We are in high end markets - Vail, Jackson, Sun Valley, Steamboat, Aspen, and Park City just to name a few and we are being asked to do kitchens. I don’t know the price per foot of a mid to high end kitchen or how to price them. Does anyone have any suggestions?
(Business and Management Forum)
From contributor S:
I price out each item individually, doors, face frames, drawers, cabinet boxes, toe kicks, crown molding, shelves, misc. moldings, pull outs, sub decks, assembly, profit and overhead factors. Then I cross check that total number against what I believe to be the going rate for reasonably high end stuff per l.f. This is what it costs to build the product.
The place I usually get creamed is that many customers want to spend an infinite amount of time talking and designing and re designing. We often end up building something totally different than what was on the original plans, but the budgets don't seem to keep up with the changes. Meetings, drawings, revised drawings, samples, revised samples, etc. can chew up mounds of time.
Then consider what it costs you compared to what you think it costs them. If this is your first kitchen then I can assure you that it will cost you more. They have more experience and their production methods are far different then yours are producing furniture one piece at a time.
Asking someone else what you should charge for your work is no way to run any business. You know what to charge for your furniture right? How did you arrive at those prices? By going to a furniture store? I doubt it.
If your price is the same and you’re the new guy it will be hard to get work in the high end markets. If you’re too cheap you will get no work because people will believe they are not getting the same quality or service.
Consider this also - why are you now being asked to kitchens? Who did them before for these clients? Consider the job but don't jump too quickly. One bad job, especially the first one, could have you at the bank getting a loan to finish the job.
The high end kitchen market is really all about having your crew available to build something when the information/decisions finally make it to you and having something else for them to do while you are waiting.
With many other products you can do an internet search to find the best price. But with custom woodwork, especially complicated stuff that involves lots of design and communication, it seems that the final cost bears little resemblance to the original proposal. Do you set a fixed number of hours for consultation? Do you set a fixed number of samples? Do you set a fixed number of hours for drafting?
The cost of building the product seems fairly straightforward, but the value to the customer, and market value compared to other shops can be much higher. Some of that could be attributed, as Tim suggests, to simply having the resources available to deliver the product as promised (plenty of people out there who can build a box, door, drawer etc., but delivering on time consistently is a different deal), or maybe you have a unique ability to interpret the desires of these customers. In any case I would be curious to know how other shops are setting prices. Is it simply direct costs of time and materials plus overhead and profit? Is design and consultation just an administrative expense?
Personally, I think that having the resources to do the work, and possessing the skills to deal with customers and design the product are worth far more than the value of the woodwork. But I don't set my prices accordingly and I wonder if anyone else does.
Every business does this kind of market research in some way. Supermarkets actually employ teams of people to go to competitors stores and write down their prices. There is even a market for electronic devices to capture that stuff. You may not like it when it happens to you, but it will. How else are you going to find out what the going rate or the competitor's processes are? You have to research your market to determine if you can be competitive with your pricing structure or if you need to make changes.