What hourly shop rates do you all charge? Any thoughts on working hourly, even on larger jobs like kitchen cabs? It doesn’t appeal to me, but a certain customer is more comfortable that way. I would be interested in any experiences or opinions you have.
Brian
Replies
Brian -
No matter how you actually write your estimates and bids (fixed price, cost plus, or time and materials), they're going to be based on some kind of time-based shop rate (hourly, daily, weekly, etc).
The trick is knowing about and including all of the factors involved. You also need to understand how variations of each factor can affect your rate. There are hundreds of books that can walk you thru the process, but your best bet might be to have your accountant help you set it up. Do it right and you should make a little money - or at least break even. Do it wrong, and you'll go broke and never really know why.
First of all I can't imagine a customer prefering open-ended hourly rates. I would be warry of this client.
If you are serious about coming up with a shop rate you need to subscribe to CabinetMaker magazine. They also have a forum where this is discussed a lot. Also joining a profesional trade organisation is very helpful.
It is nearly impossible to compair shop rates. It will only be helpfull if the shop is the same size and does the same work as yours, in the same market, with the same tools. My shop rate is a fraction of what my competetors are because I am a 1 1/2 man shop and my shop is only 2,000 sqft. and all my machines are paid for. Shops with employees will have to charge eexponentially more as their shop gets bigger. Also a one man shop with a CNC machine will have a much higher rate.
It is very usefull for you to come up with a "shop rate" for your own purposes, but avoid showing it on an invoice or estimate. Linear foot rates are generally the best method to estimate and charge by. But it takes a long time to come up with an accurate linear foot pricing system.
I hope you will consider giving this client a hard number. It is never good to have variables when money is involved.
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.
"First of all I can't imagine a customer prefering open-ended hourly rates. I would be warry of this client."
On the other hand, it could just be that the client has experience with contracting and is realistic enough to understand that complicated jobs often incur unexpected costs, and honest enough to be up front about it. Lots of really big jobs use cost-plus contracts.
-Steve
Mike -
While it's true that "hard money" is often the best way to bid, it usually requires a detailed description of what work is (and isn't) included in the price. Few things can wreck a business relationship faster than a customer misunderstanding what you're doing for the price you gave them.
Depending on the job, I often bid it T&M - or partially T&M. If I'm designing something, the time required will depend on the number of iterations needed to make the customer happy. Sometimes it's only 1-2 and sometimes it takes many more. If I doing a kitchen with installation, I may have to coordinate with other subs to get the job done. If my bid is based on one trip but it takes three, should I just eat the extra cost?
No, you should not eat the cost. This is what a conntract is for.
I use the 10-40-40-10 percent method. The first 10 percent is paid when the contract is signed and I always go over the details with them.
Design time is bidded on just like the rest of the job. If I think it will take more time I bid more. If I am wrong about the time needed..... well I'll know better the next time.
The client gets to keep the drawing when the 10% is paid. After that they get two more revisions, not complete layouts, just revisions of the details. ie. drawer sizes, door types, cabinet choices, finish. After the second meeting if they need more design time I charge an hourly rate specified in the contract. I have never had to use that rate, but it lets the client know my time has a value and we can't redesign indefinately.
The next 40% is paid before materials are purchased, the next 40% when the cabinets are built, but before I deliver. I encourage them to come to my shop and look at them, but they never do. Regaurdless I make shure they understand that the cabinets will not be installed untill the second 40 is paid. The final 10% is paid after all is installed and they are happy.
This isn't my idea, it is a pretty common contract. I dosent work for all situations, but the language is flexible and I use the contract for everything I do. Any of you who want to really be serious about this need to attend profesional trade development courses. Contract development is one of the most popular classes at the Pro shows.
I cannot thing of any job where I would be comfortable working by the hour, unless it was under $500. But that is basicly a days work any way.
As far as covering what work you are going and not going to do (scope of work or responsibility) that should also be spelled out in the contract. It is pretty easy to cover everything. There are great templates and programs on the net.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.
Thanks all for the generous feedback. The hourly situation is definately one that I would shy away from, unless it were only a days work. The customer I speak of is one who has expeience in contracting and is only trying to be fair, and knows me as an hourly field carpenter. The work has been convenient in the past, but I will never work again in the shop for the same rates that I charge with no tools on site (I am an employee). I must take into account all the factors involved and set a fixed price. Even my small shop is very well equipped and requires upkeep. The 'shop rate' approach, though valuable in pricing, is not the way I want my work to be valued. It is a product that I offer, not only a service.
No hard numbers, but thanks anyway, guys!
Hi Brian ,
GRW and Mudman have it for the most part .
I have done many kitchens over the last 30 years or so and by charging by the hour to build a custom kitchen the potential for disaster is present .
Heres the thing , say you agree on an hourly wage , What about the materials ??? Unless you get a deposit like Mike said perhaps 50 % before you buy the materials .
How would you charge for the materials ?
The door would be open for the client wanting the leftover wood now that you are selling it to them , as opposed to selling them a completed product as it is . This imho is key and my guestamation is that few if any custom professional cabinet shops would operate that way .
Special research and design and planning are legit areas to chage hourly fees in addition to shop hours .
Working by the hour ,, if we work slow the client gets ripped if we work too fast we do sloppy work trying to save time and money it's a tough thing .
If you're going to make a living from your wood work then you need to learn how to bid and price in hard numbers , you really need to deal with absolutes in business not maybes . They really do want and deserve to know how much it will cost .
Some trial and error is how we learn , if we don't make any mistakes how can we learn ?
best of luck to you
dusty
Lead time ( time it takes to get a job completed ) is also a big part of the picture, unless you're doing only high end furniture commissions where time isn't really a factor. With general custom cabinetry, I've found that too long a lead time will eventually cut into the amount of work that goes through your shop, even if you're competitive with your bids and do top notch work.
Don't put completion dates in your contracts. Always leads to problems , unless you put in an early completion bonus and want to roll the dice.
I am almost always asked during a contract negotiation " Well, when do you think you'll have this done?" I will reply " In x weeks". " Oh. That long?" My reply. " Do you want it good or do you want it fast?" Their reply is usually......YES
Unfortunately, quality takes time and doesn't always sell.
Paul
ps I know this doesn't answer your question directly but hope it gives you a little insight.
Edited 11/5/2007 3:32 pm ET by colebearanimals
Brian
I rarely if ever work for T+M. I did years ago in the building trades. In my wood shop I use a firm bid. If I were to do a T+M job I would keep the customer aware of the current cost at least once a week. I would try to avoid sticker shock at the end of a lengthy job.
Shop rates don't seem to mean too much to most folks. Final cost are what they're worried about. A small shop with few pieces of equipment may take twice as long to make a kitchen as a better equipped shop. The smaller shop with lower overhead, but twice the man hours may bid the same as the larger shop with higher overhead, and fewer man hours.
It's also a regional question. One can't charge the same rate in Boston or in some more rural area. Also based on reputation and experience. Working from your basement versus in a commercial shop with employees and insurance certainly adds to the equation. Our shop time is $50 an hour in western MA.
$50 an hour!!!!
Is that what you bill the client? Do you mean $50 a man hour? even that would be the lowest I have ever heard of. 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.
Shop rates do vary by location. Here in Vermont USA the last time I checked the commercial shop rates here they were about $55 to around $85 though I think there are some charging more. That was 3 years ago. They are paying most woodworkers in custom shops about $14/hr for fairly low skills, to $30/hr for higher skilled woodworkers in the high priced shops.
Hi Mike ,
Wouldn't you think that a shop that can charge $85 per man hour is in an area that obviously will allow it , while still remaining somewhat competitive .
Then in a more rural area the rate may be much less , I think the cost of doing business is directly related to the prevailing rate in that area . Your overhead in Texas may be much higher than here in Oregon but lower than New York or Boston for example .
Our material costs are probably pretty close to the same in most all regions of this country. It's the overhead or cost of doing business that is different . If I billed out at $85 an hour I would have been able to retire about 12 years ago .
The sales price or cost to the end user changes with each scenario and area , don't you think . So as has been said it is difficult to help someone try and figure out a rate for other than our own areas .
Here in Oregon we bill between $125 - $200 per lineal foot of cabinet plus or minus extras , bells and whistles . I have heard prices from some posters as high as $600 per foot , I find that hard to believe , but stranger things have happened !
regards dusty
Actually, Texas has some of the lowest rates in the nation. And our material costs are low as well. I don't know of any shops that have a published hourly shop rate. I can tell you that the linear foot prices you quoted are in line with our basic new construction cabinetry installed unfinished. For my own purposes I figure shop days at $250 to $300. But I have a small shop and very low overhead. I don't bother with hourly rates because there is no such thing as an hourly project. Even if I build just one unfinished door it will take up most all the day. On the flip side I might charge $1,000 for a weeks work. Small jobs eat up a lot of time with gathering materials, calling the client, book keeping and delivery. Large jobs make me a lot more money even if I charge a lower "rate". Shops that are more production oriented don't have the same issues because they have dedicated door making areas and office personel. This is why bidding is so complicated.
Cabinet Maker compiles a bidding survey every year and the results are absolutley amazing. One example last year was a kitchen that recieved bids ranging from $20,000 to $100,000. And the bids were evenly spaced out between; not one high bid, one low bid and the rest clustered around the mean. Also there is no coralation between shop size, location, time in business or any other characteristic. Yet these are all successfull shops....... So why can one shop charge $100,000 for the same job another will do for 30,000? Nobody knows. That why if we are going to take our business seriously attending seminars on best practices and accurate bidding are importaint.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.
$125-$200/lf. of kitchen cabs sounds low compare to other numbers that have been shared on the web. I suppose that lumber may be relatively cheap in OR, and maybe you have low overhead? Would you care to elaborate on what a customer might get on the low and high end of this? Anyone else care to pitch in low, high, or maybe median, lf. rates? Shouldn't uppers be a little less than lowers? I'm in learning mode (also in far northern CA). Thanks.
To add to Brian's question:
As someone who is asked occasionally for a price "per lineal foot" can someone explain exactly what that entails? Do you measure the uppers and lowers seperately, or is this price for the uppers and lowers combined?
I crrently have a basic price list for all of the cabinets that I have built so far. I add a percentage for cherry, for glazing or other custom finish, for dovetail drawers, etc... I guess what I am asking is not so much how much you charge per lineal foot but rather how do you guys (Dusty & Mike) go about figuring the footage once you have come up with a base price per foot? And how do you account for extras like custom finishes or dovetail drawers, etc?
Thanks,
Lee
Evening Lee ,
Don't tell the potential client those will run $200 per foot , rather get the opportunity to go look at the job and give them an exact price . When they ask you about what do you think it will run before you leave if you feel you must then use the formula for yourself to shoot them an approximate price .
Good timing , that's a very important question imo .
I have a per foot price starting point , based off of Red Oak , like you said I add an upgrade percentage for White Maple or Cherry or Q Sawn maybe 25% for example . I may bid the whole job without finish or installation then add the up grade charge then add the finish and install back in . So much per door depending on the style and so much per drawer so much per frame and panel drawer face .
My post to Brian before this one lays out the total per foot method , basically after you have bid the entire job then divide by the footage you actually have an average cost per foot .
This method is extremely consistent as opposed to materials times 3 or any type of hourly bid .
So review a few kitchens you have done and you will arrive at the average price per foot you have charged .
You will find that to ball park bid ( which I don't recommend unless you have small feet and a large mouth ) it will hold true more times than not .
The example I gave Brian I could have quickly bid it at $150 a foot and been within say 5% of the actual selling price .
does this help ? dusty
Edited 11/8/2007 1:29 am ET by oldusty
Linear foot pricing does not work for every one, but here is the ideal senario. You build cabinets the same way every time, only doors and finish change. Over time you look at what you charged for a "basic set of cabinets" then divide that number by the linear feet of cabinetry. You then come up with modifiers like $20 a foot extra for premium slides, or $30 a foot for cherry. Using this system you can give very accurate bids very fast, usually on the spot.
If you only build a few kitchens a year you will have a hard time getting an accurate average. Also it is hard to account for true custom work like radiused fronts and odd configurations.
My work is very custom and I can't rely on linear foot pricing for bids, but I do use it as a compairitive tool. I notate on every invoice the linear feet of cabinetry installed and I keep a running average of the last 10 jobs. Considering the type of work I do I am suprised that the linear foot price dosen't change all that much.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 Brian ,
The other numbers that have been shared on the web as you say , just like shop rates can easily be taken out of context , meaning the geographic area an individual is in will dictate or regulate the market price .
In my area of So. Oregon I am in the middle to upper end of the price spectrum .
Not unlike the cost of a home in Beverly Hills will be way more then the equivalent home in Chico California for example .It's not apples to apples even though the construction may be the same .
I've been told lumber prices are the same or lower in Los Angeles then here , the demand being higher creates more suppliers and competitors , the same is true with shop prices . Even though quite a bit of the plywood is laid up locally using Eastern hardwood veneer skins we have no hardwood mills to speak of locally , it all comes from back East with the exception of Alder , Myrtle Wood , an some Western species the are milled by a few small mills so It's not that we pay much less .
In fact the cost of materials only varies slightly in metropolitan areas throughout the country to my knowledge , unless you are buying green wood mill direct . Of course if you are located in an isolated area way off the interstate you will pay a premium for everything I would imagine .
The low end will buy plywood slab doors the middle ground will be frame and panel doors recessed panel and for raised panels I add about $ 25 per panel .
This is for domestic species not Bloodwood or Honduras Mahogany , mainly we use Cherry , Maple ,Alder, Eastern Red and White Oak , Walnut runs more Birdseye is higher .I have done many jobs out of Quarter Sawn and Rift Sawn Oak over the years .
Paint grade cabinets cost slightly less to produce but the paint runs more per foot then a lacquer finish and painted jobs usually require a few more trips to complete an install if they paint them in place , so the end cost is close to the same .
$ 200 or so per foot will buy Rift Sawn craftsmen style 3 piece crown molding in itself can add about $30 per foot alone .
I use full extension ball bearing drawer slides on most all jobs with few exceptions, Euro hinges and no particle board or Melamine in my products in fact I refuse to use any China ply , I'd rather go to the Dentist ( no offense to any of you Dentists )
I use Rudd pre cat Lacquer and put a quality finish on my products .
Yes uppers are a usually slightly less per foot depending on the ht , 42" uppers are the same cost as base in my shop.
I just bid on a small kitchen haven't heard back yet , there was approximately 16' of base and 17' of wall cabinets Raised panel Red Oak flat sawn , 42" wall cabs with a clear lacquer finish including installation the bid was about $5,000 . This job would cost me close to about $2,000 to produce .There are no angles or frou frous this a very straight forward job , so if you add the footage together and the divide the selling price by the footage this gives you the per foot average , in this case it is about $150 per foot .
So regardless of your overhead you can only charge what the market will allow , unfortunately if you work slow you don't get to charge more .
Florida prices are very high for particle board and laminate type of product for some reason and a larger city can have lower prices because of the number of shops . Someone on this forum said they get like $600 per foot , that to me is a shockingly high price , I'm not calling them a liar but I do find it hard to believe .
I hope this helps you
regards dusty
Dusty,Thanks for all the info, really. I think I now know enough to take a closer look at the market in my area.
One afterthought is that a lot of people order cabinets from Home Depot now don't they? I recently installed about 40 lf. of them . . . really horrible, thin particle board construction, and door defects and problems. Not what anyone would call 'cheap' in dollars either! But anyway, I donl't think Home Depot adjusts their prices by region, so might this level the playing field somewhat? Take care. Brian
Brian ,
There is real cheap and middle and high end even in modular / pre fab / ready made cabinets .
The higher end may have a very nice say raised panel solid wood face and high quality slides , hinges and Dovetail drawer boxes , some are even no PB .
It used to be a completely different type of client would use the big store cabinets , many DIY types but now many builders will handle the installs and order the cabinets .
When people bring in a layout from a distributor the first thing I do if I want the job is try and improve the layout in looks and efficiency . They are limited in custom sizes and typically don't come longer than 48" .
Change the layout and design them something unique that they love . I use 3/4" materials in my box construction and shelves 5/8" is unusually thick for store bought , many are 3/8" - 1/2" . Islands are one area pre fabs fall short , make sure you include something that can't be duplicated unless custom . I also offer very wide and large drawers with 1/2" bottoms and 150lb slides as well as custom uneven corner base cabinets maybe 13 " one way and 16 1/2" the othe way , never seen them try that one .
One kitchen I did had a 5' upper wall cabinet with a plate rack across the bottom shelf , no modular will be able to do that in one piece to my knowledge .
sell by design
dusty
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