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Sample of Bill of material and costing to client9/27
I need your assistance on how to calculate my BOM for client and including my markup for a frameless kitchen cabinet and a closet
Waiting to hear from you all.
We have no idea of your overhead costs, and machinery. Impossible to tell another shop what to charge.
For me I write a detailed description of what the cabinets will look like, be made of, what they will be finished with and if they will be delivered and/or installed. I list out the cabinets, the size and what attributes they have.
I list disclaimers a total price and the billing schedule of said price.
@leo G what's is your mark up after your costing. I need a clue pls, I don't want to charge too much or too low
This will be different for everyone. But you have to add all your material cost first. Then take your total overhead for the year (total do not forget anything that might go into your business even if you sponsored your kids little league team) and divide by the number of working days in the year. This year it is 261 then take that number and divide by the number of hours you work in a day. This will give you an overhead per man hour. Take this number and add it to what you want to make per hour plus all the other cost that go into that personal insurance, taxes, ss, ext. Add the overhead per hour and all of your payroll cost per hour and this will give you what you need per hour to break even. If you think that the job will take 50 hours to complete and your shop overhead is $20 per man hour, you want to make $20 per hour and your extra payroll expenses are $10 an hour then you need $50 an hour to break even. $50 an hour times 50 hour job is $2,500. This with your material cost is your break even point. Then you can add in profit. This number is what is up in the air. Its what you think you can get and what you think that the market will bare.
Once you figure out your per hour rate its easy every time after that. This number only really needs to changes as shop overhead goes up or if you want to make more per hour.
Why would you give a client your Bill of Materials and your mark up?? Makes zero sense to me!
Never mind...mis read your post.
As others have stated, your markup and margin will be directly dependant on your local area, your shops capacity, and all the other factors that go into it. These are all numbers only you can come up with for yourself. Even posting a drawing of the job and asking what others would charge will land you all over the map based on region.
Find market price by going to a big box store and have them price your custom home addition. That will give you an idea of market price.
Maybe secret shop a kitchen and bath design shop.
Now you have an idea of what the market price is.
Now you need to figure out if you can build and sell with margins based on your business at those prices.
You should be focused on market pricing, not markup over cost but to do that you need to know market prices.
I think its never a bad idea to know what the market is charging but I don't think you should only base your price off of this. The only way that I would use it is if I see that I can do a job for $10,000 and the market is bidding at $15,000 then I might bump my pricing up to get closer to that number.
If the market is $100 for widget and your production cost is $105 without markup, burden or profit you probably don't want to be in the widget business.
Its fundamental to understand market pricing so you can determine what type of widgets the market will buy from you at a cost you can produce and make a profit.
I guess I would rather do the job for $13,878 than $10,000, maybe even $14,378 than $10,000.
I have no desire to take money out of my pocket or have my family get by on less so someone else that makes significantly more money than me can pay less.
But as they say cost is fact and profit is policy.
Getting bid results and scope is essential in custom work to knowing where you are in the market.
Without a scope the other guys price is meaningless.
What my margin / markup is is not relevant, the first issue is what will it cost me to make it, the second issue is what are my soft cost and overhead costs. The final issue is how much profit do I want to make.
The construction industry works on the cost +10% "mantra".
A Contractors cost has a lot of soft costs before he gets to the "10%".
A drywall sub whose office is in his home and has almost all material delivered to the job site has very low overhead and can work on a much tighter margin than a cabinet company that needs to maintain a manufacturing company and do installation and delivery as well as design / engineering.
Drywall comes in one color unless its going on a wet wall, it comes in few sizes.
They probably rarely have to provide samples. They may need to mockup the tape or texture.
Its a much simpler trade to complete. The warranty is mostly the stud and rock manufacturers so there is little warranty risk.
Why anyone would think that two completely different subs could work on the same margins is beyond me.
Plus lowest price doesn't always win the bid. If you can sell the job at a higher price because of other factors, then there is one less thing to worry about.
Lowest bid is usually govt stuff and some commercial.