What would you bid?

Whether it’s the economy, smarter bidding, or some other factor is not certain, but prices in the 2011 CabinetMakerFDM Pricing Survey are closer together and more competitive than in previous surveys. 

Since 1997, the Pricing Survey has been the only industry tool that attempts to track pricing on custom woodworking projects. The survey works by taking real jobs done by real shops and making the bidding specifications available to shops across North America who in turn can submit their own bids for comparison. It’s an attempt to achieve something close to an “apples to apples” comparison of how different shops in different areas would price the same project. But because pricing on custom work is so variable, the survey routinely in the past has provided a spectrum of pricing in which the highest bid might have been as much as six times the lowest. Not so this year. 

While the 2011 bidding is still wide ranging and still reflecting broad regional representation, the bids are much closer together this year, with the highest bid on three out of the four projects only about 70 to 100 percent higher than the low bid. Check out the spreadsheets and individual analysis for each of the projects, but there are some general conclusions to be drawn. Of course, before delving into that, you need to understand the basics of the survey. 

How the survey works 

The concept of the survey is simple, but because of the huge variety of ways shops bid work, the execution is complex. For each project in the survey, we collect original bidding data, including specifications on materials, hardware and any special requirements. We also ask for design drawings and finished photographs. All of that material is put into a bid package that is available for free download from www.CabinetMakerFDM.com 

Volunteer shops from all across North America are invited to bid on any or all of the projects that are appropriate to their shop. We ask that shops only bid on projects they would actually do if presented the opportunity. We also ask each bidder, no matter what method they use to price the job, to provide breakouts for materials costs, shop rates, construction hours, installation rates, installation hours, finish rates and finish hours. Not all shops provide this data because they might not even keep track of these numbers, but for purposes of comparison we urge them to do so. 

Finally, we ask a few questions to add to the comparison. We ask how many years the shop has been in business and whether they use software and CNC manufacturing. All of these factors have been cited in the past as possible contributors to the wide variance in bidding. Also, it’s important to understand how seriously the bidders take the survey. We always ask how much time they devote to their bidding. This year the average was 5.7 hours, but some people took as much time as 11 hours to complete their bids. 

Learning from the 2011 survey 

Everyone we talked to involved with the 2011 survey indicated a renewed vigor in examining their costs on past jobs to better inform pricing new work. Even shops that use such systems as pricing by the linear foot, seem to be tracking costs more and adjusting their pricing accordingly. That’s obviously a reflection of the tight economy and more competition. But it might also be a reflection of the experience level of bidders in the survey: The average bidder for all projects has been in business more than 20 years and several bidders have been doing this for more than 50 years. 

Despite suggestions to the contrary, there is no correlation between pricing and the use of high technology such as software or CNC machining. There are both low and high bids from CNC shops, and even shops using the same software package will show up with dramatically different bids, high or low. Similarly, it’s interesting that construction hours don’t correlate consistently to automation either. 

Estimates for construction hours and materials costs are clearly the biggest variables in the bids. Paying closer attention to record keeping in these areas will help shops to have more accurate and profitable quotes. 

And finally, the survey suggests that shop rates have edged up. A shop rate of $50 an hour is about the bottom for bidders this year, while in years past there might have been a quoted rate as low as $25 an hour. The average rate is $66 to $68 per hour depending on project, and there are a few bidders with shop rates over $100. This suggests that despite downward pricing pressure from the economy, established shops are paying attention to overhead costs and making sure their shop rates – and the resulting bids -- reflect real costs. 

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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.