Labor and profit - Same thing?

[David DeCristoforo]

"Labor" is what it costs you do do the job. "Profit" (not to be confused with "overhead") is money "left over" at the end of the job that you are free to use as you see fit.

[J.R. Rutter]

You are right Matt. Whether you think of it as an extra high labor rate or profit, you should pay yourself for your time and have money left over.

[Don Bullock]

"Labor" is what it costs you do do the job. "Profit" (not to be confused with "overhead") is money "left over" at the end of the job that you are free to use as you see fit.

David is correct. If you are into woodworking to make money, you have to show a profit or you won't make any money.

In another post you stated:

I should add that I'm doing this for a living now.

You can't make a living at anything without making a profit. While your wife may feel bad that the piece you made for your friend is expensive she has to understand that you have to make a profit on what you make to pay the bills at the end of the month. In the case of woodworking for a living your labor is where you make most of your profit. Your time and effort (labor) is where you make the money. Don't forget to add in all the other costs, i.e. utility bills (machined use electricity), machine depreciation, etc. when you figure in your actual cost for making things.

[David DeCristoforo]

There needs to be a clarification here between "earning a living" and "making a profit". Let's say you work for one month and at the end of that month you have covered all of your expenses for that month. You paid for the materials, your shop rent, utilities, insurance, everything. Plus you ate for that month as did your family and you all had a roof over your heads and some gas in your tank and clothing to wear. You paid all of your personal expenses (phone bill, power bill, etc.) but at the end of the month you had no money left. You have not made a profit. You have earned a living. Theoretically, you could continue like that forever given that you could find steady work. But you will never be able to move from that spot unless you actually make profit that you can use to improve your situation. Buy better tools for example or build your business or buy advertising (re-investing your profits). Or take a vacation or buy a jet ski or whatever. There is a not so subtile distinction here.