More competitive bidding

Maybe it's the economy. Maybe it's a sign of more small shop business savvy. Whatever it is, bids are closer together and generally higher in this year's CabinetMaker  Small Shop Pricing Survey.

Although bids still are wide ranging, from top to bottom they are closer together, and several shops report hourly rates of $100 or more. But before we get into the details, it helps to understand how the survey works.

How it works

CabinetMaker's annual Small Shop Pricing Survey is an attempt to measure pricing of projects typically done by small custom shops. Now in its 12th year, the survey is the only such tool in the industry.

Real shops contribute bidding specs for real projects they have done. Other shops around the country price the jobs just as they would for any job in their shop. Then we print the itemized results in the magazine. That gives shop owners and estimators not only a good idea of the range of pricing across the country, but the itemized categories also provide insight into how and why variances in pricing exist.

Strong projects attract strong bids

This year's survey had one of the strongest lists of projects the survey ever has had. All of the projects were mainstream for their market segments and all came with extensive documentation (although some bidders still asked for more).

Projects included two kitchens, an entertainment center/display cabinet package, a wine cellar (complete with toy train!), a small store fixture project and a complete residential library with both built-ins and freestanding furniture. Several bidders commented it was the best selection of projects we ever had offered.

Quality and bids up

While the number of participating shops is slightly down this year, pricing and the time investment in the bidding process is up. Bidders on average invested at least five hours in the process of bidding. Many submitted multi-page back-up materials to support their bids.

Experience levels reported by the shops also were mostly higher. While a few shops participated that have been in business less than five years, most have more than 10 years under their belts, including one shop in business 50 years. Interestingly, not all the younger shops show up as low bidders, and that 50-year-old shop turned in some of the lowest bids of the survey as well as some midrange prices.

Most striking this year is the rise in reported shop rates. The average shop rate this year is up to $57, compared to $55 last year. But that doesn't tell the whole story. For the first time, shops in California, Massachusetts and New Jersey are reporting rates in excess of $100, with the top rate reported at $125 for a shop in New Jersey.

Kitchens most popular

It's no surprise that the two kitchen projects were the most popular in the survey. Most CabinetMaker readers build kitchens. Interestingly, a mid- to high-end frameless kitchen project (average bid $23,000) earned more bids than a high-end beaded face-frame job (average bid $44,000).

Bidding was closer together, too. The highest bid for the face-frame kitchen was a little less than three times as high as the lowest.

The highest bid for the frameless kitchen was only about four times higher than the lowest bid. Those both still may seem like wide variances until you compare to last year's kitchen where the high bid was six times the low bid.

Learn from the survey

So, how can you benefit from the survey? The first step is to study it closely. Go beyond the wide variances in total bid and look closely at the itemized numbers for shop rates, construction hours, materials costs and the like.

Maybe you price by a linear foot measurement. When's the last time you broke that down into actual material, labor and overhead costs? Use the survey as a springboard to do that, and see if you are making the profit you think you are. Look at your shop rate. Does it really reflect your overhead costs today?

The Pennsylvania shop that contributed the library project in this year's survey did that job for only about $25,000 two years ago. The owner says he would charge at least $30,000 today.

That's a 12-percent increase in just two years. Interestingly, he also notes that since he's raised his prices, despite a slowdown in the economy, he's been making more money even while doing fewer projects. He attributes that not just to the price increase but also because he's not filling his schedule with low-dollar jobs that don't allow him to fit in the more profitable projects.

When's the last time you raised your prices?

Have something to say? Share your thoughts with us in the comments below.

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About the author
William Sampson

William Sampson is a lifelong woodworker, and he has been an advocate for small-scale entrepreneurs and lean manufacturing since the 1980s. He was the editor of Fine Woodworking magazine in the early 1990s and founded WoodshopBusiness magazine, which he eventually sold and merged with CabinetMaker magazine. He helped found the Cabinet Makers Association in 1998 and was its first executive director. Today, as editorial director of Woodworking Network and FDMC magazine he has more than 20 years experience covering the professional woodworking industry. His popular "In the Shop" tool reviews and videos appear monthly in FDMC.