Competing with the Factories

      Custom quality at a mass-produced price? Pros debate the issue. February 25, 2005

Question
I have noticed that many cabinetmakers build a lot for contractors. Some of you say the contractors only care about price and delivery. I know all do not. Why or how can you compete with factory built if that is the case? I can not. Why do GC's deal with custom shops if all they want is inexpensive cabinets that are ready when they need them? Why not just get them from a big box store?

Forum Responses
(Cabinetmaking Forum)
From contributor W:
Simple... the dishonest/shady cabinet shops that underbid or do anything to get the work. It causes the industry as a whole to under price its work, which in turn drives down the prices for all the shops and the GCs know it. The shops out there that operate without paying taxes or having the necessary requirements to operate the business legally cause the legitimate shops to not be able to compete price-wise, and again, the GCs know it, so they are to blame as well. You should never have to compete with the big box stores or huge nationwide cabinet manufacturers. That's the unfortunate side of this business.



From contributor D:
There are lots of different home builders who cater to many different types of cabinetmakers, and you just need to find the builders who are looking for what you do.

There are a lot of contractors around here who want nothing but pre-mades. They like the fact that they can mark them up three times and make a dandy profit. Their customers are uneducated on the options available and don't know the difference between the dura supremes and a quality custom cabinet.

Plus, as was stated, the lines between the two are becoming fuzzier every day, with the manufacturers offering things they never had before, coupled with some custom shops dumbing down their trade to try and compete.



From contributor J:
I have been doing this work for thirty years and I usually pay myself about 70k per year. This is not a great amount, but it is adequate. I easily compete with the box stores. I generally beat them by about ten percent. I have every tool a commercial cabinetmaker could want and that is how I compete. I read in these forums where it takes so many days to do this or that. Working by myself, I do a job with slab doors and 14 cabinets are ready for installation in 3 days. I work 8 hour days, but I stay busy working the entire eight hours. My opinion is that if you can't compete with the box stores, you should get out of the business. My product is equal to any upper end product out there. I work by myself, I am licensed and insured, I paid 2K in taxes on my business property and 1k in taxes on my equipment. I know what it costs to make a set of cabinets and I do not debate prices. My experience with contractors in my area is that they want someone they can depend on to do a professional job in a timely manner. I am always paid within 3 days.


From contributor D:
3 days by yourself? Are you finishing them and are they Euro or FF?


From contributor J:
I finish them myself. I build what I call a modified Euro. My sides are 3/4 ply that are edge banded. On wall cabinets I have a 1 1/2" horizontal rail. The same applies to base cabinets. All open ends I lay out flat in the finish room and spray. All closed ends are Chinese birch with the UV finish. After assembling base cabinet with hinge plates and drawer slides attached, I put them in the spray room upside down for spraying. Finishing the exterior is very quick. The same applies to upper cabinets, although I do not put the backs on until after finishing. I use Fuhr water borne products. Stain is usually dry in 30 minutes. I usually stain doors and finish the back of them the same day. Doors that I have stained the previous day I have finished both sides the next day. My drawer boxes are Blum meta box. I offer any type of drawer people want, but 99% don't want to pay extra for a dovetail. I lose track of time, but I think I have been using the meta box for 6 years with no failures. I use the uv 3/4 Chinese birch for drawer bottoms. All shelves are adjustable and are made with the uv birch with a matching pvc edge band. No finishing here. I outsource all doors other than slabs. I think I have a pretty good system.


From contributor B:
I, too, run a small, one man shop in which I build both cabinets and furniture. I have an accountant and run my shop in accord with all the local tax/business laws that apply to my situation.

I recognize that some small shops ignore some of the tax/insurance requirements, but I think it may be a bit unfair to lump them into the same boat. The small shop is limited in many aspects because they cannot produce the volume that a large shop can, yet because of generally a much smaller overhead, they may well be able to make the same percentage of money on a lower price.

I do not really attempt to compete with the box cabinet. I build all of my cabinets out of hardwood plywood, build dovetailed drawers, use high quality hardware, and supply custom panels on any exposed cabinet end or back. I work with the customer and help them design their own kitchen, offering glass, metal panels, etc in the doors. I can also design special cabinets to accommodate odd spacings and obstacles. (This is particularly helpful in remodeling.)

When pricing my work, I show them what I offer and what the price includes. I can offer some things that the box store cannot and essentially it is a matter of whether or not the people involved want this service. If they wish to go elsewhere, that's fine. I also work in a family-owned construction business and have installed a lot of various factory-built cabinets. Some of them are pretty decent for the price. Some are high priced pieces of junk!



From contributor M:
Pre-made slab doors, pre-finished ply with PVC edge and meta drawers… I would hope you could get that done in three days.

For builders, we sell semi stock cabs for kitchens and baths. The only cabinets custom made are usually built-ins. No, you should not be able to compete with the box store. You should definitely not be able to beat them by 10%. Anyone matching, much less beating, box stores is selling themselves short.



From contributor J:
One must learn to build what the public wants. I like making dovetailed drawers, but no one is willing to pay the difference. I have a 30.00 up charge per drawer vs meta box. Plus, the dovetailed drawer is really obsolete. There is no need for it with the advances in drawer slide tech. Butt joint, glue, staple and use a good slide and the drawer will operate well for the life of the cabinets. I use Chinese birch with UV finish with a matching PVC edge band for shelves. I can't imagine a better shelf. I build cabinets using 3/4 pre-finished ply for all components except open ends. For durability of the finish, you would have to step up to a conversion varnish. I used to order wood by the semi truck load and kiln it myself and spend hours making doors, but now I outsource. You can make a cabinet so well that no one can afford it. The bottom line is that, while we may not want to compete with the box stores, we better be able to. The competition is going to get tougher and tougher. I saw some cabinets a couple weeks ago that were all wood, maple raised panel, that were shipped completely assembled from China.


From contributor M:
I totally agree. We also build all our interiors with pre-finished sheets and edging. We outsource dovetailed with 1/2 ply floors for less than it costs to build Baltic birch ones. The only reason we still build doors in house is because of the tolerance and lead time issues with outsourcing. I tried it several times and the downtime and labor in re-ordering, handling and delayed installs was more costly than building our own. I too make all decisions based on what is most cost effective. I could care less if we built the doors or not. In our situation, it is just more profitable in the long turn.

My comment about not pricing the same or less is based on exactly what you said. You have 30 years of experience, god knows how much money in tools and a great system that works. You deserve more money. You have earned the right to charge more money and you should be charging more. Absolutely, technology is changing and the gap between custom and semi-custom is closing quickly. Yes, everyone needs to set up their own quality standards and do everything they can to be more efficient and competitive. But to sell your talents just to compete with the chains is self-deprecating. You have obviously had a very successful career to get to the point you are now. That is exactly why I believe that you and everyone else needs to value themselves higher and become more efficient to be able to make the money and live the life we all deserve. Your situation is unique. You have very low overhead and obviously have all your machines paid off. For anyone in their infancy or adolescent stages of business to take this approach would be suicide. A cabinet is a cabinet is a cabinet. All our worth is in service, which no chain or import can ever compete with. Sales and service is where the value is. Trying to compete strictly on manufacturing costs is futile.



From contributor C:
I have a question for everyone who says that a shop can't compete with the big box stores. Why not?

You are at an advantage. You get to cut a lot of middlemen and markups out of the equation. The cabinet factories make a good profit on the cabinets they sell to the box stores, the box stores mark them up considerably and have a lot of overhead to cover, and they make a great profit on it.

So how can you not make money on a job that goes directly from factory to consumer?



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