"I'd much rather make 50% of $200K than 75% of $100K.
Are we in business to make cabinets or to make money?"
And I would rather make 75% of 100K than 25% of 200K.
Everything depends on someone's concrete calculations, as well as personal aspirations and philosophy.
Here is mine.
When I cut, I cut around 10 sheets per day (that's just to say I'm currently not doing cabinetry full time, since there are some other things I spend time on, but soon I'll be back in the shop full time). Last I checked, outsourcing cutting in my area was around $30-40 per sheet.
So in three days outsourcing would cost me around $1K. That's just around monthly financing rate for a decent CNC that can cut not just 10, but at least 30 sheets per day. So, if I'm cutting more than three days in a month, or more than 30 sheets per month I see no reason why shouldn't I have my own CNC and reap it's benefits for free for the remaining 27 days in a month? Besides, it frees my workforce (whatever it is) from operating on construction boring machine and table saw, therefore just the edgbanding and assembly remains, so the calculation is even more favorable than suggested. Also, I'm saving time for not delivering sheet material to that other shop and not picking it from them, including all loading, unloading, edge-chipping and sorting that goes with it. Further more, I get to schedule, and therefore optimize, my time however I wont, compared to alternative.
Now, let's say I've oversimplified too much details (router bits, maintenance, software (which is anyway just $2.5 per day), electrical bill...), so let's introduce some margin of error to compensate for that and say that I'm wrong not just 100% but 200%. So, instead of 3 make it 9 days to pay for the CNC, and 21 to enjoy it for free (compared to outsourcing) and it still doesn't change the logic.
I don't know what's the story with your customers; are they not ambitious, are they not business savvy, or they've not developed a habit of using pocket calculator, but if any one of them figures this out, you're in trouble, the same way they would be in trouble if you decide to employ 2-3 (more? if you already have some) installers and an mediocre salesman and blow them out of the water, because if they are making good money selling your cabinets to end customers, what's stopping you to do the same?
I could swallow it somehow if some multi-million cabinet business opens a cabinet factory in my neighborhood and throws me out of business, but I wouldn't be not ok if one of my 1-2-3 shop man competitors buys $8 pocket Casio calculator, key in few of the above numbers and crush my business, and that's literarily where some of my peers that work with the same customers I do are now. Two years ago when I gave my price list for the cabinetry services I offered at those properties I was literarily an isolated island: I was not connected with the surrounding world and didn't know anything about anything and just calculated it as with what I would be ok. It turned out that other vendors working at the same properties had to lower their prices for 40-50% to be able to match new reality. Now they only make money on the installations because that's the only thing that remains after they match my prices and have to buy finished or RTA cabinets because they're not able to build their own. And it's a very thin margin, basically they just keep their installers working and making just enough to pay their salaries. And I know that because I know where they buy those cabinets and how much they cost. The only thing that still allows them messing with cabinetry is me not emailing new price list, where I could lower my price per cabinet for $40-50, what would make them working with a loss, and I would STILL BE OK.
Besides that, I'm not interested to be 1-1/2 man show till I retire. If I had few guys in the shop your single-cnc machine shop would not be able to deliver what I need. I'm willing to bet that 99% of the "shops" that outsource their cases are 1 or 1.5 man shows. And as far as I'm concerned, those are not 'businesses' but self-employed people. Just like I am now. I don't know for your customers from the example, but that is not what I aspire to stay.
I'm sure there are some (or maybe many) corners in this country where some 'outsourcing-savvy' cabinet guy is surrounded with numerous CNC shops ready to cut today, latest tomorrow morning, whatever he needs and in whatever quantity he needs, but that is just not the case in my area.
When I was outsourcing few times it was always "by the end of the next week" and was usually the middle of the week after that, parts were not square, scoring blade was set to wide and the edgebanding not even mediocre. Payment upfront 100%, and the answer to any complains about cutting results was always that everything was "within their specs".
I just don't think it's a smart idea in general, and in the long run, to have one's business depend that much on someone else's schedule and someone else's "specs". It's one thing when you depend on something that comes from Amazon or Home Depot - those will still be there after WWIII, but I don't want my business and consequently life depend on something that is 3-4 man shop. Please let no one be insulted, that's what I even think of myself and say to anyone that comes to work with me in my shop: "I'm just one guy, now I'm here, tomorrow - God knows why - I may not be, devise your plans accordingly".
Anyway, that's just how things look from my angle, and I may be - God knows why - partially or even completely wrong.
All the best,
O.