Question
I am seeing if it is possible to have custom cabinet pricing formulas based on the lineal foot. My standard materials are prefinished maple ply at 68$/sheet, softclose glides at approx 24$/piece, drawer boxes at 70$/piece, hinges at 3$/pc. The fronts are harder because we try to sell FSC certified doors. If they are shaker I can make them myself but any other door style have to get a custom quote from a door manufacturer and they are cash! Actual fsc 4/4 material is usually 15%-20% more but door manufacturers charge a lot more than that.
For the formulas I took basic drawer/door, three drawer, four drawer, pantry, etc and I estimated labor for roughly 15lf at 18" boxes and figured materials and divided by the lineal foot. Is it possible to really come up with a formula that gets me within 12% of actual cost or do I have to figure material and labor for every cabinet bid I do? I see the fronts as my biggest hurdle. I'm at central coast of CA and economy is hurting, just trying to stay competitive and make a little dough.
Forum Responses
(Cabinetmaking Forum)
From contributor K:
I use linear ft pricing, but I am in NC so my numbers would not work in CA. But I believe my method would. I use a base linear ft charge that includes my standard door which is usually around $20-22 a sf. Then start adding items such as drawers and functional hardware. I do my finishing by sf separately and my install by the lf separately. I find that most people are impressed by the detailed nature of my quotes and it helps me keep track of everything I need to buy. I am also up front about the necessity to upcharge if they choose a more expensive door or material. I also keep a running tally during our design meeting. At the end of that meeting I make the adjustments and we are all on the same page when they leave.
From here, you have to add a design charge for your different styles. If you break out installation as a separate item, you are done, if not, add it to the cost. Once all this is complete, you will have your lineal foot charge for base and wall cabs based on the style of cabinet you choose. Of course, any specialty items (i.e. - special moldings, knobs/pulls, etc.) you either add as an addition or price it in to assume the top product to include so it covers all the variables.
Now, some consider lineal foot pricing to be top to bottom, and some consider it to be measure the top and bottom separately and divide by 12 (the more accurate method in my opinion) to account for voids in the design (i.e. - refrigerators, dishwashers, etc.) and sizes of cabinets. This method works for pretty much all of custom cabinetry, as it covers all sizes and designs.
If it were as simple as providing a LF pricing for cabinetry that included any type of cabinet and option, a price list would not be needed. Unless you elevate all your pricing to include all options, you cannot have a LF pricing option that factors in every type of cabinet and option, which is why there are charges above standard assumptions for cabinetry. To clarify other potential miscommunications, finishing would also be assumed to be covered under Costs, as would sanding and assembly, as would the labor and materials to accomplish it be. You can use whatever method you would like, but with this pricing structure, you will find yourself really starting to understand your costs, because it breaks down where the money goes. In a lot of cases, many will be surprised that they are not charging enough.
Pantries are priced by using the base cab price multiplied by twice the width of the pantry. So let's say our base cab LF pricing was $250LF, and the pantry was 24" wide, that pantry would be $1000 (24" for the base and 24" for the upper part). The reason we use the base cab LF pricing, is that it is more than the upper, and takes into account the 18" void between a base an upper with regards to pricing.
We are actually pricing everything by the square foot, but converting it to lineal foot pricing for the public, as that is what they are used to seeing in the papers and at home centers.
It is very difficult to go wrong when you put together your pricing based on SF, as your base materials are priced that way, and you have fixed prices for the hardware. If a shop takes the time to put together a price list, I promise you, it will open their eyes to many ways they are actually losing money. It will also target areas where you can do better in production.
So if maple is your standard and you pay $80 per sheet and now are bidding bamboo at $225 per, the whole job may cost you $1,000 more spread over the total footage as it raises the per LF price. For me this is a very accurate and efficient way of consistently priced bidding once you know your costs.
I have calculated real time numbers based on cubic feet that works well for me and saves the hassle of add-ons and specials. This way, my first numbers are pretty close if not dead on my final price as long as nobody changes any dimensions. Different cf prices for drawer over door, drawer bank, etc. End panels per sqft. I probably lose some jobs because I'm bidding against lf pricers, but in the end, the costs are probably about the same, and I don't have to do as much math, and I also don't end up with a bunch of unpaid for 21" off-rips of $68.00 ply when someone wants an extra deep cabinet.
Arch Top Doors - no problem add X
Raised Moulding - no problem add X
Also add for each drawer box, adjust up from ball bearing full extension 1/2" baltic birch dovetailed box (our standard) if they want import soft close or Blum soft close. Adjust up from 2 3/4" single piece crown (again standard) to whatever the client desires. For measurement I use the longest point-face or wall (for those with attitude I might run the tape up the wall a bit). I also measure thru the dishwasher and also the range if it's a drop in It's not a lunar landing, just don't forget any of the adds.
The easy way to do this is to simply guess how long it will take you to build the job and price it accordingly. If you have been in this business long at all you should be able to guess with plus or minus one or two days accuracy. If you think that is a horrible way to price your work you are correct. It is better that the Lft method. If you are a small shop producing one or two jobs a month being off by a day or so is not a big deal. If you are producing a job a week, start shopping for software.
Use the power of all this great software that is available to us. I have my Cabinet Vision bid system dialed in so well that I would have the same margins no matter what the job is. For example if I have an order of nothing but doors and made doors for two days, I would have the same income as I would if I made boxes for the same two days. Ideally you should make the same amount of money no matter what you are producing. If you offer different levels of product that fetch different margins you can easily mark that up.
I hear many guys have pricing systems that end up screwing them one out of five jobs. For example if you do not differentiate corner cabinets from standard base cabs, or appliance cabinets from glass door exposed interior cabinets you can lose big time. A job with three or four corner cabinets instead of the usual one or two can consume a huge chunk of that linear foot method. If you try to compensate by marking up the linear foot base price then (like Contributor F said) you are basically just itemizing your labor rates again. So just forget it and invest some time in a good bidding program.
For those who inaccurately price LF as top to bottom and in essence charge the same price for both cabs, instead of measuring the top and bottom separately and pricing accordingly, another way to look at it is if you have two lengths of boards (top and bottom), both the same width and length, but one is 3/4 (equivalent of an upper cab) and the other is 5/4 (equivalent of a base cab), you don't price them the same, even though they are the same width and length (i.e. - LF). Of course not, you would alter the LF pricing of the 5/4 to be more than the 3/4 because there is more material, so why wouldn't you do the same with cabinetry? If you have a 10' run of cabinets straight across, it is not 10LF, it is 20LF - 10 for the top and 10 for the bottom. Build your pricing accordingly. Internally, your LF pricing for the top should be different than the bottom but you can also average them out for the customer to KISS (i.e. - $200 for uppers, $325 for base, averages out to $262.50).
Whether you use CV or another program, a spreadsheet, square feet or cubic feet, LF is just another way of saying this price in a way that makes sense to the customer. To make the point, it should be noted that the home centers use programs like 20/20, CV and the like to price out their product and advertise it as LF pricing. They do this to make it easy for the customer to understand and relate to. It's just a conversion from one to another (like converting board feet to LF for the customer), but if your numbers are solid, it doesn't matter how you express or use it to the customer - square foot, LF, cubic, etc.
For cabinetry that is beyond the norm of the LF pricing they provide (i.e. - pantries, drawer banks, corner cabs, hoods, etc.) do you think that the home centers just eat it? Of course not, it is charged a different price. But you have to know your costs.
Something to consider - the national home centers and the national refacers all use LF pricing for the customer. They have the resources to setup whatever system they want and they use LF pricing publicly because it is easier for the customer to understand and relate to. This LF pricing the customer sees is NOT what they use internally, but the reason they can use LF pricing for the customer and have it match out is that all they have done is converted what they do internally to LF pricing. If your pricing is solid, you should be able to convert your pricing to whatever method you choose - SF, LF, CF, 20/20, CV or whatever. Sometimes we have a tendency to make the simple complicated.
I bid customer A's job at X amount. Customer A calls the big box and asks for a price. Big Box says our cabinets are $262 a lineal foot. Customer A exclaims wow that is $10,000 less than our bid from that other high priced shop (until big box explains that a lineal foot is a foot of wall space and that the dishwasher counts as wall space but the range doesn't and a 36" base corner cabinet counts as six feet of cabinets and a 24" upper corner counts as four feet of cabinets and the Lazy Susan’s for these cabinets are also an additional charge and by the way we have to add for the proper doors, upgrade in drawers and hardware, decorations, the $1500 custom hood liner, delivery and installation. Did you want that finished?)
My point is that you must actually do the work and design the job before you can actually get a price for that job. Lin foot pricing is just a random starting point in the bid process.
Certain operations are more or less profitable than others, so to say you should always earn the same dollar regardless of what you are doing is optimistic but not reality. Price per LF gets out of context easily and I think that causes a lot of confusion.What I have done to track things for my own knowledge is add the whole job up extras finish and install then divide by the LF to use as a gauge. I don't give the per LF numbers to my client, the formula and numbers are just for bidding
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Yes the wall and base are footage on there own. If they are shopping price, mine will be for a completed job price not a LF price like the big box. It is so easy to alter the LF price for say deeper cabinets or taller or backs or any other features that need to be plugged in, whether it is done by a program or our brain, the criteria still has to be entered.
I'll tell you what works for me and why I prefer what I do to a lineal foot method. I bid work by counting parts and pieces, calculating materials for each product in the job, calculating labor for each operation in the shop, calculating the steps it will take to install the job, adding in various soft variables at the end and arriving at a cost. I then add overhead and profit and that is my price.
I have automated this method with an Excel spreadsheet and it is very fast. I estimate a lot of work and it has to be fast and accurate. There are also several off the shelf programs that will do much the same thing. There are a couple of significant advantages but most of them are only advantages for people who run their business like I do.
1. I get a pretty accurate budget by material type that we can use to track the job.
2. I get a good labor budget by operation that we can use to track the job and refine our estimating for next time.
3. I can make specific changes (one wood species to another, one laminate type to another) or take out or put in new items very quickly, with automatic pricing for the change.
4. I can price change orders and have clear, precise data to offer when the customer wants a breakdown as they often do these days.
5. I often avoid winning the wrong job or losing the right job because my system is sensitive to projects that are labor heavy or materials heavy.
6. It's well adapted to estimating all of the work we do, not just cabinet work- paneling, reception desks, solid surface etc.
7. I find it a less intuitive and more objective system and so easier to teach someone else with reproducible results.
There are different prices for different assemble types (90 degree corner cabs are the most expensive, upper cases are the least). Within a cabinet class they all have the same price. Remember this is only the price of the labor/markup for the case only. Every part that goes in or on the cabinet also has a price. Every shelf, pull-out, drawer, face frame, door, has a price. Again no material cost is counted. Material cost is simply calculated and added to the total. This removes the complications of pricing work that includes outsourced or client specified materials. The beauty is that as I improve my production modifying the pricing is very simple and accurate. There is no guess work or assumptions.
I have learned the hard way that customers do not care about feet, inches, core material, HPL vs. Melamine, maple stained to look like cherry or cherry, dadoes or dowels, staples or hot glue and any other explanation that requires more than two sentences. If a customer asks me about my LF pricing I tell them "I do not price my work by the foot because it is not accurate and leads to confusing calculations. However I keep a running linear foot price average of all my jobs and it is $XXX per foot over all with high end jobs averaging $XXX and simpler jobs costing $XXX per foot."
So in two sentences I explain all they care to know. Once we start the design process I can give them a accurate quote on the spot. When they see the bottom line price they quit caring about linear foot prices. Especially once they go through the convoluted process of pricing cabinets at a big design center that uses LF pricing.
Marking up materials is a touchy subject around here. I do not do it because I do not sell materials. In the world of business nobody marks up things that they are not reselling. For example Ford does not mark up the plastic that goes into their cars, a home builder does not mark up the lumber that goes into the frame, Sony does not mark up the laser that goes into their DVD players. It simply does not make sense from a business stand point.
If you are marking up material to cover handling costs then that should go into your unit pricing scheme. It does not matter how much the sheet material costs ($20 melamine or $150 exotic prefinished plywood) the handling is the same. By using a percentage markup you are cheating yourself on the less expensive materials and making it hard to sell the nicer products. If a certain material requires more work than your usual process would include add a mark up for that, but not an arbitrary 10 or 20%. As an example we sometimes use acrylic edgeband on doors. The acrylic has to be polished by hand to get the high gloss finish we want. I do not mark up the material (there are different prices for different prices for different colors) I add a markup per linear meter of the edgeband.
What I developed, with the use of Excel, is a cabinet makers dream. I am an estimator and I developed this program out of necessity. Most estimating programs do not address the personal impact a company has on its own products. For most cabinet makers, they will never know what their real costs are. The need to build a costing program for your business will be the difference in knowing what your benchmark really is. The more you know the better off you are.
In fact, the footage is entered for standard dimensions (depth and height) for both upper and base. All other compositions are leveled with a factor for conversion. These adjustments are tested periodically for value and accuracy. Incidentals are picked up as accessories. Labor costs are homegrown and budgets can be derived from this. What most people have trouble understanding is the connection between cost analysis of components and implicating cabinet costs. They are not necessarily the same. What is true, is all roads lead to the benchmark. The goal is to determine what a profit margin of 5% would be and then taking into consideration the greatest amount of shop resistance (budget high end). The final bid will be a combination based on your cost analysis, allowable profit margin, current market standards and client favorability.
To clarify, are you basically adding the cabinets up like this? If there are three base cabinets totaling 6 linear feet with the same door type and each with one drawer. The math is: 6ft x (linear base cab price) +6ft x (linear door price) + 6ft x (linear drawerbox rate) = subtotal for cabinet type.
Then this would be repeated for every type of cabinet (upper, base, tall, etc.) I would argue that at this point the formula becomes so detailed that you might as well charge per cabinet and then the client can see the real cost of a given cabinet instead a complex linear foot price.
To clarify I am not arguing your method is inaccurate. Based on your statements I believe you have created an accurate pricing schedule. I am suggesting that you are already charging by the cabinet but you then turn around and average that cost over the linear foot and detach the upgrades from the cabinet price, even though it was all together in the first place.
The problems I see in this system are; first, the customer sees a confusing break out instead of a per-assembly price and secondly you are burying your cast of manufacturing and overhead in the system instead of keeping it attached to the associated process. I can see how you can argue against the second point though.
Most cabinet companies start estimating with the owner. They will have used whatever knowledge and experiences obtained thru-out their career as a basis for costing. It will be simplified for his immediate needs and will lack the detailed cost analysis he so wants. Eventually, he will want his company to grow and a need to take it to the next level which means he will need to increase and refine every aspect of his operation. New equipment, increased employment, increased plant space, improved sales, maybe a finishing booth and improved pricing methods are just some of the things he may need. The estimating programs mentioned above could take you to three plus million in sales, but may be too slow for working in the ten million range. Do some research and you may find a suitable program that will simplify your estimating needs.
Then add the price (again exclude materials) for a shelf, drawer, and the doors. These are also universal constants. All the drawers of a certain construction type have the same number of parts and operations, no matter what the size is. The same goes with doors and shelves. Trim and moulding gets a lf price. Material can be added at the end of the total or you can calculate the amount of material per cabinet. This mostly depends on what your software can do. Look at the common operations that all your assemblies share and group those.
In the case of your custom cabinet you will have the number of base boxes. Or if you join assemblies you can add a price per vertical partition. Then you have a separate FF price. I price my FF the same way I price doors. Then you add the cost of each drawer and the price to install a trash pull out.
Looks like this: $45 (case price) + Face frame price + door prices + drawer prices + accessory price = total assembly price.
Here are the break downs for: face frame price = 15$ (per assembly) + $1.50 per lf of material. The per assembly price is to cover assembly costs like glue, clamping, pocket screwing, etc. The lf price reflects the cost to machine the stock to size, if it is beaded or shaped change the $1.50 price to reflect the additional machining. If you want to more accurately cover the cost of gluing up large multi opening FFs add 3$ per mid stile.
Door price = $12 (per 5 piece raised panel door) + $1.50 per sqfoot. The $12 price represents the labor associated to a particular door type will vary based on the type of door. A slab door might cost $5 and a cathedral might cost $16. The square foot price only represents the trouble of handling larger doors. Technically a small door and a big door have the same number of parts and operations, big doors are just a PITA to assemble and the sqft price covers this.
As you can see there are no arbitrary prices. Every price is directly associated to a process. And the prices are applied in the same way the process is done. machining stiles is a lineal operation, but assembling a case or a door is a assembly operation that is not affected by the size of the assembly. In the case of a very large assembly it is easy to add another category. Big doors with multiple panels have a different per-door price, cases over 36" wide have a $10 add on price.
This might sound complex, but compared to creating an accurate lf scheme this is a lot easier. All you have to do is look at the actual operations and charge for them. Do not charge for non-value adding work like printing labels and stacking panels. This is added into your markup. Your markup can be based on a operations level also. Per sheet, per part, per job, per assembly, per delivery, per man hour. The purpose of these mark ups is to cover your cost of operating the business. Accounting and invoicing are applied per job ($50), ordering and receiving sheet good are a per sheet markup ($2), label printing is a per part markup ($.30). Applying the monthly overhead items like rent, electricity, and insurance can be handled different ways. I add all these costs up and divide them by the target number of jobs next month and add that to the job. You can also use a percentage markup to the total. I am thinking about applying electricity to the part level. If I divide the number of parts I average in a given month by the bill for that same month I get a number ($ .005). If I look at a slow month and a busy month I can average those numbers and account for that. Or I can subtract the difference and apply the "base level" electric rate (lights, computers, heating, dust collection) to the per job rate ($17) and then the remaining be prorated over the per part rate.
By breaking out your real cost on the operational level you have super accurate pricing. Also when you are looking at an increase in insurance, electricity, labor or glue you know exactly where to add the increase to account for it perfectly. If you are looking at a new machine (Unique CNC door machine) you can pretty darn accurately figure out how it will change your pricing to the client.
Most all industry specific design/production programs support this kind of pricing schemes. If not all you need to do is export the number of cases, doors, shelves, drawers, lf trim, parts, etc. into a spreadsheet and add the prices there. If you use a program that supports these pricing schemes internally (most do) then the price will be automatically calculated as you do the layout.
Accurate real time pricing: materials are calculated from the cut list and added separately. No mark up. All the material handling costs were dealt with before in the pricing scheme.
When you try to apply a linear foot price to a assembly level operation (clamping and screwing a cabinet) you will loose control over the real cost. It is like measuring the circumference of a ball with a yard stick. You can get close, but you really need a flexible tape measure. Linear foot pricing of something as complex as cabinetry is a losing battle. By the time you start adding in these operational costs it gets too complex and modifying the numbers based on specific changes in your business is even more difficult.
Following my system for pricing each slide, hinge, or accessory would have a labor charge that is associated to it. All hardware that has the same labor time to install would get the same price. Example; all Euro hinges $1, all brass face mount hinges 3$, all wire basket pull outs 5$, magic corners 25$. The truth is I don’t bother with this. I only use Euro hinges and I assume that all doors have hinges. So the labor for the hinges are included in the base door price - same with drawers. I assume all drawers have slides, and I only offer two types of drawers (I only use Blum Tandem Box or Tandem slides) so the labor to install the slides is included in the drawer box price.
Most of my jobs use Tandem Box system. All I have to do is cut the bottom and back. If the customer wants solid wood or melamine I use the tandems. Now that you understand what I am doing the pricing looks like this: $18 (melamine box), $6 (Tandem box).
This price is based on the operations required to make the part. Tandem boxes only require two square parts to be cut out and one edge to be banded. Mounting the drawer front is really easy, all fronts get the same boring pattern. Melamine boxes require five square parts, 8 to 16 dowels/holes, four dados, four edges banded, and the two rear notches. The mounting the drawer front requires two or three more holes to be drilled in the sub-front. The price exactly relates the time it took and the cost to me. If I buy an automatic drawer machine that sped up the processing time I could very easily change the rate to $8. If the client requests something totally different I can charge a different price. There is a custom drawer rate to cover the odd stuff. I never use it though. Remember materials are always figured separately, and the labor for everything related to the drawer is in the per drawer rate. I set a maximum depth and width for the drawers. If they go over these sizes they have to choose from a different drawer type that has a different bottom and slides. This has never happened though.
If I want a total price for one drawer I can easily see that in Cabinet Vision. If I select the drawer and look at the material list or Bid Center it shows the total price with materials. Customers never care to see that though. Sometimes they want to see the difference between two different types of cabinets (a 5 drawer stack versus a paired door with 4 rollout shelves). Linear foot pricing makes this pretty much impossible to do accurately. Building Block pricing (I just made that up) makes it automatic. They can instantly see the 5 drawer stack costs $34 dollars more (assuming panel doors, solid wood doors have a much higher per door base price).
The ultimate beauty of this type of pricing is you can really see where you are making or losing money. Even though I am charging three times more for labor I have to do 15 or 20 times more value added work. I make more money selling 6$ Tandem Box drawers than the 18$ melamine box drawers. I might be losing money on the melamine box. It would be pretty easy to check. But lumping this info into a linear rate separates the value added work and production costs from the unit of measurement. All you see is that 16 feet of tandem box drawer over pair doors costs 800$ if you change to Melamine box the cost goes down to 750$ (The Tandem box system is almost double the Tandem slide).
You see that there is a lower total price, but a higher labor income. It looks like your shop will make more money, and the customer will pay less. But the numbers are hiding all the work that you are paying your employees to do on those melamine boxes. They could process the parts for a system box in five minutes and assemble/install in seven minutes. Cutting out three extra parts from two different materials (7mm bottom, 18mm sides) extra edgebanding, grooving for the bottoms, tapping in dowels, gluing and clamping, notching then installing is more than 30 minutes. You are losing money but the linear foot method hides this. By the way I am making up the prices. These are close approximations of my pricing, but you need to look at your numbers.
A modular pricing system is much more accurate and gives much better information to the penny counters. This is why no industry uses a Lf pricing scheme except cabinet makers. PVC pipe and electrical wire are sold by the foot. But something as complex as cabinetry requires a more sophisticated pricing structure. Not more complicated. Looking at some of the very complex Lf pricing schemes I do not think they are simple at all. It took as much time to develop and is a lot harder to modify, because there are too many assumptions (like the number of drawers or partitions per foot).
I am not an expert, but I listen to the experts any chance I can. Not just our industry, but anyone in production and manufacturing. I don’t know if they teach this stuff in business school. I have very smart friends with MBA’s and they do not seem to know anything about manufacturing costing. They know the broad strokes and the rules of thumb, but could not figure this stuff out relying on their education. It takes people like us who work in the industry. Guys who pull sawdust out of their pockets when digging for change.
Guys that can smell a slow feeding saw and hear an out of balance moulder head. We are the only ones that can come up with effective process management and pricing schemes. But very, very few are really trying. Cabinet making is becoming an easy market for business men to penetrate. CNC, door making technology, CNC moulders, feed through finishing and the amazing software allows a person with no experience open a shop and gross a million dollars their first year. If you read Cabinet Maker you have seen the stories. These guys are business men and they know how to streamline a business and get their product in the client’s houses. They also do not stop when their schedule is full. They keep growing. The industry is slowly consolidating and will do so faster as the manufacturing system becomes more integrated. There will always be a place for the mallet and chisel guy that can cut dovetails and French polish, but that is a small market.
Wal Mart and Home Depot are not our competition. They can’t compete with us at all. It is the new guy with business sense and a technically oriented mind. That guy will not waste time on old ideas and do things the way we always did it. He will constantly look to innovate and make more money. These guys are already here. They don’t wear tool belts and blue jeans and they wear suits and vacation in the tropics. This is not only my observation, I hear this from machine dealers and industry consultants as well.
