Hello all,
Well, after 12 years of having a cabinet job, I am ready to build a cabinet making business. My question is regarding pricing. I have learned a lot on woodweb, but still have questions. For those of you that bid every job based on Material/Labor/Overhead/Profit, what things do you include in your overhead figure?
How do you figure the number of hours required to make your products?
Do you utilize sq ft pricing, or lineal ft pricing?
Do you have different shop rates for cabinets, finishing, doors, installation etc ?? Or is the number of hours the total of all of the above?
How do you handle breaking down each item for clients that want it? For example : How much extra is that one cabinet above the washing machine?

Do you estimate the number of shop hours for one cabinet??

What thing make up a per hour shop rate?

I don't want to over complicate, but I'm tired of lineal ft pricing! It leaves out too many variables!!

If you've had a cabinet job for 12 years, you have the base on how long it takes to make them.
What's included in overhead? Everything! Rent, utilities, insurance (on you, the building, the business), salary, self employment taxes, state taxes, machine depreciation, etc....
Don't forget that every owner is not productive 8 hours per day. You get phone calls, drop-ins, etc....So be sure to figure your labor rate based on actually working hours, not hours in the day.
My pricing is never based on any random measurement factor. It's based on materials, labor, and overhead.
You will likely miss on some estimates in the beginning, but keep records and the estimates get more accurate quickly.

What things do you include in your overhead figure?

All fixed and variable OH, basically every nickel spent that isn't direct labor making or installing product.

How do you figure the number of hours required to make your products?

Software, based on the old AWI cost book and internal time studies.

Do you utilize sq ft pricing, or lineal ft pricing?
No, 12' of 12 1' wide cabinets is significantly more work and material than 12' of 3 4' wide base cabinets

Do you have different shop rates for cabinets, finishing, doors, installation etc ??

Installation yes, other shop areas no,
If I had hundreds of employees or employees dedicated to a specific cell 8 hours a day I would consider it.

Or is the number of hours the total of all of the above?

Yes

How do you handle breaking down each item for clients that want it? For example : How much extra is that one cabinet above the washing machine?

The cost to add 1 cabinet when built with all the other cabinets is less than the cost to add the cabinet after everything is done. The cost to take out 1 cabinet prior to starting increases the setup times, mobilization and other fixed costs on the remaining scope so the cost to take it our is less than you sold it for (internally) and the cost to add before you start another is generally less than the one you had bid.

Do you estimate the number of shop hours for one cabinet??
yes

What thing make up a per hour shop rate?
We have an internal cost and then a burden to develop what we charge ourselves for an hour of time. We then mark that up during the sales process.

For us its all the direct burden plus the hourly OH rate.

See my attached change order spread sheet for an idea on labor and material breakout.

Oops it won't let me upload an excel spreadsheet rename it to an .xlsx after you download

Zeke,
I would imagine that all of us have different methods for pricing and no doubt they all work or we wouldn't be in business. You have to do what works best for you and if you hang in there you'll figure it out. You'll know when the job is done whether you made money and enough of it or didn't make enough. Some of it is just trial and error.
As others have said, everything you pay for is overhead.
My method is for base cabinets I price by the inch. I have a different scale for regular base, drawer stack, sink base, etc.
For the wall cabinets it's width x height x dollar amount.
That's how I come up with my base price and then I add a percentage on that for what finish they want. Of course there are a lot of other things that get added into that before I figure the percentage, but you get the point.
I started doing it this way several years ago because I felt like I wasn't making enough money and it has worked really good for me. Plus I can figure a quote up much faster as well. When material prices increase I just add money to the price per inch. Does that make sense?