How to Set Your Woodworking Shop Rate (Hourly Wage + Overhead Math)
When a customer asks 'what's your hourly rate?', most woodworkers blurt out a number that feels fair — $25, $35, $50 — without doing the math. Then at year-end they wonder why the business isn't generating cash.
Your shop rate isn't just your wage. It's wage + tool depreciation + electricity + blade sharpening + dust collection + insurance + everything else that makes the shop function. Skip those line items and you're personally subsidizing the business.
This guide walks through the full math — wage, overhead, target rate by skill tier — and gives you a defensible number to quote when customers ask.
What goes into your shop rate
Your billable shop rate has three layers: your wage, your shop overhead per hour, and a buffer for non-billable time.
Wage: what you'd pay an employee with your skill set. For a hobbyist starting out, $15–$22/hr (minimum wage + skill premium). For an experienced custom-furniture maker, $35–$60/hr. For specialists (period reproductions, marquetry, hand-tool joinery), $75–$125/hr. Pick a wage you'd accept doing shop work for someone else.
Shop overhead per hour: total annual shop costs ÷ billable hours. Annual shop costs include tool replacement/depreciation ($800–$3,000), blade and bit sharpening ($200–$600), consumables (sandpaper, glue, finish, fasteners — $400–$1,500), electricity ($300–$800), shop insurance ($300–$1,200), software/CAD subscriptions ($0–$500), shop space (rent or amortized portion of mortgage). For a typical indie shop, this totals $4,000–$15,000/year.
Billable hours: not 2,000 (full-time work hours). Realistic billable for a one-person shop is 1,000–1,500/year — the rest goes to admin, customer communication, marketing, sourcing, photography, sick days, and unsold prototypes. Divide your annual shop overhead by billable hours to get per-hour overhead.
Example: $8,000 annual shop overhead ÷ 1,200 billable hours = $6.67/hr overhead. Add to a $30/hr wage = $36.67/hr cost. Add 15% non-billable buffer = $42/hr. That's your shop rate floor.
Indie shop rates by skill tier
Use these as benchmarks against your calculated rate. If your math gives you a rate below the tier benchmark, you're underpricing for your skill level. Above it, you need to justify the premium with portfolio quality and turnaround time.
Hobbyist / new pro ($25–$45/hr): Building basic furniture and home goods. Standard joinery (pocket screws, dominos, biscuits). Limited custom design experience. Mostly stock items at craft fairs and Etsy.
Mid-tier custom maker ($45–$75/hr): Full mortise-and-tenon and dovetail joinery. Can quote custom from rough sketches. Has a portfolio of 20+ commissioned pieces. Does some on-site installation.
Specialist / studio furniture ($75–$150/hr): Period reproductions, marquetry, bent lamination, complex curves, conservation work. Years of dedicated practice. Often gallery-represented. Commissions priced project-style, but hourly equivalent is in this range.
Production / contract shops ($35–$60/hr equivalent): Volume shops doing batch work for designers, builders, or retailers. Lower hourly because of batching efficiency, but higher revenue from volume.
Why most woodworkers undercharge
Three predictable mistakes:
1. Skipping shop overhead. 'I already own my tools, so they're free.' False — every blade dulls, every bit chips, every tool eventually needs service. A $300 cabinet saw blade lasts 200–300 hours of cuts. Spread that across hours and you're paying $1–$1.50/hr in blade cost alone, before sharpening.
2. Believing 'hours' means active machine time. Setup, jig-making, glue-up clamping, finish drying, sanding between coats, customer phone calls — these are all part of project time. If you only count active cutting hours, you're undercharging by 30–50%.
3. Quoting based on 'what the customer will pay.' This is a recipe for permanent underpricing. Quote based on your actual costs and target margin. If the customer balks, they're not your customer — find one who values the work.
How to actually quote a project
Don't quote hourly rates to customers — quote project totals. Customers don't want to feel like they're paying a meter. But you must always know your effective hourly rate so you can sanity-check the project price.
Workflow:
1. Calculate materials (lumber × 1.4 waste factor + hardware + finish + packaging).
2. Estimate hours (be honest — include glue-up time, finish curing, customer revisions).
3. Multiply hours × shop rate (wage + overhead).
4. Add 50% retail margin (or 20–30% for repeat clients/wholesale).
5. Quote the total. Round to a clean number ($1,250 not $1,247.83).
If the quote feels high, that's the math telling you the project takes longer than the customer is willing to pay for. Either decline, simplify the design, or accept the lower price knowing you're discounting your hourly rate.
Worked example: a one-person custom-furniture shop
| Line item | Amount |
|---|---|
| Annual wage target ($30/hr × 1,200 hrs) | $36,000 |
| Tool depreciation/replacement | $1,500 |
| Blade & bit sharpening | $400 |
| Consumables (glue, finish, sandpaper, fasteners) | $900 |
| Electricity (shop) | $500 |
| Insurance + permits | $800 |
| CAD/software subscriptions | $300 |
| Total shop overhead | $4,400 |
| Overhead per billable hour ($4,400 ÷ 1,200) | $3.67 |
| Cost-based rate ($30 wage + $3.67 overhead) | $33.67/hr |
| Add 15% non-billable buffer | $38.72/hr |
| Round to defensible rate | $40/hr |
$40/hr is a reasonable rate for a mid-tier indie woodworker with 5+ years of experience. Quote projects at this rate × hours × 1.5 markup for retail customers. If you raise your wage target to $50/hr (specialist tier), the rate jumps to $60–$65/hr, and a 30-hour custom table reaches $2,700 retail before materials.
Frequently asked questions
Should I charge a different rate for design vs. shop work?
Most woodworkers charge a flat rate that covers both. If you're doing significant CAD or hand-drafting (5+ hours per project), some shops separate it as a 'design fee' billed at $50–$100/hr. Customers accept design fees more readily when itemized than buried in shop hours.
How do I price commissions where the customer keeps changing the design?
Quote the original design with a fixed price. Add a 'change order' clause: significant changes (new dimensions, different wood species, added features) are billed at your hourly rate plus material cost. Get sign-off in writing before changing anything. Without this, scope creep eats your margin.
Should I charge for shop time when waiting for finish to dry or glue to cure?
Cure/dry time is part of the project schedule but not part of your billable hours — you're not actively working. However, your billable hours should include any setup, monitoring, or recoating, which can take 30–60 minutes of active work spread across multiple visits to the shop.
What rate should I charge for repair work or restoration?
Repair/restoration commands a 30–50% premium over new-build rates because the work is unpredictable, often requires hand-tool skills, and carries risk (you can damage the original). A $40/hr new-build rate becomes $55–$60/hr for repair. Quote a range and bill actuals — never quote fixed price for repair.
Calculate your woodworking shop rate
Plug in your own materials, hours, and overhead — get retail and wholesale prices instantly.
More woodworking articles
How to Price Custom Cutting Boards (Real Lumber Costs + Labor Math)
Cutting boards are the gateway woodworking project — and the most underpriced. Here's how to actually account for lumber waste, finishing time, and shop overhead.
9 minWholesale Woodworking Pricing: Margins, MSRP, and Retailer Math
Wholesale to retailers can scale your woodworking shop or sink it. Here's the margin math, contract terms, and the real numbers on whether wholesale is worth the discount.
8 min