What makes pricing for custom woodwork range so widely? Is it regional market variations, different levels of shop automation and efficiency, or simply a function of poor estimating practices? This year’s CabinetMakerFDM Pricing Survey probes those questions and more, suggesting that the complexity of custom work continues to present real challenges for pricing.
How the survey works
Before exploring the results of the survey, it is important to understand how it works. We take real jobs done by real shops and make the bidding specifications available to any shop in North America that wants to bid the job as if it were a real project in their own shop. To better understand the variations in pricing, we ask all bidders to provide not only the final price but also information about their estimates for materials, construction labor, installation, and finishing. That way there is more data to see where the estimates vary.
Of course, not all shops provide all of that data. The many ways shops price work often are inconsistent, which naturally leads to variations in pricing. It also explains why, when you add up shop rates and quoted hours from items in the survey, the totals frequently don’t match the price quoted by the shop. Still, the breakdowns are fascinating and give insight to the pricing challenge faced by custom shops.
In addition, shops are asked to report how long they have been in business, whether they use software for bidding, and whether or not they use CNC in their manufacturing process. Each shop is identified by its state or province to suggest regional differences. All of these factors have been cited over and over as contributing to pricing variations.
The projects in this year’s survey all came in with high bids being about triple the price of the low bids. That might seem like a wide variance, but it’s actually less than what the survey has seen in some years past. Still, what accounts for such discrepancies?
One of the first places to look in this year’s survey is in the estimates for materials. As one of the original bidders points out this year, most of the materials used in cabinet and built-in projects are commodity items that are widely available and competitive across North America. Certainly there are minor regional pricing variations, but if shops were truly pricing exactly the same goods for the same jobs, the numbers should be pretty close. That they aren’t suggests this is a key area where many shops have trouble estimating.
Similarly, construction hours range widely in the bids. Shops still have lots of trouble figuring out how much time a job will require. And factors such as CNC use that would seem to potentially reduce construction time, often don’t seem to be a consistent factor in that direction in the survey.
Two projects in this year’s survey offer an opportunity to explore this theme in depth. The closet project originally was done with maximum CNC automation and outsourcing with very little time in the shop. The face-frame kitchen project was done with outsourced boxes from Cabinotch as well as outsourced doors and drawers. In both cases, the original bidders were very confident of comfortable profit margins, but their bids show up at the low end of the spectrum.
How to use the survey
Study the projects that most closely relate to the work you do. Then download the bid specifications from the Pricing Survey page at www.cabinetmakerfdm.com. Go through the exercise of bidding those jobs and see where your shop falls within the pricing parameters presented here. If you have more than one estimator in your shop, think about having them all price the same projects in the survey separately, and then compare results. That could help you make sure all the estimators are on the same page.
Most importantly, think hard about where you go wrong in pricing and how you can correct that. Better record keeping on actual materials costs and actual labor hours will likely go a long way in improving your estimates on future jobs. Consider options for outsourcing and CNC to see how that might affect your pricing and production efficiency. And finally, think about submitting one of your own projects for next year’s survey so you can see how others would price a job you actually did.