How to Calculate What to Charge as a Carpenter

Carpentry has minimal overhead costs.
Carpentry has minimal overhead costs. (Image: Comstock Images/Comstock/Getty Images)

When you work as a carpenter, there are several factors you need to calculate to determine how much to charge. You need to cover all costs for materials, as well as overhead costs and labor. Finally, you need to add the amount you want as a profit for yourself. Combining all of these costs will allow you to keep your company profitable for a job.

Estimate the amount of materials you will need and how much you can acquire them for. As a carpenter, your main material is, of course, lumber. For example, assume you have a very small job that requires 30 yards of lumber at $0.50 a yard, so your material costs are $15. Remember the price you can get for lumber will vary. If you deal with one supplier a lot, it may offer you discounted rates.

Determine any overhead costs. These costs include gas to get to a job, electricity you need to pay for yourself, depreciation on equipment and any other cost that does not fall under labor or materials. For example, assume you estimate gas costs at $5 and you depreciate your equipment $3 for the job.

Estimate the number of man hours you need and multiply the amount by your average hourly pay rate. For example, assume the job will take three hours and you pay employees on average $15 a hour, so $15 an hour times three hours equals $45 in labor costs.

Add up your costs. For example, $15 (materials) plus $5 plus $3 (overhead) plus $45 (labor) equals $68 in total costs for the job.

Estimate how much you want to make as a profit; this is your markup. Include a little wiggle room in case your costs are more than you thought. It may be hard to estimate your markup when first starting. It will vary by market for the simple fact some places pay more than others. You also need to consider barriers to entry. If you are just starting off, you want low markup. This will get you more clients due to a lower cost. This then allows you to build a client base and spread your talent through word of mouth. What you want to make on a job will depend on you and how much you can afford to take in return for your services. Remember, the lower the price can undercut your competitors. For example, assume in your area most carpenter have a 10 percent markup, but since you are new you want to make 5 percent on the job, so make your markup 7 percent to cover any unforeseen costs. In decimal form, 7 percent equals 0.07.

Add one to the decimal form of your markup rate and then multiply it by your total costs to find what you should charge. By adding one, you are taking your original cost and adding the markup to it. In the example, 0.07 plus 1 equals 1.07, so then 1.07 times $68 equals a charge of $72.76.

Tips & Warnings

  • Remember as the size of your job increases, the more you will charge for materials, labor and overhead.

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