacturing environment. That final level of quality control can and will
determine the ultimate final number of sales.

Offline Untidy Shop

  • Posts: 2744
Re: Increase your price or increase your workforce?
« Reply #6 on: May 23, 2019, 12:13 AM »
I would look at it another way - is your work bespoke or unique from that of others. Bespoke items by their nature usually take longer to make and therefore cost more. By seeking out a market for these unique items you might slow down your production rate without loss of income.

Please note however that I am discussing this more as an observation, NOT direct experience.
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Offline Pnw painter

  • Posts: 211
Increase your price or increase your workforce?
« Reply #7 on: May 23, 2019, 02:54 AM »
I’m not sure if this applies to your work, but as you get busier you can be more selective about the projects you choose to take on. It’s ok to turn down work if you don’t have the capacity or it’s not a project you’re interested in.

As long as you have a backlog of work and a steady flow of new customers don’t worry about how your competitors are pricing their products. You need to figure out a price that works for your business not theirs.

Sent from my iPhone using Tapatalk
« Last Edit: May 23, 2019, 02:58 AM by Pnw painter »

Offline Doug S

  • Posts: 439
Re: Increase your price or increase your workforce?
« Reply #8 on: May 23, 2019, 04:42 AM »
I am a one man joinery business. I used to employ someone but it caused me a lot of hassle and stress because of health and safety etc so back to just me. If you can find the right person you might be okay but it is a big step employing someone if you do it properly.

Doug

Online grobkuschelig

  • Posts: 542
Re: Increase your price or increase your workforce?
« Reply #9 on: May 23, 2019, 04:48 AM »
As has been echoed above, I vote for price increases.

On one hand, this will act as a filter for jobs, aka you will most likely not get as many, which will take some pressure off from the workload.

In addition, you are, at the same time, changing your customer base to ones who are identifying more with what you do and are eager to pay the price for it.

As soon as you make more by the hour, you also get the additional freedom of being able to “outsource” certain tasks you might not want to do anymore.
And you will also be able to pay a price for this and receive quality work supporting your standards.

If you try to farm out stuff for cheap, just to get more done, you are entering the volume business, which in my opinion, is not a game one can win in a workshop. That’s what factories are for...

Offline kcufstoidi

  • Posts: 828
Re: Increase your price or increase your workforce?
« Reply #10 on: May 23, 2019, 06:56 AM »
Unless NZ is producing a different type of worker its going to be difficult to find an employee that only works after hours and on the weekend. Right from the start an employee typically means a higher level of stress in your life along with an increased financial responsibility as they and the government get paid before you do. Their problems also become your problems. Train them to a level of competence and you can have another competitor. In todays culture the demands of a young growing family will soon put your hobby business in further turmoil. One option you may not like to hear is to sell the equipment, get rid of the hobby business and enjoy more free time with your wife and kids. If their is one thing I've learned in almost 40 years of marriage, happy wife happy life.

Offline Paul G

  • Posts: 1986
Re: Increase your price or increase your workforce?
« Reply #11 on: May 23, 2019, 10:47 AM »
I’d be surprised if you don’t also have to raise prices if you hire someone. I don’t know how things are there, but here in California there are a lot of employee costs that surprise the uninitiated. If you really want to grow this business substantially then hire. Your job will change from craftsman to manager, marketer, QC and all the other hats worn by a business owner. But that is a leap some craftsmen don’t want to make. Others have mentioned pursuing better efficiency, that would be a great place to start now, because that will matter whether you hire or not. Squeezing more quality work from the same time is a great skill to develop for just about everything.
« Last Edit: May 23, 2019, 10:53 AM by Paul G »
+1

Offline online421

  • Posts: 129
Re: Increase your price or increase your workforce?
« Reply #12 on: May 23, 2019, 09:39 PM »
Thank you all for your feedback/comment so far.

I take pride in what I do and what I make, usually I dont need to attend to a job after it has been delivered, but there is always 1-2 cases in a year.  There was once I had to drive 500 miles 3 days before Christmas to fix a job. it was a Christmas present a mother has bought for her child, I didnt charge the customer anything because it was my fault.

I am afraid by hiring someone the standard will reduce and I will have to attend to more of these remedials - nobody likes remedials - they are only good for your reputation if you attend to it.

I think the solution is to increase the price.

I doubt selling up the equipment is one of the solution, I need the money to feed the family/mortgage.

Griggio Unica400
Felder AD951
Masterwood OMB1V
SCM 5 RCS1100
Casadei FV110
Chicago Pneumatics CPRS10500
Ceccato CDX 12
Holytek DC006
Festool DF700XL, LEX3, OF1010, CT36
JLT 190BM2, JLT 79K10
Danfoss VLT 2880
Sicar TOP6

Offline James Carriere

  • Posts: 54
Re: Increase your price or increase your workforce?
« Reply #13 on: May 24, 2019, 01:34 AM »
You do not describe what type of work that you do, however another possibility is to outsource a portion of the work. For example, if you are a woodworker, you might consider outsourcing the finishing.  This is not an unusual scenario and it might free up your time to move forward on the next project while the current one is still being worked on by others.  Speaking from experience, employees are expensive.  I would be hesitant to hire one if this is still a second source of income for you.  Likely, even if you can find a nights and weekends person which would be difficult as previously mentioned in another reply, you would discover that there are little to no profits left over for yourself if your prices stay the same and you largely build one project at a time.  My advice is first and foremost to focus on your efficiency.  Work smarter, not harder.  After that, if you truly have more work than you can accomplish while having a day job then you can raise your prices.  The goal is really to have the ability to work less for the same amount of income.   Why build 5 tables at $1000 each when you can build 4 tables for $1250?  Don't let fear rule your business decisions.  Yes you might lose a client or two with a moderate price increase but you already state you have more work than you can accomplish and you will have an improved chance to obtain new clients of a higher caliber.

Offline Jiggy Joiner

  • Posts: 751
Re: Increase your price or increase your workforce?
« Reply #14 on: May 24, 2019, 03:58 PM »
Not sure what type of work you do but, running a full time business and employing people is quite a strain.
Many years ago, I had more people working for me than I do now and although I was earning more money than I could of ever imagined, it wasn’t all roses.
I never had a minute to breath, lots of paperwork, rules, regs and responsibility. Plus I was still on the tools myself.

Now it went very well for a while, and could have been the making of me but, there were a lot of negatives and stress. I found employees were stealing materials from me, and offering to do jobs cheaper privately. Luckily I had loyal clients who spilled the beans on these greedy underhanded people.
Eventually, even though he money was pouring in regularly, I was becoming more unhappy, and it was putting a strain on my marriage and family life. No amount of income is worth that kind of thing.

I eventually fired nearly everybody that worked for me, and scaled things down, to where I was working harder with less income but, my marriage and well being improved by the week.
I keep the volume of work I take on more sensible now, and employ a lot less people than I used too. The employees I have now are totally loyal, and trustworthy including one of my sons.
I often think about expanding again but, I’m not 21 any more and don’t need the stress and hassle.
I have advised my son to start up something, or take over when I retire but, he’s apprehensive after me telling him about past employees etc.
He is young enough to do it though but, with loyal and trustworthy people. And that’s my advice to you, if you take on staff, make double sure you pick the right types.

Be prepared for long days, lots of paperwork and juggling your family life.
If you are getting more work, the obvious choice for any business is to expand, by how much is either up to you, or the demand for your services. Putting prices up has to be done every so often, as your suppliers will increase their prices etc, and so you will have to pass on the increases. This, in my opinion isn’t the answer to more demand though, the natural progression of any growing business, is to expand.

Just get the right people, be prepared for the ups and downs, and don’t forget to smell the roses along the way.

Offline online421

  • Posts: 129
Re: Increase your price or increase your workforce?
« Reply #15 on: May 28, 2019, 05:31 PM »
Not sure what type of work you do but, running a full time business and employing people is quite a strain.
Many years ago, I had more people working for me than I do now and although I was earning more money than I could of ever imagined, it wasn’t all roses.
I never had a minute to breath, lots of paperwork, rules, regs and responsibility. Plus I was still on the tools myself.

Now it went very well for a while, and could have been the making of me but, there were a lot of negatives and stress. I found employees were stealing materials from me, and offering to do jobs cheaper privately. Luckily I had loyal clients who spilled the beans on these greedy underhanded people.
Eventually, even though he money was pouring in regularly, I was becoming more unhappy, and it was putting a strain on my marriage and family life. No amount of income is worth that kind of thing.

I eventually fired nearly everybody that worked for me, and scaled things down, to where I was working harder with less income but, my marriage and well being improved by the week.
I keep the volume of work I take on more sensible now, and employ a lot less people than I used too. The employees I have now are totally loyal, and trustworthy including one of my sons.
I often think about expanding again but, I’m not 21 any more and don’t need the stress and hassle.
I have advised my son to start up something, or take over when I retire but, he’s apprehensive after me telling him about past employees etc.
He is young enough to do it though but, with loyal and trustworthy people. And that’s my advice to you, if you take on staff, make double sure you pick the right types.

Be prepared for long days, lots of paperwork and juggling your family life.
If you are getting more work, the obvious choice for any business is to expand, by how much is either up to you, or the demand for your services. Putting prices up has to be done every so often, as your suppliers will increase their prices etc, and so you will have to pass on the increases. This, in my opinion isn’t the answer to more demand though, the natural progression of any growing business, is to expand.

Just get the right people, be prepared for the ups and downs, and don’t forget to smell the roses along the way.

Thanks Jiggy, that is a very insightful response

I agree the natural progression to any business is to expand, after much thought I have decided to hire part timers on weekends to carry out laborious/repetitive works and also increase the prices.

Cheers


Griggio Unica400
Felder AD951
Masterwood OMB1V
SCM 5 RCS1100
Casadei FV110
Chicago Pneumatics CPRS10500
Ceccato CDX 12
Holytek DC006
Festool DF700XL, LEX3, OF1010, CT36
JLT 190BM2, JLT 79K10
Danfoss VLT 2880
Sicar TOP6

Offline harry_

  • Posts: 1288
Re: Increase your price or increase your workforce?
« Reply #16 on: May 29, 2019, 07:42 AM »
my question is this:

Have you lost any work because your prices are too high? If not, there is likely room to move your price point upwards.

I was once told "Be careful of the work you take, for if you do a good job of it, you'll likely get more of it." Point being, there are times when "no thank you" pricing is appropriate as well.
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Offline Jiggy Joiner

  • Posts: 751
Re: Increase your price or increase your workforce?
« Reply #17 on: May 29, 2019, 02:36 PM »
Not sure what type of work you do but, running a full time business and employing people is quite a strain.
Many years ago, I had more people working for me than I do now and although I was earning more money than I could of ever imagined, it wasn’t all roses.
I never had a minute to breath, lots of paperwork, rules, regs and responsibility. Plus I was still on the tools myself.

Now it went very well for a while, and could have been the making of me but, there were a lot of negatives and stress. I found employees were stealing materials from me, and offering to do jobs cheaper privately. Luckily I had loyal clients who spilled the beans on these greedy underhanded people.
Eventually, even though he money was pouring in regularly, I was becoming more unhappy, and it was putting a strain on my marriage and family life. No amount of income is worth that kind of thing.

I eventually fired nearly everybody that worked for me, and scaled things down, to where I was working harder with less income but, my marriage and well being improved by the week.
I keep the volume of work I take on more sensible now, and employ a lot less people than I used too. The employees I have now are totally loyal, and trustworthy including one of my sons.
I often think about expanding again but, I’m not 21 any more and don’t need the stress and hassle.
I have advised my son to start up something, or take over when I retire but, he’s apprehensive after me telling him about past employees etc.
He is young enough to do it though but, with loyal and trustworthy people. And that’s my advice to you, if you take on staff, make double sure you pick the right types.

Be prepared for long days, lots of paperwork and juggling your family life.
If you are getting more work, the obvious choice for any business is to expand, by how much is either up to you, or the demand for your services. Putting prices up has to be done every so often, as your suppliers will increase their prices etc, and so you will have to pass on the increases. This, in my opinion isn’t the answer to more demand though, the natural progression of any growing business, is to expand.

Just get the right people, be prepared for the ups and downs, and don’t forget to smell the roses along the way.

Thanks Jiggy, that is a very insightful response

I agree the natural progression to any business is to expand, after much thought I have decided to hire part timers on weekends to carry out laborious/repetitive works and also increase the prices.

Cheers

You’re welcome, and I sincerely hope you prosper in business.
As much as my bones ache more and my back too nowadays, I still enjoy providing a good service to our clients, the majority of whom we’ve been recommended too, and know that it’s appreciated.
We have a good reputation which helps us when meeting new clients. They get a decent job done, we get satisfaction and payment. We are also willing to learn and move with the times, which has been a big help.
You sound both sensible, and determined, that’s a good combination in business in my opinion.

Good luck to you.

Offline ctvader

  • Posts: 61
Re: Increase your price or increase your workforce?
« Reply #18 on: May 30, 2019, 04:58 AM »
The Modern Craftsman is a podcast that discusses a lot of what’s in this post.  The hosts all have different size business and provide a perspective on each.  The guests they bring on also go into detail of how they got started, what it takes to run a business, when/why grow, etc.  It’s more geared towards people in the trades but they do a lot of discussions on the business end.  I find it thoroughly entertaining even though I’m not in the trades.
« Last Edit: May 30, 2019, 06:10 PM by ctvader »