|Home » Forums » Business » Message||Login|
You are not logged in. Consider these WOODWEB Member advantages:
Selling to design/install shops8/21
I have been designing, building, and installing custom kitchens for the last couple years. I have found that the design/sell and install portions of the project are not very profitable for me, but my shop time is. I have been thinking about the idea of approaching a couple different design and install showrooms with a sample cabinet, design, and bid to see if there is a place for me in their line-up of brands. These are places that would carry kraft-made, merrilat, and often an amish alternative. My question is, does anyone know what the typical markup percentage is for these brands? I'm trying to gauge ahead of time if my brand/price/quality would be profitable for such a business.
we sell through a lot of dealers.
40% is the industry target mark-up. i'm not sure how many achieve this but i would say 25%-40% would be your mark-up range.
Thanks for the helpful response. So if I understand correctly, If I sold a kitchen at $15,000 the dealer would want to sell it to the customer for 21,000? (15,000x1.4) Sounds impossible for a small shop.
bob - that should be worst-case.
our local dealers don't typically get anything beyond 30%, but yes, it seem like a lot for the design and sale. once again, we feel like we're in the wrong business!!!
15,000 / .6 = 25,000
IMO you have this backwards, installation is maybe 10%
design = sales another 10%
With low to no overhead.
The answer is not that if YOU sold a kitchen for 15K the dealer would be at 21K.. the answer is that if you WERE TO SELL a kitchen at 15K, but absolved yourself of all the design, customer interaction, questions, changes, collecting and paying sales tax, delivery, after transaction BS, on and on.. you would ship that kitchen for 9K and wash your hands.
Whether or not your distributors would cut you free of all that headache is another issue.
The simple fact of the matter is the retail customer transaction accounts for 50% of the cost of the sale easily. Your time meeting with them, working through ideas, shipping drawings and emails, answering the phone, dealing with changes, delivering, after sales BS, is likely far more than 50% of the cost o that transaction. But the retail shop fools themselves into the notion that thats just what you have to do.
Take the 40-50% hit, enforce your contract, and stay in your shop and make. The 50% "hit" to the retail outlet is a gift.
Meanwhile the overhead never sleeps
One place that we have long sold to adds 25% for the sale only, no design, install, follow up, shipping etc. Another that operates as more of a retailer adds 50% +frt. (33% of the sale price + frt.) When we sold furniture at wholesale, what they got for a mark up was hard to tell. We provided all the sales brochures, paid part of the advertising and provided "List" price sheets that were obscene so they could offer huge "discounts." They determined what the "List" price was. The retail furniture business was full of shady operators. Maybe it has improved?