Pricing a Furniture Prototype

How do you decide what to charge for designing and building a piece of furniture that will then be mass-produced by others? June 22, 2010

I've been approached by a designer to build some prototypes for a line of furniture that has been developed. These pieces though prototypes will be finished to the same high standards, using the same materials as the consumer product will be made from, as they will be used as examples for potential investors. Though he will provide me with scale drawings, the final construction methods as well as certain design points based upon these methods will be up to me, as this is my area of expertise, not his.

My question is: what kind of payment is appropriate for such a commission? He has made note that I will more than likely not be called upon for the construction of consumer pieces as they will be massed produced in various finishes and from various materials, obviously efficiency is a main concern. I haven't done any kind of work like this before. Do I charge a standard price, hourly rate, or is there some sort of percentage that I should be guaranteed should the line be picked up. What is common and correct in this case?

Forum Responses
(Business and Management Forum)
From contributor M:
If you are not going to be building the line, then it is another piece of furniture. I would rather get paid than wonder if the line will be picked up and get a percentage.

From contributor T:
I can tell you what I think from my experience as I have done this type of work. Prototypes typically cost significantly more than what the finished mass produced product would. Don't tie yourself to the success or failure of their marketing their line of products with regard to your payment for the production of prototypes. Your job will be to engineer the project so that it can be produced efficiently. That takes time and thought if you are going to do it correctly. Many factors have to be considered. Will the product need to be produced and shipped in knocked down form and how to do that is one of many parameters they likely want you to engineer. The easiest way to price it is based on your best understanding/guess of the hours you will spend to produce the answers and develop the prototype based on your own hourly design and shop rate.

From contributor J:
I have never built a prototype piece of furniture intended for mass production, but I have build prototype models for other consumer products. The shop I worked for had a nominal rate of $70 per hour, and that was dirt cheap; prototyping was a sideline, not the primary business. Many dedicated prototype shops charge twice that, or more. I also once chatted with a buyer for a large greeting card company who remarked, "You can't get a prototype of anything for less than $5000. A prototype of a cardboard box is $5000."

In my experience, prototyping usually involves building most things more than once, or at least doing extensive modifications, because the customer doesn't really know what they want until they see that what you've built isn't what they had in mind - that's often why they need a prototype. You can try and get the customer to visit the shop frequently during construction, but that leads to scheduling difficulties and downtime while you wait. So however you price things, put clear limits on what they get for a given price. If they can't accurately describe what they want before you build it, then it's T&M. Royalties should the line be picked up are not typical.

The building work here is secondary. It sounds like you're being asked to do both aesthetic and mechanical design work. The scale drawings may not be very detailed; some designers convey their ideas in the form of very rough sketches. Sometimes the top and side views don't agree, and the resolution is up to you. There are more decisions to be made along the way, more responsibility and fewer authoritative references about what's right and what's wrong, but it's a lot of fun if you're a creative type.

From contributor X:
I would prefer compensation for all my time devoted to the prototypes, and this would also include materials, overhead, storage/incidentals and profits. My personal rate of labor would be double that of the standard rate because of expected delays/start ups that would affect my other obligations. Record keeping would be a must.

From contributor L:
We've built prototypes over the years. I pretty much agree with the other posts. They always cost more than you normal production. Many changes will be required, many start stops. It is almost impossible for you to design for someone else’s manufacturing processes. Get paid up front not based on any future sales, most prototypes never succeed in the market. Is this designer someone with a good track record of bringing products to market? It's a risky business, how much of that risk do you want?

From contributor B:
I've done a number of prototypes over the years and unless we do it on a T&M basis it's almost always been a losing proposition. Do it T&M if you can. Give them an estimate of time if you absolutely have to. There will be so many questions and details that are not thought out it's the only way you can guarantee yourself that you won't lose money.

From contributor G:
Are you just building a one-off mockup (in which the price should be about whatever you would charge a house owner who brings in a sketch and says "make me that"), or are you entering into a iterative process in which you will refine the model, rebuilding as necessary, so that the product can be produced in the most satisfactory and efficient method on the equipment available at the factory where it will be mass produced (in which case time and material for the model, plus a reasonable return for your engineering knowledge over and above the production of the model on an hourly consulting fee basis). If you do not know which service you are being asked to provide then you must explain the difference to the client and get the answer...don't get backed into a position of just getting paid for a piece of case goods and then being tied up for unpaid hours answering questions about how to modify and manufacture the production version.

From contributor B:
Whenever we are asked to prototype a piece it takes two-three times as long as a one-off piece for a off the street customer. You will be dealing with numerous people all with input into the construction, design, finish, shipping etc. My feeling is always I am the lowest paid guy in the room but have to answer all the questions. Make sure you are getting paid for your answers as contributor G pointed out. We always do prototypes T&M and the time on phones and standing around discussing changes is documented and added to the bill. Our last prototype was for the medical industry and was shipped to Tokyo. It took three revisions to get it this far and I am sure they are not done.