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Line item pricing9/28
Curious if any of you have an opinion about whether it is worthwhile to show your clients each cabinet and cost as a line item in a proposal.
We started out as a custom shop, but are finally repeating assemblies from job to job. Whereas originally we estimated each project by calculating the entire job's worth of materials and labor, now we are using a system that produces a cost for each cabinet. My question is this: do you find it worthwhile to show clients (homeowners, architects, and contractors) the price of each cabinet? Does this cause more trouble than it is worth? (i.e. do they start to question each cabinet and each price?)
It sure makes it easier for the customer to compare your prices with Home Depot! Also easier for the next guy to underbid you. Don't do it.
For me, it depends on the customer. I have some GC's that I have a good relationship with, so I do line item pricing so that they see consistency from one job to the next. I think it helps build trust.
But for one-off customers, I would only give a total price, not a breakdown.
I have been pricing this way for years, and have never shown line by line costs to the customer. Just opens a can of worms for debate when they decide they dont like the cost of a gable, fill strip or whatever.
As you and I know, some simple looking things can be actually difficult or expensive to produce. I only show the subtotal of all all parts, thus avoiding any questioning.
Yes line itemize your cost. Your customer has the right not know how they are spending their money with you.
For those of you who don't itemize, I'm sure you have no problem taking your car the the shop and they tell you it's $2000 to fix it, but they don't tell you how or why. I'm sure you don't ask for a breakdown or how they arrived at the price.
This is the same. Some shops add up total materials, labour, overhead, then add on for profit. They dont give customers a line by line breakdown. Just because I choose to price my cabinets line by line, doesnt mean I need to share that info.
Im not going to sell someone a single filler strip, so what does it matter to the customer what the cost of that is. The bottom line is the bottom line, thats the only number they need to know.
Yep, dont do it. If they ask, you can do a break down room by room but thats as far as I will go. It just opens the door for excessive haggling, They will try to nickle and dime you out of your profits. I like the above analogy " its like buying a new car"
When I was new, I would do close to a line by line with custom furniture. Until I had a few customers in a row suck the air out of the room when they saw the labor number. They have no idea how long it takes to make furniture, and that number puts them into sticker shock. And with that auto repair analogy? They charge the price for labor from the universal flat rate manual. If it says $500 for a water pump replacement, that's what they charge wether it takes them 1 hour, or 3. So no perfect transparency there.
I itemise room by room.
Kitchen x amount
Clients LOVE an itemised quote. Every now and then a customer shares their appreciation for the proposal. It sets us apart from the rest and also makes it easy to kick off the job and get that deposit when they say "well take everything except study bookcase and garage cabinets". You don't have to back and forth reworking that one price.
I agree that per cabinet, per item is just too far broken down and there is nowhere to hide the price padding you might put in for a difficult detail that is going to leave everyone on the shop floor scratching their heads and take your detailer longer to explain to them how to built it than it takes to make it.
I have some standard items set up in the accounting software that I can easily add to the quote. Most people want all the bells and whistles but have no idea of the cost involved. So if they are asking for the pullout bin, pullout pantry, lazy susan ect. you can itemise them so that when they get the inevitable bill shock they can crunch the numbers themselves and work out what they are willing to pay for.
I often give a base price for laminate and then a breakout price to upgrade to two pack or solid timber AFTER THE TOTAL. That way you come in with the lowest price possible on the paper and the customer can do the maths on how much for the extras. Don't underestimate the power of a low figure, the old $9.99 trick works.
For small to medium custom build I truly believe we still need to go "by feel" a little bit in the quoting department. If you meet the homeowner you do your little investigative work and you know better then them what joinery they are likely to want. What car do they drive? what clothing brands are they wearing ect. ect. Are they a value buyer? looking for long lasting quality? must be better than the neighbours type?. Then you can tailor a quote around those factors and have a better shot at winning the job.
We all sell different types of projects. In my case, I don't itemize anymore than by room. Its a $3700 job, start to finish and includes tax, delivery and installation. It keeps it simple and reduces the decisions they need to make.
Whether you itemize your work or not (I do the room by room but I also break down by category) you really SHOULD itemize your DISCOUNT.
We give a discount for Angie's list clients of 5% across the board and I've always itemized that. Our second year in business my tax guy noticed this and told me we could deduct this as 'promotional discount' and claim as an expense. Ever since then, I don't lower my prices, I raise my discount!
It helps at tax time, bigly!