Pricing per square foot
Pricing work by the square foot, and why not to do so
I have recently picked up a customer who wants me to supply him with custom cabinets on regular basis. He does the selling and I do the building. I have to supply him with a per square foot cost for the cabinets. Does anyone have any suggestions on how to figure labor and overhead costs into a per square foot cost? Material costs are no problems for putting into per square foot.
It sounds like you are a custom shop trying to go into some aspect of production. Pricing per foot is scary if you don't consider the following into your equation:
-the volume of cabinets
-the time frame for production
-options (pull-outs, specialty items)
-your relationship with the customer (clear communication and understanding of product)
-your process for production
The tendency is to price based on smooth production. Itís not always smooth, overtime, mistakes (made in volume), and miscommunication can rapidly erode profits in very competitive aspect of this business. It is also important to be realistic about how efficient you are in a given 40hr week. 75-80% efficiency seems typical.
I don't understand your fear of line/ft pricing? We have priced cabinets by line/ft for years. Every cabinet maker I know has some sort of line/ft pricing.
How do you price a 4 drawer cabinet, with 2 drawers divided into three compartments each if this cabinet is in a 10' length of cabinets that are standard drawer over door type boxes?
From contributor D:
Another route you may take is to come up with a price list based on cabinet styles/sizes, just like Big Box does. We did that when we were in the residential market selling thru dealers and it worked out well. We had a list price, and the dealers had a multiplier. If you are selling to a middle man, I don't see a better way. That way you don't get stuck doing all the quoting. The dealers should be handling all of that.
From contributor E:
In my area almost every custom cabinet shop prices by the foot, including me. I have a standard price per foot for uppers and lowers, and when a customer wants a couple of extra drawers I charge X amount of dollars, I have a standard price for all my extras; appliance garages, pull-out trash cans, drawer dividers, extra drawers, etc. My customers don't give a hoot what I am charging a running foot, I bid ALL my jobs and they want to know one figure - what is this set of cabinets going to cost me? I have a formal proposal and stick to my bids. If the customer wants to change something or add on something then we deal with it.
From contributor D:
A typical wall cabinet is 30" high with face frame construction. We can get 12 ends out of a 4x8 sheet. What happens if your customer goes to 36" or 42" high walls? Is this another "standard price"? We get a really good yield out of the 30" ends, approximately 93%, but the 36" is bad and the 42" isn't much better. I know you can use the scrap, but at some point, you end up with all this material that is 12"-24" long that you can't possibly use it all.
Then, in the run of wall cabinets, you've usually got shorter cabinets for refers, hoods, MW's. How does that figure into the equation, or is it not enough difference to worry about? What about bars, or the various situations you run into, where the customer for whatever reason wants a run of 24" high wall units?
How do you figure labor into lineal footages? How long does it take to build a foot of base? Is the labor the same for a lineal foot of sink base, a foot of drawer base, a foot of standard base and a foot of angle corner base? I just don't see how to do this and maintain any degree of accuracy. Here's an example, say you have a "U" shaped kitchen, center leg is 12' and the left and right legs are 8', and of course the right leg is a bar (oops there will be finished backs on that leg, is there a standard price for that) and then you have a galley kitchen with two straight legs 12' and there's a desk affair on another wall that's 4'. Surely the labor can't be the same for these two kitchens, can it? Both kitchens have 28' lineal feet of cabinets.
Again, I'm not bashing anyone's methods of doing things. I just don't see how you can make this work.
From contributor E:
You are correct in having a difference in labor, but when pricing by the line ft. you have to also add all the extras that may come up i.e. extra drawers, finished bar backs, etc. We build a 31 3/4" upper, if the customer wants a 42" upper then he will pay $xx plus $25 for that foot, if we can use the scrap then we do if not we chunk it. We do not have a lot of scrap either, from our weight calculations about 7-9%. The customer will also pay a few extra dollars for arch top doors per foot. If a customer wanted a section of uppers only 24" high then I would still charge them my same per foot price for uppers, just like I do for Ref and vent-a-hood uppers that are only 12" tall as opposed to 31-3/4". As far as the lowers my customer pays the same line ft price for sink bases as for standard bases or vanities or knee spaces. Although we use a per ft figure we add in all the extras.
I believe this to be a decent system of pricing although it might not seem very accurate to you on the whole it works out. I run my numbers on a monthly basis here in my 3 man shop and am making an acceptable profit. We also do not build a bunch of little boxes and assemble them on the job site. If the kitchen needs a 79 3/4" long upper then that is what we make. Our normal job is 20-25 ft of upper and 20-25 ft of lower. We build in 4 -5 days and take a day to install and trim out. We are what I consider a small production shop, and use all 3/4" plywood for our boxes, Amerock 3400 series hinges and KV 1284 drawer guides.
Now for the strange part; I try to stay at least 10% higher on cabinets when compared to my competition. I not only sell my cabinets, I sell myself and my crew, my customers have my home phone number and can usually get a hold of me at any time. Sometimes this is a good thing and sometimes a bad thing, but trust is the key to my business.
How do you adjust your lineal foot price when your sheet goods price goes up? When your hardwood price goes up? When your hinge price goes up?
How about when the client wants to change something like the finish, letís say the client wanted a stained oak cabinet, and then decided they wanted a stained-glazed maple cabinet?
How would your price differ if a client came in and asked you to price a ten-foot base cabinet, then after you gave your lineal foot price, they decided they would rather have ten one-foot cabinets?
To contributor E:
I don't even like pricing the installs per foot for some of the same reasons mentioned.
What happens when a scribe to a soffit gets changed to a 4 piece upside down base with a scrap block sitting behind a piece of crown which accepts a dentil? Suppose they also said they now want 42" to the ceiling, which you get the money for but on the install you need to climb ladders all day. Suppose they also decided they want 14 dollar handles with 7 dollar backplates instead of 3 dollar knobs by themselves. In other words, how many per foot variables do you think it will take before it just makes sense to do per item pricing? With the handle example you're doing parts of it anyway, just how many handles per foot do you figure anyway? Is the handle count sometimes over and sometimes under? Think maybe sometimes that's how the pricing is too?
Pricing by the foot is something that works only for high-production, cookie-cutter type operations, where the options are few or non-existent. And even these folks regularly include plenty of pricing guidelines and caveats. So why would anyone doing *custom* work think about applying such a clearly uniformity-based pricing method to work that's anything but ordinary?
If you're doing custom work, some things just come with the turf: unusual jobs, design and execution challenges, and last but certainly not least, the opportunity to make good money. Don't blow that chance just because someone's wagging bills in your face.
Anthony Noel, forum technical advisor
Bidding by the foot doesn't work for all the reasons previously noted. Selling by the foot or TRANSLATING your price to a unit measurement is a different issue and can be controlled by qualifications. Not that I recommend it but I deal with it all the time. It requires tools that allow all these what-ifs to be modeled and checked quickly. I take out an elevation and recalculate my price, give them the credit less any costs incurred and if they want it translated, I do. Itís a price good for that instance but it gives them a reference point that they are familiar with.
From contributor E
If the customer changes something after I give them my bid, they will pay extra. I also do not stain and seal cabinets. Around here it is usually customary for the painter on a job to do that, I do not furnish any knobs or handles. Normally the customer would pick out and purchase what they want and the trim carpenter would install these when he comes to install the passage door knobs. Also if my material cost goes up then my base price goes up. I never said this was the perfect way of bidding but it has worked since 1971! To answer the original post, I would not let anyone determine a price for my job but me. It would seem logical for your salesman to give you a copy of the print and then you give him a finished turn key price.
I am not trying to convince anyone that my way is the right way. It works for me and a lot of shops around here. I am a small production shop, not a full blown custom shop. I would be lost in my estimating if I did a 100% custom job. I would probably spend more time figuring out the price than actually building the stuff.
From the original questioner:
I think that I have had my eyes opened as to what route to go. The reason that I felt that the per square foot price may have been the best possible way to go was to allow for design changes. The original deal with the sales guy was to supply him with 125 laundry room for a subdivision. There are no drawers in the rooms, just straight runs of uppers and lowers. The problem is none of the rooms are the same sizes. The widths vary but the heights of the cabinets remain constant. I felt that the square foot price would be a fairer way of trying to deal with different sizes for the sales guy instead of me reworking the pricing every time there is a design change. I would allow for cabinets to be a certain price up to one size and then another price for cabinets that are bigger and are going to have a lot more material wasted. The original post was more of a way to figure accurately my costs into a square foot price. It would seem judging from everyones posts that a lineal foot price is more accurate in trying to determine one's costs and markups.