Hello to All , especially cabinet makers ,
The last survey in Cabinet Maker magazine really was an eye opener to shops here in North and West .
A good friend of mine who runs one of the best shops in our area bid it up and compared his price to the results . Mind you his price my price and another shop are all at the upper end locally . He said there was only 1 or 2 lower than his . Unbelievable , as far as I can figure the cost of materials is close to the same in most places . Is the cost of doing business much more in these areas ?
Why on earth can you get $26,000 in Florida for a job in say Arizona you could only get $11,000 for ?
I have noticed when someone writes in asking how much do we think he should charge for a piece , some myself included have been scolded for such low prices . We say $ 3,500 some say $12,000 , apples to apples it dosen’t make sense .
any thoughts
regards dusty
Replies
dusty,
while lumber costs vary around the country, most large shops buy in prices very similar to what other large shops buy, but it varies much greater small shop to small shop, IMO.
Labor and Profit can vary wildly.
I'm anxious to read the article you mention.
Expert since 10 am.
Hiya jackplane ,
The issue I am referring to came out like 4 or more months or so ago . Sorry I can't give you the exact volume # .
My guess the difference in material costs from one region to another are close to 10% from the high to the low overall average this does not account for 200% variables .
dusty
The Bid Package can be found http://www.cabinetmakeronline.com/html/static/pricing_survey/06prisrv.pdf
The results are not on Cabinetmaker Magazine website , Or I cant find them.
Shoot me an E-mail ([email protected]) and I will see if I can find the results in PDF format.
Charles Wilson
Dusty,
I understand your confusion about this quandary.For the last few years I have been co-presenting a seminar with the author "Pricing for Profits" to try and shed some light on this subject.
There are a number of factors that contribute the the large gap in the pricing survey and I will briefly try and cover the major ones.
After taking all the above into consideration the sad fact of the matter is, most Cabinetmakers have trouble pricing their work. Weather it is a lack of understanding for the four basic components of pricing or a lack of confidence. I talk to hundreds of shop owners a year that leave money on the table. Don't take me wrong I am not advocating gouging a customer, but plain and simple making a living wage with enough profit built in to grow and survive.
If you are a professional Cabinetmaker in the Greensboro NC area Will Sampson and I will be covering this topic in depth Friday the 16th.
See:http://www.carolinaswoodexpo.com/gso/events_detail.cfm?EID=184  for more information.
If not in the area contact DiAnna at Director@cabinetmakers.org for a full seminar schedule.
Thanks for letting me rant
Charles Wilson
Past President
Cabinet Makers Association
Hello Charles ,
Thank you for weighing in on this matter .
Sounds as though this is a real ongoing delema that has you busy .
Of all the probable factors your reply listed the level of competition imo seems paramount .
I wonder if such information like cabinetmakers per capita are a direct correlation to pricing ?
As far as salesmanship , heck even if we sell every option whistle and bell known to hardware vendors as long as we are in a lower price zone the bottom line shall remain low .
I thought real estate price zones and cost of living similarities could be directly attributed to end user costs , but that is also not always an accurate indication .
Thanks again , your expertise is greatly appreciated
dusty
I think some of it has to do with clients. Some understand the value and are willing to pay and some think that anything above free is too much.
8quater
You have a very good point.
Marketing to the "right" type of client has a lot to do with profit margins.
If your target is a starter home /tract home customer with twenty other shops competing for the same job, a low price may be the deciding factor. This would make it hard to maintain a good margin.
On the other hand If your market is the higher end trophy home with a client that understands a value in quality and is not afraid to pay for it, .....see the difference.
A small shop owner once told me he couldn't make a living in his town because home dopey opened three locations in his town last year and was undercutting his price. I did see one on my way in from the airport, it was down the road from the Ferrari dealership.
Your market is what you make of it. Trying to beat the low price leader is not a good way to feed your family.
My motto "work smarter not harder"
Charles
The variance is not regional, or any other logical reason. It is simply that some shops charge more than others. That's all there is too it.
The job I am starting now would easily have cost 35 or 40 thousand dollars by the top shops specializing in this type of work. In fact I have seen similar jobs go for $50,000 It is very custom with curved face frames and doors and a lot of very cool architectural work with curved soffits and special lighting. I am very happily doing the job for a lot less than that. The customer knows they are getting a good deal, and I am getting a great opportunity to show what I can do. I will also make a lot of money on this job. It is a job that would get very high and very low bids. Most of the low bidders will be new shops looking for "the big job" or a shop that doesnt realise what they are getting into. The high bids come from shops that are busy, and see the job as more trouble than it is worth.
Here is the big shocker.... the price doesnt have that much to do with the quality of the work!! I visited a friends shop a few months back. He has been in the trade for 50 years and has done work for the wealthiest families in Fort Worth, Texas. I saw them doing things that would NEVER happen in my shop. He casually told me that "they wont be able to see that anyway". He is right. They wont see it, and the end product will look great and last as long as it needs to. But it is not as "good" as I would have done it.
I do thing the the survey exagerates this difference, after all they know that they are not really doing the job. But I will say it again.... Some shops just charge more than others.
Pardon my spelling,
Mike
Make sure that your next project is beyond your skill and requires tools you don't have. You won't regret it.
Hi Mike ,
Yes I would tend to agree with the fact that a wide range of bids can come from different types of shops .
When you say price doesn't have much to do with the quality of the work , as far as your friend that has worked for wealthy people and such , you saw things that you or I may not allow in our works . My question is does your friend charge upper end prices and deliver lmedium quality or are his prices adjusted to a mid range to allow the type of quality you described ?
If the job you are doing could easily go for $35 - 40 thousand in your area and you have bid it a lot lower , how or why should you make a lot less ? won't it cost you close to the same or more for materials ? The customers know they are getting a good deal , you bet they do .
The shops with more employees and higher overhead can probably put the job out faster , but the cost per unit or foot is higher for them than you or me .The bottom line may be close to the same .
good luck on the big job
dusty
Dusty,
Thank you for your kind words.
The growth and development of our industry is very important to me, that is why I became involved with industry trade associations. Over the last thirty years this industry has provided a great way to support my family and has allowed me to travel all over the world to champion the cause. Because of this I feel obligated to give back to the industry what I can.
You made an observation that is an alarming trend now-days. That is undercutting a job's price. This is done for many reasons but in the end it just serves to deflate the true value of our work as cabinetmakers. If a customer came into your shop with two other bids that had a average price of ten thousand dollars and you take the time to give an accurate bid of fifteen thousand dollars, you would be out of the game. Most customers would never consider the two low bids to be out of reality thus the market price for that job just became lower by five thousand dollars. If the customer was a one time homeowner it is not as bad a a builder that cold bring you ten jobs a year.
In the real world I have found that most shops on the same level ground will be close in price, similar labor and similar material cost. The difference usually comes into play with other factors such as a good understanding of what your operating cost are and the worst of all "buying a job".It used to really bother me when one of my competes under bid a job just to have work n the shop, now I think its great my competition is burning up his time on a now profit project. That way he is to busy doing free work to do a real paying job that I want.
I don't want to pick on Mike in any way. I just have to wonder if he really has a good handle on what his true cost to manufacture are and a fair profit added on. Reminds me of the story about the new guy that was so proud he sold a twenty-five hundred dollar job that only cost five hundred in materials and six weeks to build and install. No body had the heart to tell him he really didn't make the two thousand dollar profit he thought he did.
Different shops have different capacities and throughput speeds. Truly a shop with fifteen people on the floor and a CNC will cost more to produce a kitchen than two guys and a slider. But the high production shop will turn out twenty kitchens in the time it takes the two guys to do one. In the big picture all is relative, more labor or higher machinery payments...... What is best for you.
The best thing I ever did to improve my bottom line was to become involved in the industry, network with my peers, attend seminars and trade shows. Learning how to separate the craft end from the business was difficult but the rewards were well worth it. How many cabinet shop owners do you know that work a forty hour week and still provide for their family? I am not bragging I just want everyone to know it is possible to make a decent living without killing yourself.
Charles Wilson
Past President
CabinetMakers Association
Cabinetmakers.org
[email protected]
Charles,You make some very good points. However, you will have a difficult time convincing people that don't want to know how bad they are really doing.One of your most salient points is how to separate the craft from the business.I cant tell you how many folks I know look at their product and say "Nobody will pay that much for this!", after the come up with a price for an item.Then the downward slide hits. I believe this is generally due to the fact that many craftsmen just see the product and not the business.There are only a handful of professionals here at Knots, so it will be interesting to see who chimes in.J.P.
J.P.
How true, I talk with, lecture to and consult with small cabinet shops all over the country and it never ceases to amaze me how many just don't get it and never will.
The sad part is the really bad ones will soon run out of money and close down. The good part is that some shops see the light and become very successful business owners. In fact I spoke with the latest CM cover-boy last night and must say he is a tremendous cabinetmaker that runs a successful business. So it is possible to find the balance between craft and profit.
I am proud to say that over the last ten years I have met some of the best people in my life in the cabinet industry and there is no other field I would want to be involved in. I am happy to see someone succeed in this business and I am glad to help anyone I can.
Charles
Charles ,
I'm sure the low ball undercutting bidding exists in much of the real world . As you said it occurs for a variety of reasons , to keep the shop running and a pay check for the crew or some have been known to bid so low to not allow another shop to get the job , maybe a game of freeze out .
I have supported my family for the last 25 years or so through my shop and have seen many come and go large and small . I think sometimes a new and maybe hungry to establish a reputation guy may bid low to get his foot in the door so to speak or to get referrals and such . This really sounds good on paper but in the real world and as the Llama people say " spit happens " often the end results are less than predicable , but can work out .
The majority of the jobs I do have mostly not gone out to bid , repeat or referral , they call if I am available we meet and if I do my job correctly , it's a matter of design and details , price does become secondary and not the deciding factor with the right kind of clientele and for me that is key the right jobs for the right type of client .
The ones with the plans from the big box stores getting 3 bids or more are shopping price not necessarily quality . I will admit I have looked at bids for high end modulars ( whatever that is ) and I could bid full tilt and then some and be under them .I try and educate my clients to help them make wise choices . After so many years working with folks I really don't think many laymen can see the difference from good to not so good in some cases and this is why Mikes friend and many others can get away with less then great maybe , this is only a generalization .
dusty
Dusty,
Sounds like you went to the same school of hard knocks that I did.
If your at AWFS this summer look me up and I will buy lunch and we can share war stories.
Work Safe
Charles
The thing about the flash in the pan shops who do work at unrealistically low prices is they all go out of business. I have been in a commercial business park for two years and seen 3 shops come and go. They were just exactly like mine, small two man shops going after the custom high end market. My experience in this market is that designers and GC's will get you the work you need to have a successful shop. But they are very gun shy about taking new cabinet makers because they know that most of them will be out of business in a year.... or less. But once you get in with these people they don't shop for low bids. They want a relationship, not a flash in the pan once in a lifetime deal.Pardon my spelling,
Mike
Make sure that your next project is beyond your skill and requires tools you don't have. You won't regret it.
Mile,
Very true, most real customers want a stable shop to do their work. Hopefully the costumer has enough business smarts to stay away from the low ball guy.
My best customers just want a good product on time and budget. The lowest price never was the priority.
The greatest risk for the starting shop owner is not the short term loss, that is easy to see. it is overlooking the long term "hidden" cost items. Some examples include deprecation both machinery and real property, Plant maintenance, down time. Other overlooked things like advertising /marketing , design time . Most of all I see little or no plan for growth in a small business.
Keep up the good work
Charles
I must say that this is one of the most profesional and well worded threads I have seen here in.... I think since I joined. Not to say I haven't learned a tremendous amount about the craft here, but when it comes to the business of running a cabinet shop the experience and advice here sometimes sounds dubious.
I tseems like our experiences are very much in line with one another.
Here is a question. How many of you shop owners started working in another shop then went on your own, and who of you started from scratch or another trade? I started with smaller remodels and repair work and slowly gained machines, experience and information untill I was ready to call it a cabinet shop. I am suprised how many shop owners I meet have the same history.Pardon my spelling,
Mike
Make sure that your next project is beyond your skill and requires tools you don't have. You won't regret it.
Mike ,
I am glad to hear your comments on the quality of the responses to this thread . Certainly lately there have been some indifferent types of threads and posts .
Those threads were not about as serious of a subject as business survival and such , but more about how we feel about certain tools and which ones some think we should buy . Those posts are imo all about feelings almost emotional at that . The posts in this thread are more factual based on individual real experiences not just neener neener .Also imo I think the majority of the posters in those lively threads in my estimation are not making sawdust to support their families , perhaps that makes a difference .
To me the wild threads as of late are entertaining to say the least , it seems some of us are ready to enter verbal gymnastics of wits at the drop of a hat .
As far as my start , I apprenticed in a small furniture restoration and reproduction shop . After about 2 - 3 years I thought I had enough knowledge to go on my own . When I first started out I tried to make a living refinishing and repairing / restoring antiques and such .
What I did not know or figure on was the business end being such an important element to succeed . As Charles was able to read between the lines of my posts I learned the hard way , I consider my self a student of the Pacific Northwest school of hard knocks ,still in attendance at times .
I then began to go after furniture and cabinet work and saw the light at the end of the tunnel and slowly established a solid reputation and base to work from and grow .
My biggest shortcoming was my lack of a business plan , for that matter any plan . It took many years to get myself into the position in the market I needed to be in .
regards dusty
As to my coments about Knots, I am not being critical. I am sure that yall know I love a good debate on the use of radial arm saw or the ever popular shaper vs. router decision. I just dont expect true profesional conversation from this forum. After all the magazine can be purchaced at most grocery stores.
I am feeling a little defensive about my bidding on my current job. I don't think that they will consider me a "cheeper alternative". I am certaintly getting them to spend more than they had planned. I sold them a more expensive kitchen; that I want to build for several reasons. It is the type of thing you see in Archaetechual Digest that was built for prices that are double what any of us would charge. A lot of yall would likely have done it for around the same price, or more likely tou would have said you werent interested.
I want to be known as the to call if you dont want regular cabinets. I do not want to be known as the guy who builds cabinets that look as good as the ones at Home Depot but better made. At that point you are in competition with Home depot. The things I build cannot be purchaced anywhere. In fact it is hard to get from custom shops.
My wife has been on my a$$ about a business plan for years and I am just now getting to it. I am slow, but not dumb.Pardon my spelling,
Mike
Make sure that your next project is beyond your skill and requires tools you don't have. You won't regret it.
Mike ,
Your comments did not sound critical to me at all . Heck you and I are almost the only ones that use a ras , and we have all butted heads in other threads . I think the conversation / advice and help can be very professional from many contributers yourself included in most parts of this forum.
I'm thinking you mean business conversation ? as opposed to professional conversation ?
As far as your bid , I may have mis interpreted what you meant but was going off of what you said and it sounded like it was low and the customers know it . My bad if I goofed .
Your direction sounds good to set your shop apart from the general competition ,by doing the type of jobs you describe you will get more of them. Your reputation will be that you do the round bars with curved doors and real trick stuff . When they call you they already will know what type of work you do , seldom will they ask for a garage cabinet .
The business plan ,,, your local community college or community should have this group called SCORE , mostly retired managers / owners / executives with a wealth of information for free . Try and have a plan , even if it changes have a plan .Charles would be better suited to address the individual planning .
regards dusty
Charles and All ,
I just re read this and found this one line interesting , "how many cabinet shop owners do you know that work a forty hour week and still provide for their family ?"
Since I've been self employed many times friends have commented how lucky I was to be able to work when I want to and take off and go as I please. My answer for them is ,,,, yup , when your self employed you only have to work a half a day yep ,,, any 12 hours you choose.
dusty
You ask a lot of good queations.
My friend (really more of a profesional aquantince) absolutely makes beautiful cabinets. THey make custom entry doors and do things that can only be done by hand in a very good shop. He tought me how to make curved raised panel doors. His work is definately among the very best in DFW. I am tempted to mention some of his clients but I worry some of yall would figure it out. So I am not saying his cabinets are poorly made, but there are things happening in his shop that dont fly in mine. In comercial cabinets Restruants, and retail enviroments there are a lot of cabinets made using ony but joints and screws, not pocket screws either just screws driven straight through. He can charge more for a variety of reasons, some are abvious others not so.
Something that I keep reading in these posts is the reference to regional price differences. But the survey clearly shows that shops within miles of each other can have wildly different prices.
I didn't give a low bid on a job. I SOLD the customer a kitchen that they wanted and that I want to build. My bid is certiantly higher than any of the others they talked to, but I am offering them a whole different level of cabinetry. I could likely have sold them regular kitchen cabinets. But that is not what I want to do. So literally sold them a good deal. And I am very excited about it.Pardon my spelling,
Mike
Make sure that your next project is beyond your skill and requires tools you don't have. You won't regret it.
Hi Dusty,
Personally I wouldn't even try to compare prices with a different region (let alone different countries). It's just amazing what the market will bear in downtown Manhattan compared with 100 miles away in rural Pennsylvania.
For me there's also the very basic question of what it is exactly that you're selling. When we market kitchen cabinets, we are not just selling woodwork. To a great extent we are also selling the positive experience of working with us, including having an interior designer devote a lot of attention to the client. This might sound like a lot of market hype, but it's true. Those who recognize it are usually willing to pay for it, and those who don't see it that way move on. We charge for caring and attention as well as the usual materials and labor.
David Ring
http://www.touchwood.co.il/?id=1&lang=e
Hi David ,
The wide range of prices always has me curious what the difference in finished products really is .
You have described the reasons for our clients to work with us very accurately imo . Most of my work comes from referrals of past clients and repeat clients . What you described I call personal integrity . The clients are confident that we will be dedicated to detail and produce the product as expected .Because of the referral or past history they know what to expect and are comfortable with our credibility and have a built in trust for us . This make working with these folks a pleasure .
thanks for your comments
dusty
In my experience there is only a cut line where cost and price are related. When the price gets too near, or below cost, then folks opt not to work.
Pricing is a part of any established businesses reputation, and thus customer expectation. Consider the difference between a referral of "If you want the lowest price, call Sam" compared to "If you want the very best and are willing to wait, call Sam." A reputation can be an extremely hard thing to change.
As someone noted earlier, your location also has a great impact on pricing. While cost is one of the factors, customer expectations is probably of greater impact. You simply can sell in a mill town the way you sell in the most elite suburb.
If you want the highest prices then high quality should be a given. But like the steak house selling prime tenderloins, high prices come with environment, presentation, and service. The consumers at the premium level can be very demanding, and it can take a lot more design and sales effort. In fact, it is quite possible that there is no more profit in that market than in more modest markets. However, you need to recognize the traditions of the market you are serving, and either adapt to their expectations, move, or starve.
Bill
Hi Bill ,
I got to agree completely with your slant on reputation . That is why I commented to Mike about bidding a lot lower then other shops may have bid .
Your right , referrals you get may tell the potential clients hey this guy does a nice job and his prices are dirt cheap or a lot lower than the competition.
While I won't rip or gouge clients or price way high on a job I really don't want , often times my clients say something like wow that's a lot of money , when can you start ?
For some reason when I was bidding against others more often I really got a big kick when I was the high bidder and got the job anyway .
dusty
I think you have to factor in the Home Depot effect. I priced kitchen cabinet for a remodel, although it is hard to compare apples to oranges I looked at the prices for a semi-custom cabinet order from HD to what a local (San Francisco Bay area)kitchen showroom was offering and the quality was equal or better at HD. The HD cabinets came with dovetailed drawers, soft close hardware etc., All of the "whistles and bells" at half the cost of the kitchen showrooms prices. Anyway it is definitely a dog eat dog world for the "average" cabinet job.
Troy
I've done more than my fair share of commercial cabinet work. I've always worked for someone else aside from the occasional "side job". One of the things I've seen is the wildly different interpretations of what a quality job is-or what was represented as such.
My question would be; Since there is no sort of governing board to oversee what level of quality the customer is getting is it solely up to the shop to sell themselves? We all know if you rely on the average consumer to make those decisions they will wonder why your price doesn't match IKEA. It is the apples to apples debate. How do you (or can you) educate every potential client on what they will be getting?
We did a small furniture repair job in a multi-million dollar house several years back. The owner said she had new kitchen cabinets done recently and how wonderful they were. All of the exposed surfaces, doors, drawer fronts, sides were finished to the nth degree. When you opened the drawers you noticed stapled boxes and cheap slides. The carcasses were melamine. The hinges were low-end. I'm sure that job wasn't inexpensive. How do you sell to that client?
Thanks for the great info in this thread.
-Paul
Hi Paul ,
You asked how can you or do you educate every potential client .
I think that is a very smart and good question for a shop owner to ask , I'll tell you my approach and perhaps others will share more with us as well .
I think that this is where reputation and referrals and experience play the most important role . Upon the initial call from the potential client who tells me they have a say kitchen job coming up I actually ask 2 or 3 qualifying questions to them , depending on the way they answer , not 100% but more times than not I can sense whether or not we are a good fit .
I ask if they were given my name by someone or are they calling everyone in the book ? If they say you did work for someone they know then you have the credibility already established which is a strong position to have .
First off builders or homeowners that are un organized or shooting from the hip blindly can waste your and everyone else's time and have no problem with doing so . #1. I ask if they have a plan , if they say well we kind of know what we want but have nothing on paper then I know much time may have to be spent most likely with the client on site and off , even before a bid can be formulated . # 2. I also ask them if they have a completion date or deadline to follow , when they say well , the painters will be there next week so 2 or 3 weeks we guess , when I am backed up for 2 or 3 months at a time I have to pass and waste no more of their or my time .It shows that the builder or HO are not realistic or organized . # 3 . this can be the biggie I ask them what their expectations are and exactly what type of work do they want to end up with I ask something like do you just want them to look nice but is it alright that they are made of particle board ? If they say yeah that would be fine with us , at that point I tell them I build an all wood cabinet and use no PB and and this type of product costs more then the average PB big box products, usually I don't work for those folks .
When I do get them in my shop I show them samples of doors and wood species and finishes photos and most importantly I go over the hinges and drawer slides and any others . I do not talk technical with someone who cannot comprehend what I am saying .I personally do not ask what the budget is and I do not assume the price I give them is way high or low I let them decide for themselves .I know that others pay my price and come back for more , so why should we work for less ?
As far as the multi million dollar home funky cabinets you described , many folks in that position use a decorator / designer and a or a builder who finds the subs , so the HO trusts that the right people and products will be used , unfortunately they themselves may not be able to see the difference in quality so it is really easier to sell them in some cases than the ones who are on a tight budget .
good luck to you dusty
Dusty,
You confirmed what I had suspected. I had the chance to watch my dad conduct his business (not woodworking) in much the same way you describe. Certainly sage advice that I am appreciative of. At present, I get to watch and learn as others struggle with the larger business related questions. I file away all the "little lessons" I am taught through observation on a daily basis. Someday I hope to put what I have learned to good use. Let's face it working wood is the easy part turning it into a living is what's hard.
Thanks ,
-Paul
Paul ,
You are very welcome , I hope some of what I have shared can apply and ultimately be useful in the future .
Heck ,I see you are in Florida land of the highest cabinet prices in the US.
good luck to you
dusty
"How do you sell to that client?"I certainly don't have all the answers, and my experience is limited to what one guy can learn in 40 years of business. What I have to say is not going to go down well on this forum, and maybe rightly so, because people are here to talk about fine woodworking. What you're asking about is not fine woodworking, it hardly even qualifies as woodworking. It is FINE MONEYMAKING. The odds are that your multi-million dollar house was outfitted by an architect or a team of architects and interior designers. They got the job because they are considered the "right" people among the client's circle of acquaintances. The architect has connections with a small number of suppliers who he turns to for almost every job. Price is not an issue, rather the speciality of each supplier and the timetable involved.In order to become such a supplier one needs to do all of the following:- develop a highly sophisticated product using the cheapest materials one can get away with. Be relentless in the drive to find more efficient ways to produce it.- have a proven track-record for on time delivery of large orders. Never screw up a job.- Network constantly with the "right" people. Invest in every way to build your "image". - In many cases, pay a kick-back percentage to the architect who sends you work. One of the obvious results of running such a business is that one doesn't work in the shop any more. For that reason I've shied away from going this route whole-hog. But I've gone a considerable way. The major factor holding back my shop's business today is our insistence on actually producing woodwork, and not sleek melamine/aluminum/glass constructions that the top architects are looking for. If you are in the shop wondering how to sell to that multi-million dollar client, you're just dreaming. If you really want to do it, get out of the shop, get dressed, and change your entire lifestyle to serve that aim.If you want to stay in the shop (like me), then resign yourself to making things for well-to-do clients who appreciate your handmade woodwork. It won't make millions but it may keep you sane.David Ring
http://www.touchwood.co.il/?id=1&lang=e
Do you really pay kick backs? I never have, and I have refused a couple. I am not knocking the practice, but in my experiance the designer or GC adds their own markup and bills that to the client. It is usually in the contract, around here we call it "cost plus". Sometimes the homeowner will pay me directly but the also have to pay the agreed percentage to the GC or designer. I have never taken money out of a payment and handed it to the GC directly. It works pretty well for everyone involved because the GC/designer will typically get a better price than the home owner would any way.
I have had customers and GCs ask for a "discount" because of the referals they have given me. I tell them (without being honery) that I would hope that they are recomending me because of the work that I do, and that in turn I refer them for the same reasons.Pardon my spelling,
Mike
Make sure that your next project is beyond your skill and requires tools you don't have. You won't regret it.
Hey Mike ,
As far as the kick backs go ,, some professions call them residuals or referral fees . Like you I personally have never paid bucks out but ,,,,
A nice bottle of good Scotch or wine or box of candy to your favorite architect or builder now and then can keep your name on the plans they draw , if the HOs are entrusting the architect they will trust his subs .
I try and take care of the people that take care of me
dusty
Edited 2/12/2007 12:05 am ET by oldusty
I've paid lots of kickbacks to architects and interior designers. Cash. Usually 5-7% of the job's value, but it is negotiable. And most times, the homeowner doesn't know about it at all. I've learned to just ask the architect outright (but privately) at our first meeting - what is he expecting? They don't all take money, but a lot do. Some prefer barter - I get the project and he gets a new desk. Whatever.
I've had one serious misunderstanding over this issue. I had closed a deal (on a handshake) with the homeowner on kitchen cabinets for a new house. This was one of "those multi-million dollar" houses. The price of the cabinets (without appliances, countertop, etc) was $80,000. A week later their architect appears on the scene, and discreetly sends a message that he's expecting some $20,000 on the side. I had already closed the deal and couldn't raise my price. So the architect put all his weight into blocking me out of the project, since he wasn't going to see money from me. And I lost the job, because keeping the architect was more important to them than our handshake.
In case you're thinking "Oh well, that's the Middle East he's talking about. It's not like that here" - it's true it may be more common in my neck of the woods, but you better believe that for the big commissions in major US cities it works the same way. I am not speculating; I've been around that block. And not just the architect. I've paid a NYC building superintendant $1000 not to hassle us while we were working. I didn't invent the idea; it was the norm if you wanted to work in that building. It all gets figured into the operating costs, and the client pays everything in the end. He just has no idea where his money is really going. David Ring
http://www.touchwood.co.il/?id=1&lang=e
David,
I've had the chance to work in shops where money was the ONLY motivation. I do understand what you are saying. I definitely do NOT want to be that guy. I much prefer building things with my hands and heart than giving myself a heart attack.
It is so true that most of what is produced as "fine" is anything but. The majority of folks can't tell the difference between two items side by side that look similar but are a world apart in quality. This was a very difficult concept to accept as a young idealistic woodworker. It is also probably an easy trap to fall into thinking you'll make a killing by slashing prices and cutting corners. I've been at it long enough to know the difference. It is probably also the reason I haven't strongly pursued having a shop of my own - not yet. I need to better understand where I'm at before I do that.
I look back on it now, the multi- million dollar lady, and I know better. Probably a case where who you are is as important as what you can do - a very good learning experience.
Thanks a lot for your advice,
-Paul
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