Question
Now I know what it's like to be outbid by a garage shop. No offense to those working out of a home shop - I am doing the same, but I am running a legitimate business and have to make a living. We all started somewhere and it wasn't long ago when I was doing it on the side and fairly cheap. But, the clients I did work for were generally people I knew or through someone I knew and weren’t looking for a competitive bidder. They only had it made because I could do it cheap. Otherwise, they would never have had it made. Maybe that doesn't make it any better, I don't know.
Anyway, just for example, I have attached a picture of a unit that somebody just had me bid on. She actually wanted 2 of them, 96" tall, the bottom unit 24" high and painted black. These were roughly $1000 each in the book. I bid $3200 including a black lacquer finish. I lost the bid to some guy who is doing them for $1200 for BOTH! I had $800 in materials alone. It wouldn't have bothered me if the guy had come in just under my bid at $2800 or maybe even $2500. But, how could anyone possibly make those for $1200 a pair?
Sorry for the ranting, but is my price way too high or is the customer just too cheap? I could have dropped my price by probably $400-500 by letting the customer do the painting themselves, which they mentioned in the beginning. But, no way could I match that low of a bid unless I give them away.
Just a word of advice for the hobbyists - if you are doing woodworking on the side to learn the trade or just keep busy, that is fine. Charge a fair rate and enjoy what you are doing. If you are advertising trying to obtain business, please charge at least a minimum going rate. This is what will put shops like mine out of business. Larger, established shops can afford to lose some bids because they are probably pretty busy to begin with. Small shops like mine rely on job to job.
I am looking for advice on this. I really tried not to take this bid loss personally. I just don't have the luxury right now of losing bids. But, I refuse to give away my work just to get a client. A discount maybe, but I figure $40/hr is already a discount for custom, one-off furniture.
Forum Responses
(Cabinetmaking Forum)
From contributor A:
As another small shop, I would have probably bid them at about $1200, each, with no painting (I hate painting, and if the customer volunteers, that would be great for me). You might consider following up after they are built and see if you can take some pictures of the finished product. By the way, what was the time frame for building them? I’ll bet the schedule doesn’t get met.
I could have seen doing them for that without painting. But, like I told her, I prefer to do my own painting since I can spray it and it shows my work better than someone brushing crap onto my work. Nothing wrong with a nice, brushed on Impervo or other high quality enamel paint. But, most people don't know how to brush it on that well. I am actually pretty good at doing that, but would still spray it because I can. If she would have come back and asked me to drop my price, I would have thrown that out and done it all primed. I refuse to deliver unprimed furniture.
Sales staff at my product manufacturers’ know my name and business. I have agreements to use their logo on my business cards etc. - more sales power. If a company offers training and I can afford it, I go - no questions asked. Once your supplier knows you are serious, so do architects and designers (they communicate more than you know). I use my suppliers as a reference for bigger jobs. How about Design software? Do you have any?
Another item is this - according to my plan I should handle two to three kitchens a month or equivalent work. I expect to earn (net salary) 3800 a month. That means my profit margins need to be adjusted for my salary and my expected workload, not what I have today, but what I will have in a year. This really hurts in the beginning. I could produce those for around 500-600 no problem 1 full day (12 hours) in the shop, 1/2 day with my sprayer. The doors would be ready to install in one week assuming you are using MDF because I bet that is made out of machined MDF then covered with a shellac primer or clawlock and then sprayed latex or catalyzed lacquer.
If I had a lot of stuff going on I would shoot the cutlist to my supplier and get the pieces cut and edgebanded (if it was melamine) for about 7 dollars a part. Then I could spray and assemble or just assemble. I guarantee the measurements would be right on. If they would have been okay with Melamine (which I would have offered) I would have cut it out in a day, and there would be no issues of quality of workmanship - maybe material – but that's not my issue.
Right now I am booked through June, and I am not the cheapest guy around...as a matter of fact about 40 minutes ago I just referred someone to the other guys, (they have a shop) because I don't produce that kind of stuff at that price range.
Always take a look at your practices and business model. There is always room for improvement. After all, when we work from the house our overhead should allow us to build the business to suit our markets.
Some projects are just not worth it to get in a bidding war, no matter who it is. For your project, I would do it for 2800.00. So you’re in the ball park. Black lacquer and paint I usually avoid like the plague - that gets subbed out. The way I look at it, the guy that won the bid is not going to eat very well.
To contributor E: I honestly don't know how you could build these at the level of quality I try to achieve for that amount. If you are setup to crank out melamine panels for euro cabinets or something - maybe. But, to me, this is a piece of furniture and should be built that way. No offense, but everyone has their niche. I prefer to aim at the higher end market. A lot of companies like Bush and O'Sullivan probably make a good profit making cheap particle-board furniture. That is the market they aim at. But, that is not why I got into woodworking. I like to build quality furniture. I do use MDF where applicable, but I draw the line there. It will always give the impression that it is cheap.
I wouldn't worry too much about the cheaper guys. In my limited experience there is room for everybody. I am a one man show with a 2k sq. ft. shop and all the expenses that come with it. With any job I bid there are guys who can do it cheaper, and guys who will be much more expensive. If you do quality work that's what will sell you, not being the cheapest around.
I have two separate clients who will wait and pay me more than market rate to do smaller jobs, because they know and trust my work. I explained that even though I'm working at their homes I still have to account for my overhead and they don't mind at all. If I am slow I can jump into some finish carpentry work and keep money coming in. The only problem is I seem to end up making more on those jobs than on cabinetry!
If you’re really that slow that losing this job hurts, you may want to start doing some marketing. Get some nice pictures of your jobs, and get your name around.
You should not use the garage shop stereotype. I like to think my quality and service far exceed the local medium size shops. I charge the same rates or higher. Every year my overhead goes up. This year I had to start paying for our health care while they are busy paying for their new edgebander. I currently work out of a historic carriage barn. I guess it qualifies as a garage with a little more grace.
Approx 100bd ft maple = $265
Slides, soft close = $100.00
Finish supplies = $60.00
.5 ply for the backs = $60.00
Crown, feet, misc = $50.00
Total of $555.00 for materials plus markup (usually 1.5). The only number I looked up was the board foot cost of maple. Popular would be a little less. The rest of the costs I'm estimating on what I think they are without looking them up. Without figuring too much, I say retail you are about right in the $3200 range. However, I'd caution the customer on the design. This piece will be quite tippy. They really need to use a restraining strap.
I can just imaging little Timmy coming over to Grandma's house and seeing a pretty thing on a shelf and trying to climb on the front. Little Timmy tips it over and you get sued. Wonder if the $1200.00 each guy has liability insurance?
Cabinet - 2 sheets 3/4" mdf- $35
Drawers - 2 sheets 1/2" birch (5'x5')-$40
Backs - 2 sheets 3/8" mdf-$20
Crown/frame/fronts/ -20 ft. soft maple$40
Primer and lacquer-$100
Slides- $25
Total materials-$260 (call it $300 j.i.c.)
Material mark up-$100
20 hrs labor @$40 per hr.-$800
Grand total=$1200 for both
This would be the economy version and I guarantee it would be better than the one in the picture, which is not a "high end" job anyway. You have to be aware of your customers’standards and expectations if you want to cater to different markets. When they showed you the $1000 dollar one in the book you should have realized their expectations and walked away without wasting time on the bid. You should definitely look for a better supplier. You don't have to buy 40 sheets at a time to get better prices.
When I make a sales call I bring my Conestoga Binder, Blum binder a few photos of my stuff and my sample blocks from Roseberg and Panolam. If they want Melamine I will do it up. Face Frames - no problem. Frameless - no problem. Melamine always gets a second look when I tell them the price.
Same as drawer boxes - I have my own, Conestoga and Blum Metabox/Tandem Box. If they want lacquered dovetail drawers, no problem - they pay. If not they can try another option at another price. Custom cabinets are custom to the client not my tastes. I would rather have stainless steel drawer sides with a melamine or hardwood plywood bottom anyday over dovetails.
MDF does not mean cheap. It means smart, recycled products, easy to shape and cut, easy to spray, inexpensive, you name it. Once Roseberg makes a green MDF I will always recommend it first for painted or colored projects.
But I do not misrepresent MDF furniture. I tell the client upfront what it is, why it is inexpensive and the upside and downside of each product choice. That's my job as I see it.
You need to learn to qualify your prospective clients, and quit worrying about someone working out of his garage or what is coming from China. When people come to you with a picture from Pottery Barn, they generally expect you to build it for less. Otherwise, why wouldn't they just buy it from them? If they want something custom, then you need to explain to them the difference between mass production (millions of dollars of equipment and no flexibility in outcome) and a small shop (setup is not dispersed over thousands of units). It is going to cost them significantly more for you to build a one-of-a-kind piece. If they understand that then you should continue talking. If they look down or away, you need to send them to someone else who is willing to work for nothing. Stay away from Black Lacquer! It is impossible to get perfect, and every flaw is magnified. Spend some time understanding your customers. Spend time on the ones that fit your operation and don't worry about the ones that don't. And finally, ask your suppliers if they have an outside sales person, and if they can give you better pricing. Some will give a break to the little guy in hopes of earning his loyalty. And then, look him/her in the eye and say, "Is that the best you can do?" It costs you nothing to ask. The worst thing that could happen is they say "no." The best thing, you could save some money here on out.
Just as a side note, I would take contributor M’s labor hours and multiply them by at least $100/hr. = $2000 then double material costs which would give you your bid price. We have been able to inch our hourly up to an average of $150/hr. and sometimes more. It has taken years of carefully screening our work and customers. It can be done. It is true we are in a large city area (Las Vegas) but many of my friends are in rural areas and getting near as much. You find the upper end customers to work for and charge accordingly. At $40/hr I would ask - do you pay all insurances/bonds/licenses? Are you able to replace your equipment regularly - truck etc.? Do you put away for retirement inevitabilities?
I just figured my driving costs yesterday - I get 14mpg in my new diesel van and drive around 100-150miles/day. That's $30/day in fuel which eats up $4/hr. plus cost of vehicle /insurance/repairs/maintenance = $4000/yr. = $20,000 over 5yrs or 100,000 miles = another $.50/mile = $75 or another $9/hr. for a total of $13/hr. for my van alone. Add to that an hourly wage of even $40/hr. would add another $80 (minimum) or $5/hr. for a total of $18/hr. for my work vehicle.
My van makes me a consistent $75-100/hr. every day of my working year when I drive. It is figured into my pricing. I charge a minimum of $125 for a service call. I believe you have to think this way or end up another of the tens of thousands of struggling woodworkers just barely making it – which, by the way, I was for nearly 35yrs! This is just my "reality thinking" that has really changed my outlook on business.
To contributor E: I'm not saying that you don't do good work. I'm sure your cuts are straight and your joints are tight. And, I'm sure your cabinets will please many customers. But, there are also plenty of customers out there that can appreciate dadoed cabinets, dovetailed drawers, solid hardwood parts, veneered plywoods, etc. I chose to aim at that market. Is it harder to find those people? Yes, at least for me. But, I still stick to my philosophy and if I don't make it, then I will go to work for someone else. I'm not in it just to make money. I don't believe in doing whatever it takes just to stay alive. I do have pride. You chose to be very flexible for a wide range of customers. That's great and works for you. I'm flexible to a point, but I draw the line at competing with IKEA or Home Depot.
As far as MDF goes, I don't have a problem with using MDF in paint-grade cabinets. If you looked at those built-ins, the cabinets were MDF and the hardwood was poplar. They turned out very nice and the customer was very pleased. But, those are hidden in a cubby hole, not freestanding where they can get kicked and dinged.
This has been a great thread. It made me think about my costs, time, workmanship, etc. But, there are enough replies here that reaffirmed my pricing. I just threw it at the wrong customer. To contributor P: Thanks for taking the time to model those. They look awesome! I don't know if that is eCab or not, but it makes me want to spend more time learning it. I use Inventor to do my designs because it is what I know and gets me the results I need. Unfortunately, it is just a modelling program and has none of the cabinet-specific features that I really need to be efficient at getting a design down all the way to a cut list. I always end up doing that manually. Anyway, thanks again. I don't feel as bad now about losing the bid. It was just the wrong customer.
To contributor R: From the drawing you get a complete bill of materials, cut list, line drawings, sheet optimization, and all nesting info for a Thermwood machine. It will also do your complete job cost and automatically place an order for hardware, outsourced doors and drawers and other components if you wish. At present I don't like the way eCabinets calculates labor costs for very custom work ( hoping to get them to change it) so I use eCabinets to get my material cost and use info from the eCabinets drawings in a spreadsheet I created to calculate my labor costs. I then use eCabinets to write the proposal for the customer.
