Cabinet Assembly Production Rate for a One-Man Shop
There is no such thing as a standard kitchen. Every kitchen is different - different wood, layout, hardware, material, etc. The per box price is only good if you produce the same cabinet, the same size, with the same hardware, the same finish, the same wood, the same material, etc. By the way you wrote your post, it seems like you are a one man operation.
So here is one method of how to determine your price. It may be easier for you to figure this out if you look at it a different way. Look at the job as a whole and not as individual boxes. How long will it take you to cut all the parts? How long will it take you to edgeband all the parts? How long will it take you to linebore all the parts? How long will it take to install all the hardware? How long will it take to assemble all the boxes with your construction method? How long to finish? How long will it take to install all of the finished product? The answers to these questions will tell you how many man hours it takes to produce this job. Accurate record keeping over time will allow you to calculate an average time per box for your operation.
"How much would you charge per box?" Simple answer - I charge as much as the market will bear that allows me to make a profit. How much should you charge? You need to know your numbers. You need to know the following:
1. Your base hourly rate. This is what it costs you to run your business per hour. Take all your operational expenses (your salary, employee payroll, insurance, utilities, rent/mortgage, vehicle payment, vehicle insurance, gas, anything you pay on a regular basis, etc.) for the year. Add all these numbers together to find out what it costs you to run your business for a year – let’s say $100,000. Now you need to know how many hours you work every year - 40 hours per week x 52 weeks = 2080 hours per year. 2080 hours - 10 days (80 hours) paid holidays = 2000 hours. 2000 hours - 2 week’s vacation (80 hours) = 1920 hours worked every year. Now take your total operational expenses and divide by your hours worked every year. This equals your base hourly rate. $100,000/1920 hours = $52.09 base hourly rate. This is not what you need to charge per hour. This is what it costs you every hour you work.
2. How many hours do you work producing your product (build/install)? I call this production hours. This requires a little estimating. I estimate that I spend approximately 1/3 my time not actually producing my product. These non production hours include sales, marketing, accounting, admin, design, travel time, clean up, set up, etc. So, to determine my estimated production hours I need to know what 1/3 of the 1920 hours is 1920/3 = 640 hours. 1920-640 = 1,280 estimated production hours. This is amount of hours I expect to be producing my product each year.
3. Base hourly production cost. This is what it costs you every hour you produce your product. Take your yearly operational expenses and divide by your estimated production hours. $100,000/1280 = $78.13.
4. Profit. Shoot for 20%. So, 20% of $100,000 = $20,000. $100,000+20,000 = $120,000.
5. Actual hourly rate. $120,000/1920 = $62.50. This is what your time is worth every hour you work. You need to make this much every hour every day.
6. Actual hourly production cost. $120,000/1280 = $93.75 minimum hourly shop rate base on a minimum of 1,280 billable hours. This means that if you bill less than 1,280 hours each year you will not make your target number of $120,000. So with an actual hourly production cost of $93.75 we know that we need to charge at least this amount as our hourly shop rate. Let's round this up to $115.00 because after researching our local market we have determined that this number is still within the limits of what the market will bear as an hourly shop rate.
7. Material. Charge for all material used on a job plus a markup. So let's say material costs you $4,000. Multiply your material costs by your markup %. $4,000X35% = $1,400. $4,000+$1,400 = $5,400 job material cost to your customer.
8. Design Time. As I stated above, I count design as non-production hours. Some companies count design as production hours. Some companies charge directly for design (separate design fee), while others charge indirectly (built in to every job) this is a much debated topic for a different discussion. I charge a design fee.
With this info you should be able to determine what you should charge. Estimate how many production hours the job will take – let’s say 90 hours if everything should go right. So we round that number up to 100 hours. Now multiply 100 hours by your hourly shop rate of $115.00 = $11,500.00. Now calculate your material costs + markup – let’s say $5,400.00. Now add your two numbers, $11,500.00+$5,400.00 = $16,900.00. This is what you should charge.
From contributor K:
For cabinet boxes (I'm assuming you mean just boxes, no frames, doors, etc.) I can take prefin sheet goods, rip, crosscut, dato, bore, and assemble and entire kitchen in one day easy. I use confirmats and staples.
From the original questioner:
Thanks for the answers guys. I am a single person shop, and was only looking for ballpark figures as another cabinet shop has approached me on doing a bunch of boxes for them. I figured it would probably take about one hour per box plus material so I was just looking for input. Thanks so much for the great insight!
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