|Forum topic by ,||posted 05-14-2012 03:46 AM||7614 views||2 times favorited||29 replies|
05-14-2012 03:46 AM
Just wondering how things are going for fellow cabinet makers. We are doing well so far this year. We have turned away some work here and there due to being busy. This is just our second year in business so we are learning quite a bit. I imagine our more seasoned peers probably have things pretty well figured out but I am sure even the more seasoned cabinet makers are still learning.
Well, one thing I feel that disturbs me is the price of manufacturing cabinets is much higher then what even I had expected coming into this thing. We are a small shop, I have 2 full time guys who work for us and both me and my wife are full time. My wife is actually one of our best as she is great at building doors, applying finish (stain / lacquer), thorough sanding techniques, dovetail drawers and glue up drawer faces and most anything woodworking. Since she is my wife, she is a great value and is not demanding her worth in the business. I am fortunate as both my wife and I are very skillful wood workers, and I recently hired a fellow who is also a woodworker enthusiast and he also possesses great skills and comes at a fair price. My last guy has all the necessary tools and skills to be very talented but tends to lose focus at times and has been known to take some short cuts in the past which upsets me at times, plus he can tend to round things to his favor. What gripes me more is that I pay him better than any of us make at this business. He has been with us the longest, for about 15 months now. He also is not dependable as he either gets sick, his children gets sick, one of his dogs gets sick or some other drama occurs. I have often wanted to fire him but lack the nuts as I am just not very confrontational. I have laid him off for a week in the past because he upset me.
This being our second year in business, we are collecting draws at a rate of more then twice the amount than what we did at this time last year. We are flush with work and we are getting jobs finished but we do not seem to be making any real money at what we do. We are keeping our bills paid. I tend to run behind on most of my work because I don’t like turning away work and then we end up working between 2 to 4 jobs at a time that are at varying stages of completion, which tends to make us run thin some. I feel like we go from draw to draw. I pay shop rent, electricity bills, one modest car payment, our personal land payment, water bill, car insurance, labor cost (which is always a large set back), materials (another large cost) and then we are broke again.
Now, I am not trying a get rich quick deal, but I want to get to the point where we are not going from draw to broke, back to draw, then to broke again. Our first year of draws, last year, totaled 160,000.00 and this year we could be on pace to collect more than 300,000.00 in draws and I feel as broke as ever.
This all leads me to my pricing. This is always the main issue. With my web site ranking high in google I tend to get a steady supply of leads, so I have raised my prices steadily since going into business. When I first started out I used to charge on average 125.00 LF for custom cabinetry. Now I am around 175.00 LF with a recent customer paying around 185.00 LF. I actually had one customer bring me a bid from Lowes, I broke the bid down and discovered Lowes was going to charge him 225.00 LF for his project.
A bid I am doing right now, the lady told me she has a bid from a custom shop and home a rama (rama is a very cheap manufactured cabinet). She even told me, to her amazement, the custom shop bid was lower than Rama by about 3,000.00. I am not sure how my bid will fair in her evaluation because my goal is to be higher than Rama because we offer a much higher quality cabinet. Another recent bid, in casual conversation with the married couple I mentioned their small kitchen will likely run in the ballpark of 10,000.00, the lady of the house seemed purely shocked and thought I should be around 3,000 to 4,000. Another bid I did recently, they owned a newer model BMW and lived in a nice home, the husband spoke as though he was “cheap” and wanted a “good” price. I gave him a very fair price and never heard back from them.
So, I am trying to see if I am just under market, maybe an issue with over paying in labor, which I doubt since my wife and I make very little ourselves, or maybe it has something to do with myself and maybe me being inadequate as a manager. Maybe I am not managing properly. I am constantly busy, either writing bids, visiting customers, building cabinets, completing punch lists, driving here and there, on and on… I feel I am just under market. But I also do not think most people I am dealing with are willing to pay a fair market value. Some are willing to pay fair, most are not. I do not deal with any customers from CL any longer because of leads generated from SEO marketing. I am planning on doing some other marketing techniques in hopes to pull more leads. I do believe the more leads I get the better my chances of getting customers who are willing to pay decent. There are lead sources I am currently not even trying to tap into yet.
Enough rambling, thanks for reading, I look forward to any feedback from others in similar situations. Thanks, Jerry