Subcontracting for Other Woodworking Shops
Business owners give advice about how to manage subcontracting arrangements with other woodworking businesses. August 7, 2006
Question
What are your thoughts or experiences subbing work from larger custom businesses in your area? I am a very small shop and focus mainly on built-in units, furniture and custom installed architectural millwork. I now have some of the larger custom shops in my area interested in me building projects that they don’t have time for or aren’t big enough for them to take the time to do. I don’t know how I feel about this - I don’t know if I am too proud to accept these jobs or if it really isn’t a kosher thing to do. Also, how do I go about working with them? Do they get a percentage or do I bid the job and they mark it up? I really don’t like to work through anyone - I would much rather deal straight with my customer. Any insight?
Forum Responses
(Business Forum)
From contributor A:
You would be dealing directly with your customer, that is to say whatever shop you would be subbing from is now your customer. You quote a price for any given piece of work - it does not matter if the quote goes to a homeowner or a business owner. If the price is right they give you the job and you go about doing the best work you can so as to satisfy your customer.
From contributor B:
I agree. Work is work, it does not matter who you are working for as long as you fulfill your obligation and get paid at the end. You should feel good that someone appreciates your work enough to want you to work for them. And sometimes not dealing directly with the customer is the better situation. It really depends on how you arrange your contracts.
From contributor C:
Always price your jobs. Know where you are on price and time for your own work. Have a schedule and know how much work you can handle at any point and time. Never let anyone else price your work. Entertain offers for work at a given price, but always take the necessary time to examine job before giving out a price and time for completion. Ignore pressure for instant bids. Always give yourself an option to counter-offer jobs. There are lots of people who like to push you into a corner to get a better price and/or quick job start time. Be a professional businessman. Tell the customer you will take time to look at the job right away. If things are not agreeable, say so. And quickly follow that up with, "I would be interested in other work you might have". Just because you do not accept a job on the customer’s terms the first time around, does not mean you will never do work for them ever again. It is important that you communicate this to your customers, and that you are willing to work out prices, problems, time schedules, with them at any time. Good service means good business. No one expects you to take all work offered to you. I would avoid locking yourself into long term, repeat work, before you had a chance to test one out first. Ignore intimidating business tactics, and do good business your own way.
Sharing work with other companies is good - it comes and goes both ways. You may want to hire them to build something for you in the future sometime. Good business relationships exist all around the world, for every size of company.
From contributor D:
One question - I always tend to price my work as fair as possible - find my bottom line, make sure I am making a decent profit and that’s what I quote. If I come down on my price won’t it give the customer the impression that I have an outrageous markup and make them feel as though I tend to rip people off?
From contributor E:
How does that expression go? "Price, Quality, Delivery date? You can choose two, I choose the third." One way to come down on price is to tell your customer that you can lower the price, however you will be working it in between other jobs as you have time. In other words, you control the timing. If they want it faster, then you control the price. But, I would not compromise on quality.
After reading lots of posts on this forum for the last couple of years, one definitely would get the impression that trying to compete on price is a losing proposition. Remember, whatever you decide to do, do it on your terms. It is your business, not theirs. If you don't want to compromise on price, then don't. When asked about lowering the price, I ask the client what they would like to remove from the project. I do not want to ever earn the reputation that I can be haggled over for price.
Also, losing a job because of price may not be losing a job because of price. Maybe that is what the client said, but possibly there was really something else that mattered more. By the way, I do work for a fellow cabinet shop in my target market area. I have equipment that they do not have. Moreover, they do kitchens and baths, and do not want to do entertainment centers, bookcases, etc. I do not do kitchens and baths, but love to do entertainment centers, bookcases, etc. We also give business referrals to each other (without any referral fee). We both feel that this is a win-win situation.
From the original questioner:
That is the way that I would prefer to do it. I currently do not do full kitchens, although I do and enjoy the built-in media centers and so on and would rather refer my kitchen cabinet business to others and have them refer their other jobs to me. However, they feel the need to get a cut of everything and insist on playing the middle man. From the responses I have gotten I see this a little differently. My competitors are now my customers and, in a way, need me. It’s also less stressful not having to do the design work. All I need to do is build it and sometimes install. I think that I may start bidding these jobs and see how it works.
From contributor E:
When I do build something for the other shop, I enjoy the work. The interface with the customer is theirs to handle. I may help a little with the design, in case they missed something. I get my 50% deposit up front, build it, deliver it, and get paid at delivery. My feeling is, if the other cabinet shop insists on taking a cut and playing the middleman, then they can handle the customer and take the risk for payments, etc. And often it can make sense for all parties involved. If the customer is buying cabinets for multiple rooms, they only have to deal with one shop. I sub for that shop and do the pieces that make sense for me. Again, it can be a win-win.
