The $8999 Full Kitchen Cabinet Remodel  We know they are out there, and I have a copy of an ad to prove it. The they I am referring to are kitchen remodelers, cabinet dealers and shops who are constantly keeping the pressure on the market to expect rock bottom prices. So, what should a shop owner struggling to maintain healthy margins do about it?

Well, here it is in all its glory. The ad says the remodel has a value of $20,000 and includes granite counter tops, labor and materials. It also says members get a 55% discount to $8999.00 and there are only 5 days remaining. I also note that the photo is too small to easily identify the materials used. But the price and the Last Chance 5 day deadline drive the ad home to prospects that may be in the market for a new kitchen.

I got this ad from a rep who was calling on me to buy advertising with his company. It made an impact on me. And it got me thinking about some things very basic to the cabinet business.

The $8999 Full Kitchen Cabinet RemodelWhy are you in business for yourself? If you’ve been running your own shop for a while, you probably have already come to the crossroads where you needed to determine the answer to that question for yourself. If your answer is something like your love of woodworking, your ability to create beautiful things where money is secondary, your answer won’t be the same as another owner who is in business to earn a profit and uses his craft as a means to that end.

I think many of us who have weathered the recent economic storm have been staying alive because we were able to capture a slice of the market we would have previously passed on. Diversification can be a wonderful thing, and can keep food on the table.

Is it possible to earn a profit on an $8999 full kitchen remodel? It may be. Regardless of whether you choose to operate in that end of the market, you can count on most of your prospects have seen similar offers and ads while they have been shopping for their new kitchen. Odds are they have (or will) stop at the local big box store or retail showroom to see what is available, they’ll research kitchen cabinets, styles and trends on line, they’ll study circulars and Sunday newspaper ads and they’ll be bombarded with many, many offers just like this one.

There is no shortage of competition anywhere that I know of, and those who are attracted by a low, low price may never find you. If they do somehow contact you, how would you respond to an offer like the $8999 kitchen if the prospect sitting in front of you brings it up? How you answer that one depends very much on how much you value that prospect sitting at your desk and what your answer is to why you are in business.

In different times, I think many of us would have not given a second thought to sending that prospect down the road to the competition. After all, we were booked for months with profitable work and really didn’t have a need for another sale at the moment.

Whatever sales and manufacturing systems we had in place back then, regardless of how fat and sloppy they were, were working well enough to keep us flush with cash and with more than enough to do.

I know that game has now changed 180 degrees for nearly every shop. Meeting a prospect’s wants and needs at a price point they desire and earning a healthy profit for an owner’s business seems to be the way many need to play the game now.

Prospects have always been valuable. It’s just when they are fewer and farther between they seem even more valuable in many owner’s eyes. After all, you stand a 0% chance of earning a profit from every prospect you turn away. It’s also true that if your prospect has not a penny more than $8999 to spend on their kitchen remodel and your best price is $20,000, you have almost the same 0% chance of earning a profit from that prospect.

So, how can you meet a variety of price points when one of those valuable prospects approaches you? One way I know many shops do exactly that is to offer a variety of quality options…a good, better, best choice for their clients if you will. That may take the form of having a line or two of pre-manufactured cabinets available to meet certain price points, and then up-selling to higher quality and higher profit points.

Adding options to a basic in-house manufactured line is certainly another way to accomplish the same thing. Some even go as far as providing three different price quotes for the same project based on the various quality levels they offer. Doing things only one way with no flexibility in pricing or options won’t get you where you need to be in today’s market, in my opinion. It just burns too many of those valuable prospects. Of course, if you are flush with cash and have plenty of profitable work lined up for months with no end in sight and more prospects pounding down your doors than you can possibly serve, what I say will make no difference.

The automobile business had this kind of thing figured out long ago. It’s even more pronounced now, where there are very few dealers with only one brand to sell. Most have several lines to choose from like a combination Chevrolet, Buick, Cadillac, GMC or a Ford, Mercury, Lincoln dealership. Each of those car brands offers a stripped down, economy model all the way through the top of the line, fully loaded model at every dealership.

Plus, for those who are not in a financial position for a new car, they offer used cars at an even lower price point. So, in essence, they try to have something for every prospect that might enter their dealership. And by doing so, they maximize their chances of earning a profit with each and every prospect they meet.

How have you changed your business to meet the current market conditions in your area? Have you a planned or fully developed multiple price point/quality level set of offerings available to your clients and prospects? I’d love to continue the conversation with your thoughts and ideas. We can do so at the CMA’s member’s only forum, or for non-CMA members, at the CMA’s LinkedIn group . Your participation in this discussion may be the catalyst to help you get where you need to be.

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