Question
I am the owner of a high-end custom kitchen and bath company located in the Northeast. The question has been raised several times about our method of estimating cabinet installations. We have always approximated the expected amount of hours and multiplied by an hourly amount. However, it seems that our installation estimates have been too high. I have heard of some shops and kitchen and bath dealerships using a by-the-inch scale. I am interested in learning more about this. If anyone has information on the actual pricing method, please respond. Any other thoughts for pricing installations would be much appreciated.
Forum Responses
(Cabinet and Millwork Installation Forum)
What are you basing your timing on? Historical records from your installs? WAG, Means Cost Data? When you say you're high on install, does this mean you're losing work because of the pricing?
Haven't heard of anyone pricing by the inch. By the foot, I've heard of. Priced installs as a percentage of sale has worked for some. The problem with any of these off-the-cuff pricing schemes is that there is no mechanism for difficulty increase. For example, how long will it take you to install 10' of cabinetry? What if it's 10' of pantries instead of bases and uppers? What if they all have 8 internal rollouts instead of shelves? How about if the 10' is made up of only 2 cabinets? What if they are in a highrise/midrise? Walkup?
To me, using time based estimating for particular tasks is the most accurate. It does require lots of data to be collected and cataloged, but once set up, it allows for quite accurate forecasting and analysis. This makes sense for production volumes. For high end custom installs (2-3 a month), it is less beneficial because of the work involved in setting up the system.
Others use a piece rate to figure costs. Values are assigned to pieces based on difficulty of install. Bases may count as one, a sink base 1.5. Wall cab as one, wall cab that is 4' wide and has a single-piece glass door counts as 3. This system is similar to a time based system. Less accurate, but quicker to set up.
By the inch/foot is too easily defeated by the things listed in other posts and more: 20 ft in one straight lineup will be much faster than a lineup that meanders around 45 degree angles, that changes in height and depth and has numerous finished ends/scribes, etc.
That leaves time estimating. We price based on time per piece, per moulding corner, per foot of base, etc. It's important in this system to add time for appliance openings, changes of direction in the cab lineups, tight to ceiling versus down from ceiling, and so on. Then you need some wiggle room for site conditions.
25% may be a little high for the top end ones. Looking back on jobs in the past, our actual cost is closer to 12 to 15% of total price including install. This, of course, will vary from shop to shop and location to location. Maybe 25% is closer for you. For me, any percent is too hit or miss. I mention it only for comparison.
On the other hand, if you have clients that want to take apart your bid and grind your price as they see fit... well, you might be better off without them. If you have a bidding system that consistently predicts your cost, you can stand firm, knowing your price is right. This is the pay-off for the work it takes to develop that system.
Accurate install pricing is probably the toughest part of the bid. If the shop is a laboratory, the site is a battlefield.
I would not allow the customer to know what I charge for installation for the reason mentioned above. I have estimated jobs minus the delivery, installation or both and let the client sub out the installation, which is usually the contractor saying "how much are you paying for installation?" or "my guys can do it for a lot less." If they want to undercut you and make no profit, fine, but stick with your policy of making a profit on your installations.
When you sell a job, you are also selling delivery and install and it should remain that way.
I have no qualms breaking out my installation price. Such an itemization clearly, though subtly, delineates what environmental factors are under my control - such as fabrication -and what is not - the job site, for example.
Finally, the longer I've been in business, the longer my list of exclusions and inclusions has grown in my proposals. We recently installed a job where the site super insisted we frame and rock the bulkheads in and around our cabinetry to ensure a perfect fit. My contracts now specifically exclude framing and sheetrock installation. And, on the very next job, this particular issue became an item of negotiation.
I have no problem letting the clients know exactly what they are getting and at what cost. By estimating the time to install, I can easily answer why an installation costs as much as it does the same way I can say why a component is expensive either because of materials, complexity, hardware, etc. Ultimately, I find it easier this way.
Comment from contributor G:
I'm in the DC area, where I find no shortage of work at top pay. 95% of my work is as a sub. I do installs for several companies. One of them supplies me with high end (new and remodelling) jobs, while one of the others gives me cookie-cutter remodeling jobs... taking out existing and replacing with new, same layout. I've found that there is no exact formula. Sometimes, what looks like good, hard cash turns out to be a wash. Bigger is not better. I get in, I get out - that's how I make money and all I have to do is deliver a perfect job, just like on the plans I've been given...
That's not too hard... Well, let's wake up. We're dealing with humans who have designed, built and delivered what I am to install and what looks good on paper just turned into...
Lost time is my biggest fear (time equals money). It's that simple. The longer you do something, the better you get at it, the better you are at predicting problems and solving them... which all effects the bottom line and my customer base and their repeat business with me. Desigers, salespeople, builders, etc. can only do so much. It's up to me, my skills and knowledge to make it all come together in a way that pleases all.
I estimate as follows: Cost per item... box, filler, LF of moulding (no charge for regular toe), out- and inside miters, hardware, panels, etc. Then I add cost for what I call "custom" items, such as raising cabinets 3/4" to allow for finish flooring if not in place, or adding nailing strips to the top of wall cabinets, or altering of stock cabinets... whatever will require additional time and materials. I add my numbers up and come up with a total cost. Then I cross check by relying on my experience. I look over the plans and what is involved. Do I have to move the cabinets from the garage, up two flights of stairs, into the house? Am I dumping the packing material or is there a dumpster on site? Am I working around others? Now I've come up with a number of days that I think the install should take. I multiply this by a day rate and add a cost for material.
Now I have two rates: One based on a per item cost and the other on time + material cost. I compare the two and hope they aren't too far off from each other. Now it's just a matter of choosing which number to go with, or do I find the middle ground? This I base on my gut and what I know is going to go into the job. Who am I doing the work for and where (travel time)? Most of the time it works well, but you can't win 'em all.
Comment from contributor A:
I always charge $75 per cabinet. I also charge $7.50 per foot for crown molding and $300 for counter tops with the sink cut out. I don't think that it's what you charge for the install so much as how much your cabinets are.
