# Pricing a kitchen, how to get the work AND make a profit?



## johnelliott (3 Feb 2005)

I make kitchens, and also do revamps (new doors, drawer fronts etc). Sometimes a combination, eg revamp plus new wall units. Whatever the customer requires.
I had a PM from somebody discussing pricing. This person has been asked to quote on a project and wondered if I had any could provide any useful input.
Yes, I believe I can. It's taken me some time to learn this stuff, and my ideas are still developing, and I am very much open to suggestions, this is where I've got to up til now
First thing to decide is what is the aim. To make a kitchen, or to make money. In my case it's the latter. I operate a business and every month I have loads of bills to pay. As with any business, if more goes out than comes in then it's definitely  time. Very imoportant to work out how much money you need to take each week. In my case it's about £2,000, so when pricing work I think in terms of £400 per day (there is two of us, BTW)
What's the customer's aim? Generally to get a nice kitchen at a good price. Good price? Well, they certainly don't want to pay more than necessary, but it can be surprising just how much money people will pay for what they want.
Your job is to convince them that you can provide what they want and that it won't cost them more than they would pay elsewhere.
Lots of research needed.
Go to MFI and a couple of the pricier firms and prepare to be amazed at what can be sold for quite a lot of money.
I'll add more to this when I get time.
John


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## johnelliott (4 Feb 2005)

Anyway, go to some kitchen providers with a plan of your target kitchen (take your spouse with you so that they think you are serious) and find out the real price of a decent kitchen.
With this information you will be able to see how much YOU (who will be providing a better kitchen and a better service) will be entitled to ask for.

You now have a duty to ensure that the customer benefits by buying your kitchen, and at a price that is beneficial to you.

To do this you need to SELL your services. If necessary read some books on selling and marketing. Alternatively there is plenty of selling info on the Net.

I've learned that customers don't have the same perception of 'hand-built quality' as we do. Solid wood often means solid pine to them. They don't get the difference between veneer and solid. They will tell you that they understand these things but they don't. 
Make sure they understand the _benefit_ of buying from you. Real benefits include personal service, better design, the ability to make cabinets in non-standard widths thus filling those awkward gaps, the fact that you and not some dodgy sub-contractors will be installing, think of some others, there are plenty. One that does well for me is making wall cupboards that go all the way to the ceiling, try getting that from MFI!

Now you've got the sale and at a price that suits, you now need to build and install that kitchen at high speed. More on that later, as I need to go and carry out a high-speed installation now

John


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## Adam (4 Feb 2005)

johnelliott":2n0zgig1 said:


> One that does well for me is making wall cupboards that go all the way to the ceiling, try getting that from MFI!



I thought they were banned now under EU regulations? Too much danger of heavy things falling out from a height causing injury?

Adam


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## johnelliott (4 Feb 2005)

Adam":1cz831yf said:


> johnelliott":1cz831yf said:
> 
> 
> > One that does well for me is making wall cupboards that go all the way to the ceiling, try getting that from MFI!
> ...



Do you mean wall units that go all the way to the ceiling are banned, or only those that go above a certain height? Some of the places I work in have quite low ceilings. 
I hadn't heard anything about this, but then I don't know where I would need to go to find out. Any info you have would be appreciated.
John


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## johnelliott (4 Feb 2005)

Back from an installation, almost a complete waste of time. Took out an old unit and found there was a leaking stop cock behind it. Fortunately the plumber can come on Monday and sort it so that I can carry on.
Goes to show the need to build in some contingency to one's pricing structure.

Choice of materials-
Normal kitchen carcases are made from MFC (melamine faced chipboard) usually 15mm or for real luxury, 18mm!. One of the main problems with MFC, apart from its sheer grottiness, is what do you do about end panels? Flat pack kitchens usually use a flat panel veneered to match the doors.
When I did hardwood kitchens I couldn't find any veneered board that was a decent match for any of the solid wood I could get, so I had to make up solid wood panels where I needed a side panel.
Anyway, now I use 18mm birch ply for my cabinets. The insides I finish with oil and varnish, and the outside I paint to match the painted doors I do, or to match the adjacent walls. Works well and looks great.
The other advantages of birch ply are- nicer to work with (if you don't mind an occasional splinter) and it takes screws much better too, which is important to me as I use pocket screw joinery

I believe that unless you can ask maybe £20,000 for a medium to large kitchen, then hardwood doors are out of the question. They take too long to make, and the customers can't see enough difference. Go into any B&Q and see hardwood doors at prices that would barely cover to raw materials.
That's the main reason I stopped doing hardwood. Now I make my doors from ash-veneered MDF, simple Shaker style frame and panel, and paint them with water based Dulux. It's the modern thing, light and bright. I've taken out loads of dark oak raised panel doors and replaced them with mine. The difference it makes is considerable. Using the MDF I can make 10 doors a day fairly easily. My wife paints them by hand, she can't quite keep up but catches up while I am making cabinets. 
This helps to keep the prices down to a level where competing with top-line MFI is a good deal easier.

Feel free to react to this stuff- add to it, argue with it, whatever

There will be some more later

John


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## Neil (4 Feb 2005)

Just wanted to let you know that your advice is being read & digested, John - keep it coming  

Cheers,
Neil


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## Mdotflorida (4 Feb 2005)

This is interesting John. 

I agree about painted doors being bright and modern. As much as I love looking at natural wood, I don't find a vast expanse of dark oak cabinets very attractive.

A question. When you make your cabinets how do you finish the exposed edges of the ply ?

Jeff


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## Chris Knight (4 Feb 2005)

John,
It's very interesting, as Neil says keep it coming please.


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## Adam (4 Feb 2005)

johnelliott":9i38ovek said:


> Do you mean wall units that go all the way to the ceiling are banned, or only those that go above a certain height? Some of the places I work in have quite low ceilings.
> I hadn't heard anything about this, but then I don't know where I would need to go to find out. Any info you have would be appreciated.
> John



John, 

I honestly can't remember where I've read/seen/heard this - it's just in the back of my mind. It could be utter drivvle for all I know!  I *thought* that it was above a certain height, due to people falling of small stools etc, as they tried to reach the large pile of plates on the top sheld near ceiling height type-incidents.

I'm trying to think where such information would be available - but can't think of a good source, nor am I sure if I'm not talking rubbish either.

Adam


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## Anonymous (4 Feb 2005)

-


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## Alf (4 Feb 2005)

waterhead37":1wr19pk3 said:


> John,
> It's very interesting, as Neil says keep it coming please.


Thirded.


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## smiffy (4 Feb 2005)

> the gasman told me he was supposed to chain the cooker to the wall to stop it falling on me.



I recently got a range cooker installed and the guy said that the chain is actually to stop 'cowboy tradesmen' from pulling the appliance out too abruptly and pulling the gas feed out. Believe me...I have seen what he is talking about.

Cheers,
Raymond.


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## cambournepete (4 Feb 2005)

Adam":27t5bd6i said:


> I *thought* that it was above a certain height, due to people falling of small stools etc, as they tried to reach the large pile of plates on the top sheld near ceiling height type-incidents.



They wouldn't like my new shelf for the cast-iron Le Creuset pans on top of the cupbaords above the cooker then :wink: Just as well my wife and I are both around 6ft tall  

John,

Your thoughts here are very interesting - keep it up!

Cheers,

Pete


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## Anonymous (4 Feb 2005)

Alf":3no7tc4p said:


> waterhead37":3no7tc4p said:
> 
> 
> > John,
> ...



Forthed??? can one forth something?


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## johnelliott (4 Feb 2005)

Mdotflorida":179lwh89 said:


> This is interesting John.
> 
> I agree about painted doors being bright and modern. As much as I love looking at natural wood, I don't find a vast expanse of dark oak cabinets very attractive.
> 
> ...



The leading edges of the cabinets we paint to match the doors. This is necessary because if they weren't it would show through the gaps between the doors (the gaps need to be approx 3mm). I used to apply a hardwood strip to the leading edges of the ply shelves but now I don't bother. The danish oil does darken the edges quite a bit and although you can see the laminations nobody seems to mind. Of course, if they notice them at all then they are comparing them with the melamine edge bound 15mm chipboard shelves that they are used to. The chunkier 18mm birch ply looks much better. The Festool edge with a quick sanding 100g Metabo ROS sander set on 3mm orbit is all that is needed. Then one coat of oil and a couple of coats of water-based matt varnish

One thing that always happens when you specialise, and need to produce quickly, is you discover tricks. Because we use water based paints we have to deal with the grain that is raised by the water. Sandpaper? No thank you. We use a Stanley knife blade, held vertically like a scraper. Move it over the surface in up and down stripes like a lawnmower and it works great for denibbing and smoothing. Quick vacuum and it's on with the next coat.

Another good thing about water based acrylics (such as Dulux) is that they dry so fast. Carrying units into a kitchen you are bound to get bumps and scrapes (on the units as well as on yourself). Quick dab of paint, dry in 15mins or less, no-ones the wiser. If it's an actual dent (as it often will be) then Pollyfilla quick-drying filler, and a couple of coats of paints and it's an invisible repair (try that with a sprayed finish)

John


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## Jake (4 Feb 2005)

> Forthed??? can one forth something?



Yeah but it takes forever, and when you finish you have to start all over again.

Perhaps you meant fourth?


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## frank (4 Feb 2005)

thanks john that was very informative better than any book and some good tips ,can i 5th it


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## johnelliott (4 Feb 2005)

I must say I'm delighted by the positive responses to this stuff, thanks!

Cabinet making- As I said before, I use 18mm birch ply except for the backs which are 6mm (in reality more like 6.5mm) . I have an 8x4 cutting table with a sacrificial sheet of 6mm mdf to protect the top. Then I cut up the sheets of ply with my Festool stuff, 2.7 rail for rips and 1.4 for crosscuts.
I did experiment with cut list programs but found it quicker to apply a little common sense and pencil and paper. Say it's a cab 575 deep by 750 high and 565 wide (something that gets me work, try getting a 565 cab from a flatpack firm, you'ld probably end up with a 400 and a tray space)
So, first thing is to rip a trimming cut along one long edge, then rip off a 575 width, then put that piece on the Festool MFT and crosscut it to the required lengths. Offcuts are kept unti they get below likely useful sizes. Very little of my ply ends up on the fire.

Before putting the cab together I have to remember to drill the holes for shelf pegs and to rout the slots for the back panel. I use a router for both these jobs, lovely clean holes (template with 12mm holes and a 12mm guide bush) and a Trend 6.5mm cutter (bit rare, these)

Dado's, don't need no *****ing Dado's!. 5 pocket screw holes on each base to side join. If the cab is going to be under heavy load then I use some Titebond polyurethane glue. This produces a very strong joint, and with careful cutting, very accurate too.Then a simple butt joint, clamps to hold it accurately while the screw go in and then uncramp and on to the next joint. I used to use biscuits, but the jointers aren't accurate enough. A couple of 50 mm wide cross pieces, one across the back where the top of the back panel will be (not all the way to the top or it will get in the way of the brackets), and one across the top at the front
Total time to make a simple base cabinet, about two hours. 


A bit more on selling-
A wise man once told me, don't sell the features, sell the benefits. To woodworkers the benefits of a custom made kitchen seem obvious, but to customers they are anything but. No good telling them your kitchen will last thirty years if their present, cheapie kitchen has already lasted that long. 
I've learned now to concentrate on the benefits like special sizes (fill that awkward gap), avoiding double cabs if it means the doors opening awkwardly, the cabinets all the way to the ceiling as mentioned before (means no awkward-to-clean wasted spaces, the fact that they will see their kitchen before it's installed, and anything wrong can be put right, and that they can probably have their kitchen quicker than from a national firm.
And I've also learned to always say something positive about their kitchen, like it's a really nice space, something like that, although I wait until I've heard what they _don't_ like about it first!

John


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## Bean (4 Feb 2005)

excellent John keep it coming


Bean


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## Melville (4 Feb 2005)

John ,you say you use pocket screws,are these more cost effective than say the dowel type screw we see on a lot of cabinets. I would think the dowel screw would have more holding power and, they come with a step drill bit .that does the hole in one go.

I take it you are putting the screw hole on the blind side of the panel in which case you would only be entering 16 or 18mm of stuff ,do you find this strong enough? , although i have not used this method myself.

Do you find by hand making your cabinets that your market is limited to a select customer. Excellent thread though John, well done.


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## tim (5 Feb 2005)

Keith,

I use the dowel type (confirmat) screws a lot mainly because I often need to take the furniture apart a couple of times and it doesn't reduce holding power - I make a fair bit of walk in closet stuff and bedroom gear so working on my own sometimes means that the only way things are getting upstairs is in pieces.

I find them quick and easy to use although if I lose concentration when drilling its easy to let the drill wander a little and then when you come to put the big fat screw in it can sometimes be a little to close to the surface and deform - very rarely breaks through but at c 3in long you can see that any slight deviation is critical.

From what John says it looks like once the cabinet is made it stays made so the poscket screws are fine plus in ply there will be ample holding power. 

John, great thread and very interesting and helpful. Confused by one thing:



> A couple of 50 mm wide cross pieces, one across the back where the top of the back panel will be (not all the way to the top or it will get in the way of the brackets), and one across the top at the front



Are these strips like a sub top ie is the 50 mm width horizontal or are they vertical for fixing through the back and allowing the door to be shorter than the cabinet height to clear any worktop overhang? Not sure if I've made sense but its late so apologies.

Anyway look forward to the next installment

Cheers

Tim


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## Woodythepecker (5 Feb 2005)

John, i must say that you have done a great job in explaining how you build your kitchens, and to hear that SWMBO helps you along the way is excellent. I won't ask you who is boss of your company because if it is a normal household i think we all know.

Keep up the good work you are doing a grand job.

Regards

Woody


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## Alf (5 Feb 2005)

johnelliott":2dt0uszg said:


> I used to use biscuits, but the jointers aren't accurate enough.


Presumably your clamp requirements would increase dramatically too.

Fascinating stuff, John. Thanks for taking the time.

Cheers, Alf


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## johnelliott (6 Feb 2005)

Why _kitchens_?

It's the numbers. I have no particular interest in kitchens, if it was up to me I would make hardwood tables and chairs. But it would be very difficult to find enough customers willing to pay the kind of money that would be needed in order for me to make a living.

People's price expectations are baseed on what they see in shops. If it can be sold in a shop then it can be made abroad and if it is, then no English person is going to be able to compete.

Kitchen's, however, need to be designed, made and installed. Even if some of that work could be exported the rest could not. The result is that people expect to pay quite decent prices for kitchens. Even quite small ones can easily cost £5,000. 

The one that I am currently doing for £x,000 would have cost £(x+2),000 from MFI(from one of their dearest ranges), and I am quite happy with that much profit, or I would be if I was getting the stuff out faster. Having said that, I am incorporating a number of unusual features which will be quicker to build next time and which will provide me with several USP's (unique selling propositions).
I find that when I visit potential customers it helps if I can offer them features that the big firms cannot.

One problem that I have not yet resolved is the fact that quite early in the selling process I need to show my customers some kind of drawing of what I am intending to provide for them. I can draw freehand but I it's slow and difficult to change. I've had a go with CAD but learning how to do it burns up time that I don't have to spare, plus at my age my brain is shrinking and tying to get more stuff in it is very difficult. I've also tried commercial kitchen design software but it is unsuitable due to it needing to use standard cabinet sizes. Any ideas?

John


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## tim (6 Feb 2005)

John

I use deltacad for a lot of drawings (www.deltacad.com) just because its reasonably easy to use and there was a pretty long demo time but I agree with you its a job in itself learning to use those things.

When you quote the figures you do are you including appliances/ installation etc or are you just talking about the cabinets? Because £5k for a small kitchen inc appliances is a pretty good price I think. 

Also do you not think that people expect that your cabinets would be more expensive than those in MFI if they are being made for them rather than just out of a warehouse? Yet you show that you are undercutting (poor term but you know what i mean) MFI using better materials and bespoke cabinetry in your example. I would have thought that you could have made a premium on this irrespective of the amount of profit you were happy with rather than offer a lower price esp if your adding a whole bunch of other USPs.

Very interesting stuff.

Cheers

T


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## johnelliott (6 Feb 2005)

Tim
Thanks for your comments, just the kind of stuff I was hoping for.

Firstly, it was not my intention to undercut MFI, I didn't find out what they were quoted until after I had given my price. Admittedly they were offering a more elaborate kitchen, more (and smaller) cabinets, and lots of trim.

That's one of my major selling points, simple, elegant, no unnecessary details, very popular with the ladies, that.

No, I wasn't including appliances.

Quality is a very difficult thing to sell. People that sell quality items, Mercedes, Sony etc aren't able to sell the quality as such, they sell reliability, features, status etc. Difficult to do that with a kitchen. 

Also, although my birch ply cabinets are stronger and will last longer that flatpack stuff, they do have one major drawback, they are not covered in melamine. Melamine surfaces are ideal for kitchens as they are very hard and very washable. It's only the edges that let the stuff down. My cabinets are either painted or oiled and varnished, neither of which are as durable as melamine. All in all, I don't really say very much about how the cabinets are made or what they are made of, instead I concentrate on the fact that they can be made in whatever sizes the customer requires, and then I point out that I can make the wall cabinets slimmer than standard in order to maximise the light and feeling of space in the kitchen, stuff like that is what they want to hear.

I'm starting to find that once I get the call, the sales are not too difficult to achieve, subject to them being actually ready to buy ewhich frequently is NOT the case.

I have two main competitors, one is the established kitchen suppliers, and the other is 'all the other things customers can spend their money on'
I prefer the former

John

John


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## Alf (7 Feb 2005)

John,

I was wondering, do you take along samples of your materials, finishes etc with you? A mini cabinet to give an idea of what it'll look like? Or don't your customers really bother about that so much?

Cheers, Alf


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## Philly (7 Feb 2005)

John
Have you tried Sketchup? It is a quick and easy program to get to grips with-but very powerful at the same time. You can knock up views really quickly, and they look very professional.
I have a couple of pics here of my workshop that I layed out with Sketchup-http://www.philsville.co.uk/layout.htm
Have a try, it is superb.
Hope this helps
Philly


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## tim (7 Feb 2005)

Philly,

Those pics look great - how long did it take you to master the program and how long d'you think it took to draw those pics. 

One of the probs I face regularly (which John alluded to) is that customers expect to see drawings very early on in the process - well before any money has been committed and if a program takes an age to learn or lots of time to draw up pics then its pretty annoying to waste hours on a lost sale - yet at the same time it has to look great often to make the sale (esp where client imagination is low).

Also not sure that the dimension on the diagram is accurate enough! :wink: 

T


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## Philly (7 Feb 2005)

Tim,
I reckon a couple of hours and your in. It has some great instruction videos with it that really get you going and there are extra ones on their web site. As to dimensions-you can make it as tight as you need. My workshop pics are close enough to get an idea of layout. The program also has some interesting render options to allow you to make "sketch" type drawings-they look great and will impress the clients better than anything I can draw by hand! :wink: 
Cheers
Philly


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## tim (7 Feb 2005)

Philly

I was joking about the dims - 4 decimal places!!!  

I've just looked at the price $475 :shock: I know not much compared to Autocad etc but still a lot. Do you think I'll be able to learn enough in the 8 hour trial time to get a real sense of its capabilities?

Cheers

Tim


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## johnelliott (8 Feb 2005)

More thoughts on pricing

My wife (who works full time in the business) and I were sorting through the potential jobs I looked at over the weekend. We know roughly what's involved in making each one, the materials and the likely time. What we don't know, of course, is how much is the customer prepared to pay?

So, when we decide how much to ask, we have to choose between two different pricing philosophies- 

a) We already know that we must not drop below a certain price. Let's say in the case of kitchen A, that that price is £6,000. When pricing A should we ask for £8,000 to cover unexpected problems and the fact that things always take longer than expected? Well yes, indeed we should. Trouble is, what if the customers had £7,000 as an absolute price ceiling? Then we wouldn't get the job. That would be OK if we had other jobs waiting. At the moment, though, although there is plenty in the pipeline, pipelines have a habit of drying up unexpectedly.

b) the other philosophy is to try to keep the price as low as possible. This way we are more likley to come in under the customers' price ceiling and are therefore more likely to get the work. Also, the customers are more willing to wait longer for us to start the job and to put up with any other inconveniences that might arise. The problem with having no padding in the price is that we absolutely must make sure that nothing goes wrong, or be prepared to burn the midnight oil if it does.

My wife and I discussed this for some time, and in the end decided to go with philosophy b, and keep our prices as low as possible. After all, a low prices is only a potential problem if we GET THE WORK, which is, of course, the name of the game (and the thread). Making the profit is the other part of the problem but I would prefer to cope with the problems of achieving speedy and efficient production than to cope with the problems of not getting enough work (been there and didn't like it)

John


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## Chris Knight (8 Feb 2005)

John,

You describe a classic descision tree question. If you are able to assign some probabilities to the various possibilities (such as the pipeline drying up, such as the possibility of hiccups etc. Then you can build a very simple model to help deternmine the most profitable course of action.


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## Mdotflorida (8 Feb 2005)

Very interesting John. Many thanks.

I'd like to know about sourcing potential customers. For every 1 person who wants a bespoke kitchen there must be many many more who just visit their local warehouse. Do you advertise. If most of your work now comes via word of mouth. How did you do it when you were starting out ?

Also, is it just a job for you now. When I was younger I was really into hang gliding. So much so that I became an instructor and taught for a living. Eventually though, because of doing it every day, the last thing I wanted to do was to go hang gliding on my days off. Do'es doing it for a living take away the enjoyment of woodwork in your spare time ? 

Jeff


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## tim (8 Feb 2005)

John,

Do you ever ask what their budget might be in your opening discussion? I know its a gamble but sometimes customers are so unrealistic that their ceiling -or what they say is their ceiling - (in my relatively short experience its usually 20% lower than the actual) can be so way off reality that its not worth pursuing the conversation any further eg dining table plus 6 chairs and 2 carvers for £1000. When I ask the question I normally phrase it very openly and say that I use it to determine the approach and possible materials/ fittings etc. 

I do it because I have been caught out at least a couple of times where I've done drawings for things etc etc to find out that the customer was way off the park in terms of realistic price. I've also found out after a job by hearing from a friend of a friend that the customer was delighted because they had a budget of twice what I charged :shock: 

I think that you are right about keeping prices as low as poss - I regularly burn the midnight oil when the padding disappears! but I also know that if I've underpriced I end up resenting the job which seems to manifest itself in a variety of ways (ie not wanting to go the extra mile - because I feel I already have etc) all my fault I know. 

So now I tend to include a variety of options on fittings, trim etc. Some of these options take the figure below the budget but the difference is purely materials so if they choose the lower priced ones then it doesn't eat into profit and some options take it higher than the budget and these do have some profit attached. I appreciate that I'm not talking about kitchens in all these examples - I make a lot of built in stuff but they often have very similar fittings.

Chris, I'd be really interested in making a model but so far I've not been able to gauge the probabilities since there are so many differences in the jobs and responses. Maybe I'm being dumb but I'm not sure how I'd go about feeding valid numbers into the model and thats surely whats needed to get a useful result.

Cheers

T


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## beech1948 (8 Feb 2005)

tim":10bbyqxa said:


> John,
> 
> Sorry guys....long rant follows...
> 
> ...



Hi,

First I have to say that my sales experience is 23 years of high value ( £1million+) sales in IT. However, selling is selling its just the materials that differ..wood..electronics...not a lot of difference.

I would think that asking the client about their budget is essential. That is the question is not "what will you pay" but:-

What is your budget for the kitchen
What is your budget for installation, electrics, plumbing etc etc
What sought of kitchens have you looked at..what do you like
What price ranges were these in

What is most valuable about finish, service, your needs,to you..what do you want
If the price came out £2500 above your stated budget would you still be interested ...if there is enough benefit to you

I would then move on to find out what they expect as benefits and have a check list of 15 benefits they have not thought of to offer...I believe people buy benefits and not things...even if the benefit is just to show off rather than have a spiffy new kitchen.

Looking at companies such as BMW and Mercedes can be instructive.

Range of cars equates to a range of differient price/quality fittings or finishes

Options on every thing helps with marketing and pushing envelope of budget or expected price and makes it their choice. In fact making it their choice is very important as they need to be able to choose the price level and gadgetry. It might be possible to double your profitability by using this "options marketing" approach

I would not even talk about competitors. Be aware of them for your own uses eg pricing, but just ignore them and project utter confidence that your kitchen is the best available bar non. 

This is not arrogance but a way to build your brand as you + your skills + your performance + your references + delivery to choice + professional quality + high quality materials. I have come to think that personal branding is probably the most important element for a small ( 1 or 2 person ) business. I have based this on starting and having a successful 2 person company delivering executive coaching...a very personal purchase if ever there was one.

Its also possible that the myths around what you do are actually your fears. Won't or can't pay enough...be low price etc etc. I think you need to test these assumptions out or find clients who will pay more. Defining your market will help. Who will pay more profit to you...council houses or country houses....salaried or business owners. Are you getting to the best market for your business..if not why not.

Oh God...there I go again....I will try not to get too carried away in future.

Alan


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## Anonymous (8 Feb 2005)

Thanks Alan, really interesting

And thanks to John - I really have learnt a lot from this thread :wink:


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## johnelliott (8 Feb 2005)

waterhead37":13pc32a4 said:


> John,
> 
> You describe a classic descision tree question. If you are able to assign some probabilities to the various possibilities (such as the pipeline drying up, such as the possibility of hiccups etc. Then you can build a very simple model to help deternmine the most profitable course of action.



That's an interesting idea, Chris, and I would like to know more about it. As Tim says, though, the problem is to put a numerical value on the probabilities. There just isn't enough data yet. 'Winiging it' is a goood expression for what I am doing at the moment

John


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## johnelliott (8 Feb 2005)

Mdotflorida":m7ix27sf said:


> Very interesting John. Many thanks.
> 
> I'd like to know about sourcing potential customers. For every 1 person who wants a bespoke kitchen there must be many many more who just visit their local warehouse. Do you advertise. If most of your work now comes via word of mouth. How did you do it when you were starting out ?
> 
> ...



Jeff,

I advertise in a local free paper. It'ds quite a bit classier than the average freebie, and covers an ideal (for me) area, couple of large market towns, plenty of villages, good mix of retired people, yuppies etc

Yes, much of it is quite boring, some of it is downright scary. I still enjoy most of it, though. When I leave a finished kitchen and the customers say they really love it then that makes me very  

I don't have spare time as such, but if I did I would probably do something musical

John


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## johnelliott (8 Feb 2005)

tim":24zz2qf1 said:


> John,
> 
> Do you ever ask what their budget might be in your opening discussion?



I could try that, anyone know where I could get some sodium pentathol? I've hinted at it a time or two, but haven't got a useful reply.

One problem is that many people, when they first start looking at a project, don't have a budget at all, they only decide on one after they've heard the price.

John


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## Noel (8 Feb 2005)

John, very interesting thread and I have to agree with you that keeping prices as low as possible is sensible. With regard to trying to ascertain the customer's budget, this can be tricky. I find in my business (importing and sourcing new cars) that asking "how much do you want to spend?" can elicit two types of responses 1) customer will automatically go into defensive mode and think that whatever price they mention I'll quote £10 shy of that figure, so will reply "no sure" etc. 2) be perfectly truthful and tell exactly the budget they have to spend.
When I hear response 1, I can generally tell within a few minutes if I'm been messed around or the customer is just tyre kicking. Sure, sometimes I'm wrong but I think you'll agree that you do tend to get a knack for these things. With response 2 it's puts me and the customer at ease when we know where the goalposts are and have a good honest and decent conversation and hopefully conclude a deal in due course.
Of course we all get the "I can get it for a grand less" type of customer. Knowing slightly more about the motor trade than they do and knowing that they are either lying or have been offered something inferior, after a quick chat I'm quite happy telling them that they should take the other deal. Sometimes they come back, sometimes they don't.
Anyway, as I say, good thread.
Did you manage to get any more clamps, BTW?

Noel


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## Chris Knight (9 Feb 2005)

John,

There is a very good explanation of decision trees here http://www.mindtools.com/dectree.html You can get software to do the calculations but for a few nodes, they are easily done by hand - enough to give you the flavour of it at least.

Of course there is a strong possibility of GIGO but even so, the insights you can get into the really sensitive parameters can be very educational.


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## Keith Smith (9 Feb 2005)

John I have just found this thread and found it very interesting. 

Where I live there is just not a big enough catchment to specialise in one thing unfortunately, on the other hand I don't have the overheads you do.

I have been writing for The Woodworker for the last 18months and now make a big thing of that in my leaflets and advertising. It certainly helps a lot. I was just wondering if you could get yourself featured in the local ****shire Life magazine. I would have thought they would be interested in the partnership you have with your wife and the fact that your kitchens are completely bespoke; it would make an interesting article. 

Then you can do the "as featured in" approach, people will pay more money and I would imagine you are more likely to get commissions.

Keith


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## tim (10 Feb 2005)

John,

What typr and grade of Birch ply do you use? Could it be left unpainted but varnished or lacquered ie are there lots of knots? I'm keen to get away from using so much MDF and I'd like to find an alternative - esp if its for a non painted finish.

Cheers

Tim


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## johnelliott (10 Feb 2005)

Keith-
I am going to have a kitchen featured in the local paper that I advertise in at the moment. I have thought of advertising further afield but am wary of being contacted by people more than say 20 miles away due to the number of journeys which are necessary before actually getting the sale. 

Tim-
I use BB grade birch ply,t he only type Edens are able to supply. Some shhets are virtually clear but most have a number of repaired knots. The main advantage of painting is being able to tie together the differnet materials ie mdf and ply. By the time it's painted it all looks the same. It also takes care of the edges. If I didn't use paint I would have to start edge binding

John


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## Woodythepecker (13 Feb 2005)

John, how much deposit do you ask for when your client orders one of your kitchens?

I have it written in to my terms and conditions that i require 45% up front, with the remainder due upon delivery. Even before i set up on my own and i was working as a cabinet maker for someone else i used to ask my private customers for this amount.
Why then after not receiving a penny am i now having to take a 65 year old woman to court for a £11,000 library i built for her? Stupidity thats why!
"This is a retired window" who after living as a ex-pat in Spain for the last 30 years came home after her husband died. I can trust her can't i? The simple answer was "No I Couldn't"

When i asked for the deposit i was given the sob story that she had to wait for her bank account to be transferred back to the UK. So i got on with the job, after all i would be working in the house so it isn't as if she was going to run off. Even when i finished the work i had no doubts about getting paid, she kept on telling me that the Spanish bank were holding the transfer up, and so as far i as was concered they were to blame.

I have since found out that far from coming back to England she is in fact moving to Spain permanently, and selling the house here, so i presume that the library and the other work she had done by different trades people was done to make the house more desirable.
Anyway my solicitor is going to put a charge (i think he called it that) on her house, which means that went she sells it i will receive the money she owes me, but even then i will be second in line behind the bank. apparently in any claim like this the bank or finance company is always first in line.
My solicitor said that this is not the first time she has done this sort of thing. She buys a house gets people in to give it the works, which puts the value up, and then sells it. He said that if i had waited another few weeks before contacting him she would have sold the house and once in Spain there is nothing i could have done about it, short of spending a lot more then she owed me chasing her through the Spanish courts.

Do you know what really gets me? Two things! First of all, this sort of person does not give a dung. If i had not been lucky enough to have a couple of commissions after the one i did for her i would have went down the tubes and been bankrupt. As it is things will be tight for a while. But i bet that this never entered her head .

Secondly how could i have been so stupid to be taken in by this person? I thought that i had my head screwed on. It is so very embarrassing and if i didn't think that it was worth warning you guys to be careful and not to get taken for a mug, i would not have admitted it to anyone.

Sorry to spoil this very interesting topic.

Regards

Woody


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## Chris Knight (13 Feb 2005)

Woody,

That is a rotten piece of luck! I think it easy to see how you "fell" for it. Even crooks get older and wiser I guess, so that she has had a good while to perfect her technique.

Good luck with getting your money back.


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## johnelliott (13 Feb 2005)

Woodythepecker":1zw1g1gf said:


> John, how much deposit do you ask for when your client orders one of your kitchens?
> 
> I have it written in to my terms and conditions that i require 45% up front, with the remainder due upon delivery.



Woody, what a ghastly story. People such as the one you have been ****ed over by have part of their brains missing. It's a sort of sociopathy. As far as I'm concerned, they need to be removed from society altogether, ideally off planet if you know what I mean. Perhaps something bad will happen to her.

Anyway, to answer your question, my standard terms are that I get 45% at the start of the job, then, when all the stuff is ready to install, the customer comes to my workshop, inspects it and pays another 45%. The final 10% when everything is installed to their satisfaction.

I used to offer credit card facilities. Works with a text message, cost £6 a month and 2.2% commission. Trouble is, if the customer says they haven't had the goods then the credit card company just takes the money back out of your account and leaves you to sort it out with the customer. I decided it was just too risky, and no longer offer credit card doings.

To continue the thread, I've got three quotes out at the moment, and three sales calls booked for the coming week. I've got enough work for the next four of five weeks anyway, but I know from experience how quickly that can change.

I've been thinking a lot about marketing, aided by the advice and opinions that I've read here. My main wondering at the moment is whether I ought to have a showroom. It means paying more rent, and having enough spare time to make the kitchen/s to put in it. I don't actually need one, but it may help to attract customers with more money to spend, rather than most of my current customers who are looking to pay 'local artisan' prices.

John


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## tim (13 Feb 2005)

I only ask for 25% - am I being an silly person? I normally get them to agree to stage payments ie if its a full kitchen and it takes 3 months or so then I ask for 25% up front, 20% after another month, 20% the month after and the balance on completion.

I find that this easier for customers to accept esp on a big job and that 25% covers materials and some labour.

I didn't realise itwas common practice to ask for so much up front. Maybe I should do that.

T


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## Woodythepecker (13 Feb 2005)

Chris thank you.

John i couldn't agree with you more. The sad thing is if she ever got taken to court the judge would probably see her as i did a harmless old woman and let her off with a smack on the wrist.

I think that your idea of asking for a further 45% just before the commission is fitted/delivered and the other 10% when you finish is perfect. Although it would not have helped with the above it would certainly help ease my mind in the future. Because as you know, depending on the job, we can lay a lot of money out upfront and all it takes is for one or two people to default, for money problems to occur. The companies i deal with have 30 day accounts but i bet if you kept them waiting for much longer then 30 days they would not be to happy and the credit would soon stop.

For the very reasons you state i would not take credit cards.

As for promoting/advertising my work. I have been pretty lucky, because as i have said, before i started my own company i used to work for someone else and i got a lot of private work while i was there. This gave me a nice client base to start with and inturn through word of mouth i have got more work.
I have also got a good few clients from a table i made for my solicitors office. Which led me to design and build one at a reduced rate for my dentist, and he promotes my work for me. You would be surprised at how much business just these 2 pieces have brought in.

A showroom could be a very good idea because as you say it might attract clients with a bit more money. As for finding time to make the kitchen/s to put in it, couldn't you build a extra cabinet here and there while you are making a clients order. Instead of 10 cabinets for Mrs Bloggs you could do 11 and Mrs Smiths order of 14 could become 15 or 16. This way you are splitting the time you have got to find between a few customers order.

Let us know how the idea of your showroom goes.

Regards

Woody

Edit, sorry tim our replys crossed. Yes 25% is no where near enough. As you can see from my problem thee are people out there that will rip you off.


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## Alf (13 Feb 2005)

Woody, that stinks. My commiserations. "Little old widder women" are a running joke amongst old tool buyers as a soft touch, but on this evidence I hope I never come across one. :shock: Hope it turns out okay.

Cheers, Alf


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## johnelliott (13 Feb 2005)

tim":szpd1x6a said:


> I only ask for 25% - am I being an silly person? I normally get them to agree to stage payments ie if its a full kitchen and it takes 3 months or so then I ask for 25% up front, 20% after another month, 20% the month after and the balance on completion.
> 
> I find that this easier for customers to accept esp on a big job and that 25% covers materials and some labour.
> 
> ...



Do you know how much MFI ask for up front? The whole lot, every single penny. Same with all the other national kitchen firms that I know of. People are used to that. 

The reason I ask 45-45-10 is the '10'. That's how much I am prepared to risk. The 45-45 is just what's left over when the 10 is subtracted.

John


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## Woodythepecker (13 Feb 2005)

Alf thanks very much. It says something about the world when you cannot trust a woman of her age.

Anyway once bitten twice shy. As long as i learn by my mistake (and get my money) thats all that matters.

Regards

Woody


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## Adam (14 Feb 2005)

Woody, 

Commiserations mate - like you say, learning from it is the main thing you can hope to get out of it. Sounds like she was a smooth operator - well honed, and also I reckon its quite an unusual scam method - I've never heard of anything similar before. It's not so easy to notice a scam when the situation is so plausable.

Hope you get you £££ in the end.

Adam


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## tim (14 Feb 2005)

John

This has been (is) such an interesting thread, thank you for starting it and taking the time to put so much into it. So far I have ‘taken’ quite a lot of the information and now I hope in some way to redress the balance by putting something back in.

As you may know I worked for a decade or so in marketing and as a result have a very strong understanding of brand development, consumer and retail marketing. I saw your question about the merits of a showroom and thought I would put down some thoughts as to the pros and cons from a business management perspective. I hope that it isn’t too dogmatic or full of dreadful management speak.

Please note that the use of You or I is simply for clarity – I can’t bear ‘one’ so these comments are not about you or me or our businesses (unless specifically stated)

Broadly, there are two types of showroom, which could be described as ‘The Enticer’ and ‘The Confidence instiller’. Briefly, The Enticer is the shop front where potential customers get drawn in to have a look at your products whereas ‘The confidence instiller’ is more about reassuring customers who are already interested in buying your products that they are up to the standard they are after and that you are also unlikely to disappear overnight. It goes without saying that the Enticer has to also incorporate the confidence instiller.

The big question is in effect twofold – Do I need a showroom? and if so, which showroom do I need?

I’ll only deal with the first question in this section because otherwise it will go on for ever (and may anyway)!

*Do I need a showroom?*

This is the pivotal question which spawns a whole load more. The good thing is that these questions can all be answered by objective, economically based answers although there may be some emotional reasons which overrule the more rational ones – such as ‘because I want one’. However, by addressing the rational ones first you can quickly assess how much the emotion is costing you and choose to go with your gut or not.

To answer this question fully, it is necessary to establish the overarching objective of what the showroom will ultimately achieve. 

If for example, the hypothesis is that it will be used to gain better paying, more affluent customers then you need to be sure that these potential customers use showrooms as their key (or one of the key) methods of deciding what to buy. If they do then you have to be able to or be prepared to compete with the other showrooms out there. 

This necessarily means diversifying your business and becoming a retailer as well because these customers will expect you to be pretty hot at that too - if you don't look as impressive as the other showrooms then the implication will be that your furniture or work won't be as good either. That also means being in the right position to secure maximum footfall, have the right type of stock in the showroom and have the right person manning the place who you trust to present your business to these customers in at least as good a way as you would (unless of course you are intending to manage the showroom as well as make the furniture!). 

All of that adds up to a fair amount of cash (not forgetting that you will still need to promote the showroom and your business as well anyway). 

Doing a quick bit of back of fag packet maths, let’s say that to lease a high street showroom costs a conservative £50k a year. Add onto that all the other costs – manager’s salary, insurance, utilities, changing stock, promoting the showroom, first year shopfitting costs etc and I don’t think it would be too difficult to get to a figure approaching £100k. 

That’s a lot of kitchens just to cover the costs. On top of that I imagine that one of your business USPs (and I am talking about you, John and me and probably most other single or two team furniture makers) is the personal touch ie hand made for them by you. 

Therefore the next question is can you make enough of these kitchens in a year to cover those overheads without farming out stuff to other makers, which aside from removing the truth behind your USP also reduces the profitability of each job (although granted it may still improve your overall financial position). It also means another diversification of your business which you may or may not wish to do.

Plus, if someone comes into a showroom to buy one of your kitchens (or have it revamped), how quickly could you do that for them? Most people who go into a shop expect to be able to purchase relatively quickly ie in the mood to buy. If your leadtime is 6 months (which is potentially feasible given how many kitchens you'll need to be making if the showroom is to be successful) then you need to gauge how many of these potential customers will be prepared to put down their 45% deposit that far in advance.

Another key question to answer is why would the customers you want, come to you rather than go to others who offer similar products?

I’ll come clean now to the rest of the forum, I was the guy who PMed John in the first place to get some advice which started this thread. I had been approached by someone to quote on a new kitchen for them and I knew it would be high end, however didn’t know enough about the quoting side of the kitchen business so asked John. 

Anyway, one of the reasons that she wanted me to quote on this (and you could replace ‘me’ with ‘an individual maker’) was that she didn’t want something that looked like it had come straight out of a showroom and nor did she want to have to deal with someone who wasn’t actually going to make it themselves. So in this instance, actually having a showroom may well have removed me from the quoting opportunity. (I don’t know what the outcome of our meeting is yet – I’ll let you know).

My rambling point is that if the high end customers want to feel like they belong to a private members club and have special things made for them (and them only in their minds) then they don’t necessarily want to see their kitchen on the high street.

So to round this off (I didn’t realise I was going to bang on so long – sorry), to open a showroom is a colossal, long term risk that needs significant investment. You could do a lot of advertising for the same level of investment or even put in a couple of kitchens in that social circle for reduced rates to act as showrooms in themselves. You also don’t need to do a lot wrong with your showroom to sink the business and if you decide it doesn’t work for you and you’d be better off not having one again, the very act of closing the shop (not the business) can send very negative signals to the public.

I am of course happy to have these comments shot down or debated since they are only a view and are not necessarily ‘right’. I also hope it doesn’t come across as patronising which of course its not meant to, its just that a lot of good marketing is in effect common sense and therefore often obvious, which then sounds patronising.  

Cheers

Tim


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## Adam (14 Feb 2005)

Tim, (and John)

When you look at the costs you mention, perhaps you could go to a half way house of some of the following

A) Commisioning a really good website - and I mean really good one - with significant amounts of info and updated with client feedback etc. Lots of photos, and something that "oozes" profesionalism.

B) Have a professional portfolio created - perhaps even having a local professional photographer catalog previous work, including obtaining feedback from clients. Then having this printed on high quality gloss paper.

C) Having a good quality glossy brochure made up - with photographs of manufacturing, previious jobs etc. Something you can leave with the client. Maybe a section explaining how you had to overcome some unusual layouts, or particular custom features - with an emphasis on how only a custom suppluer could achieve this.

This would be cheaper, although such things are not cheap, and would require a reasonable financial committment - to meet the expectations of a "high-end" purchaser.

On an aside Tim, I can well understand a customer wanting a kitchen that didn't look "standard" - a friend of mine wanted exactly that, and in the end, ordered some beech planks, and handmade the lot. He's chuffed to bits with how it turned out - precisely because it "fits" into his old cottage.

Adam


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## tim (14 Feb 2005)

Adam,

Totally agree. There are loads of ways that you could market the business - I was just replying in particular to John's musing about showrooms (and obviously Woody's interest as well).

I also agree with you about 'cheapness'. Basically if any form of marketing is cheap - it usually looks it. The thing to consider when setting up a marketing budget is cost effectiveness - literally Return on Investment. The other thing to do remember with any marketing plan is consistency both in terms of the message used and in the way its communicated. ie don't talk about 'exclusive and premium' in one message and then in the next talk about pricing and discounts. 

What I mean about the way its communicated (and in part refers to my previous point about the quality of the showroom you are able to fund) is the format and its production value. 

A good example I imagine most people have seen at some time is a TV ad by some local business that somehow has managed to get a slot in one of the ad breaks during a Champions League match or a film premiere. Generally these ads while not cheap cannot stand next to the other ads in the break eg Nike, Guinness, Sony without looking homemade. So although the ad probably cost £10 or 20k to make and the airtime cost another£10 or £20k, the only message that is successfully communicated is 'this is us, we are here and we're a bit rubbish!' Or you get a flyer from some new smart restaurant opening in town that looks great but its printed on what looks like loo roll. First impression? 'we look good but our attention to detail and use of quality ingredients is a bit suspect!'

Just for the record - I do work!! Its jusut that I have a pile of admin to do and I need to wait in for some deliveries plus the finish on the table I'm making is drying at the mo so I'm at a loose end!

Cheers

Tim


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## Chris Knight (14 Feb 2005)

I think there may be a halfway house - or other fractions of a full-blown showroom. I have been to quite a few makers who have finished stuff in a separate part of their main workshop premises and this seems to me much better than a high street shop for the sort of "custom-feel" you folk are talking about. Certainly it won't get passing trade but anyone who knows of you would be able to visit and depending how messily you work, any work in progress can also act as a demonstration of your approach and standards.

A really good website is probably useful too, as Adam says but I reckon it can be quite expensive and even with professional help can consume quite a lot of your own time. There are many pitfalls too for the unwary (like losing your site, or domain, server crashes, poor backups etc. etc. and many folk have been burned by unprofessional website designers in these areas.


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## tim (14 Feb 2005)

> I think there may be a halfway house - or other fractions of a full-blown showroom. I have been to quite a few makers who have finished stuff in a separate part of their main workshop premises and this seems to me much better than a high street shop for the sort of "custom-feel" you folk are talking about. Certainly it won't get passing trade but anyone who knows of you would be able to visit and depending how messily you work, any work in progress can also act as a demonstration of your approach and standards.



I agree with you in part Chris, and in fact the 'confidence instiller' which I mentioned at the beginning is probably exactly the same as you describe. There are a few reasons why I don't agree with you fully (and these are also to do more with the way I'd prefer to work rather than I am saying that you are wrong!) . 

Firstly, space. If I had enough space in my workshop then I'd be using it for working in/ finish room etc etc. rather than filling it with speculative pieces.

Secondly, control. This covers a bunch of things actually: 

Control of working efficiency: I don't know how much time I'd want to take out of my working time to discuss the minutiae of furniture with 'drop in' customers esp if I was in the middle of a glue up or hitting a deadline. Therefore, I think I'd have to make it 'by appointment' which in a way is what I do anyway - except that often I take pieces to people to show rather than see them at the workshop. 

Control of perception of the business: My workshop isn't very big or that impressive but it doesn't mean I can't turn out work that is both big or impressive. Yet if a customer came to see me at my workshop without having met me or discussed the kind of work I do (or that they wanted) then I wouldn't want them leaping to the wrong conclusions.

Control of perception of my abilities: This probably doesn't apply just to me (I hope :shock: ). If a prospective customer turned up at my workshop when I was nearing the end of a big commission, particularly one that required installation on site somewhere , the only impression they could gain is one of semi organised chaos (at best). For example that MDF cabinet (white one) that I posted some pics of a couple of weeks ago - well for the week before that was installed, there were 9 or so boxes stacked up in two piles, shelves and doors lying on every available surface for painting (and or drying) and nothing looked that brilliant. Yet the end result looked great, the customer was really happy and has also recommended me to a few of his friends. I know that we all as woodworkers can perceive what most WIP is going to look like but in my experience most punters are not able to judge either approach or standards based on what they see. Let me qualify that - obviously, if you have a leaky workshop with rusty tools then its obvious to most that the quality of your products is possibly not what they are after, but most customers wouldn't be able to spot if your work was really good from what they see in your workshop unless they have something to compare it to. So from a commercial perspective, there is potentially more to lose than gain in this scenario.

The third and final thing is cost. My workshop is at home - it does not need to attract business rates as such, I also don't need public liability cover or parking spaces etc etc all of which I would if it was 'open to the public'.

As I said, not everyone finds those conditions a barrier but at the moment I am lucky in that I have about as much as I can handle and this all comes from word of mouth - which normally means that somebody else has been telling then how much they like my stuff (much more powerful than me spouting a pile) and they will probably have seen my finished stuff wherever they heard about me.

I am putting a website together at the mo which I agree with you is a necessity these days (and is expected which is possibly more important) but I'm careful as to what I want it to do. Basically, it will be for me to direct people to images of my work and what I'm about rather than some 24/7 retail site which to be honest wouldn't be that appropriate anyway plus as you say, could take up a huge amount of time.

The really good thing? My delivery has just arrived! If only I had a showroom where they could have left it :lol: :lol: :lol: 

T


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## Chris Knight (14 Feb 2005)

Tim,
You make a host of good points re the workshop cum showroom!

BTW what delivery is that?


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## johnelliott (14 Feb 2005)

Tim, your fingers must be tired from all that typing. Good stuff. Your worked example of a high street showroom is illuminating, and I'm definitely not going to do anything like that.
I have wondered about renting the empty unit next to me, will continue to weigh that one up.
As far as web site goes, yes, good idea, but only as back-up to local advertising. I don't want to attract enquiries from any further than 20 miles or so.

Here's a good question. When pricing my work, should I be thinking about the maximum I can get for any particular job, or should I be thinking about asking for the _minimum_ that I need? I'm inclining toward the latter at the moment. 

John


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## tim (14 Feb 2005)

> BTW what delivery is that?



Some flowers for my wife :wink: 

Chris, I was thinking about this whole workshop/ showroom thing more while I was out with the dogs - (the great thing about a forum like this is that by having to write stuff down it makes you (the author) think about it more). 

I think to put all that spiel above a little more succinctly (not difficult  ) would be to say that every customer meeting is the same as a job interview and as such I want to present myself and my business in the best way possible to get that job or contract. I want to be excited at the possibility of the commission and I want them to feel that my business is special and that they are special to it. There is no way that I can guarantee to be able to do all of that if someone just drops in. I don't want anyone to catch me 'teaching a tool a lesson' or being just a bit jaded. All I have to sell in my business is me, my expertise and services. 

I know that for those who work in the corporate world how horrifying it would be if a prospective client with a potentially lucrative contract turned up unannounced and then made their assessment as to your suitability for that contract based on overhearing you and your colleagues discussing last night's telly round the water cooler.

John, I had one other thought - I'm not sure who your bread and butter clients are (I know you do a lot of revamping and refurbishing etc) but it may be that the kind of thing you do for them is not appropriate for your showroom given that you are trying to attract a different market segment. 

There is a danger then that by excluding that they may feel less important to you or they may feel that you have become too upmarket for them and their wallets even though neither of things are true. Just like if the local pub puts in a fancy new restaurant, it can alienate everybody or it can make a mint!




> I think to put all that spiel above a little more succinctly (not difficult  )



Clearly, I lied  :lol: 
Cheers

Tim


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## Chris Knight (14 Feb 2005)

I don't know if you have read any of Jim Tolpin's books on making money at woodworking such as:-

http://images-eu.amazon.com/images/P/09 ... ZZZZZZ.jpg
http://www.amazon.co.uk/exec/obidos/ASI ... 78-4181414
http://www.amazon.co.uk/exec/obidos/ASI ... 78-4181414

I have read the second one (which I just note from the price has become a rarety!) and thought it had a lot of good stuff to say- I'll sell my copy for less than Amazon want!!


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## tim (14 Feb 2005)

> Here's a good question. When pricing my work, should I be thinking about the maximum I can get for any particular job, or should I be thinking about asking for the minimum that I need? I'm inclining toward the latter at the moment.



Wasn't that my original question to you? :shock: :lol: :lol: 

My theory is that you should know what the minimum is that you need to make on a job and charge as much as the client is prepared to pay. The difference between the two is the defining difference between a product and a brand and the way to deliver that is marketing (as you pointed out right at the beginning - benefits not features). 

You know the answer to the 'minimum' question unfortunately the other one is the million dollar one! Don't get me wrong though you can make a lot of money with a product but you have to have high turnover (thats how cash and carries make their money for example). 

In our line of work, I think its all about the fringe benefits because we can't compete with MFI in terms of efficiency and buying power. It is a given that the product will be great (and expected) where the value can be added as far as the customer is concerned very much depends on your target market. Once you have identified what that 'added value' is ( bespoke, project management etc etc) then you can add that on in cash terms and extract it into your bottom line. Tesco jeans £8; DKNY jeans £65 - you do the maths - they won't be paying much more for the basic product and even when you factor in advertising costs etc - they don't have to sell many jeans to make the same money that Tesco. 

Cheers

Tim


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## johnelliott (14 Feb 2005)

After a bit of toing and froing we both (customers and I), hopefully, have a pretty good idea of what I will be providing. So then it's time for the big question. How much. Let's suppose I reckon we (me and my staff) can make the stuff in 8 days, and install it in 5 days. Add on a couple of days for the unexpected and that comes to 15 days. I already know that I can pay the bills, pay for the materials and have a reasonable amount of discretionary spending on £400 per day. So, 15 x 400 = £6,000. So, do I ask £6,000 or £8,000? (or more even). 
It's a gamble, isn't it. It's reasonable to assume that the more I ask, the less likely I am to get the job. Not only do I have to compete with other kitchen providers, I also have to compete with Mr Letsleaveittilnextyear. 
I know from experience that if I quote on a job, and they decide not to go ahead then they are NOT going to ring me up and tell me why. Even if they did, I can't be sure that they are telling me the real reason.
So, no feedback to guide my bidding, the only thing I know for sure is the amount I need (in this case £6,000). Does it not, therefore, make sense to bid £6,000? If I had a longer queue I might take a chance on the ocassional job and bid high, but I don't.
Tim's and others' responses welcome

John


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## houtslager (14 Feb 2005)

John, nice too read your ideas and modus operadi on this subject.
Whilst working in Amsterdam and other places less extravgent  
I too have been hit hard by non payinbg customers.The biggest hit was £ 45K.Long story over that one.Another time maybe  
But to go on, my present method is very simerler to yours, allowing the difference of clients wallet thickness and their attitude when they enter MY DOMIEN ie workshop.
I now ask 50% up FRONT, 1/2 way through project another 25 - 30 % with the balence on DELIVERY 
NOTE I SAY DELIVERY, not completion, as fitting any furniture has TOO MANY PITFALLS  DAMHIKT :? 
The fitting is then charged on an hourly RATE !
If not for the time spent in FLorida I believe as does my bookeeper - I finally had a PROFITABLE formula and some good clients too  .
But then family called and blew it all outta the water.  
Now, I am in London and doing site joinery , at least it delivers cash and a little profit { of which most I'll blow at ALLY PALLY  }

So, anyone GOING there ON SUNDAY ?

all the best from HS in wet and cold London


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## tim (14 Feb 2005)

John,

I don't know the answer - it is all a big poker game and while the theory is fine, in practice we know its not so easy. One of things I have done in my testing of the waters is actually ask the question of the customers who said no. I figured what had I to lose. The answers were interestingand also surprisingly honest (I know that because in some instances I was able to find out if they were actually telling the truth (because people know people etc).

The main thing that was interesting to me was that those that had said that they had changed their minds and had either not got anything instead or had bought something from a shop whose prices I couldn't compete with anyway ie IKEA. Net result is that the sort of minor price sensitivity that is the difference between my profit bring reasonable and non existent would not have altered their purchasing decision.

Therefore it wasn't so much my pricing strategy but the fact that customers didn't know how much things cost - eg Oh I thought you'd be cheaper than MFI. The others were things like 'actually we've decided to move so while all those changes would have made a huge difference to our house, it still not going to be enough for what we need'.

Its really I suppose a case of learning how much you can influence people's decisions and then working out whether thats the right thing for your business. 


Cheers

Tim

"I don't know the answer, just the theory!"


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## tim (16 Feb 2005)

> Here's a good question. When pricing my work, should I be thinking about the maximum I can get for any particular job, or should I be thinking about asking for the minimum that I need? I'm inclining toward the latter at the moment.



John,

I've had a further thought on this - prompted in part by your question above, some of my own business planning and another comment that you made somewhere about your price on a job being lower than MFI's.

Basically, your pricing should only be sensitive to market forces and not to the customer's pocket - particularly if as in this example you are talking about the lower end of a market segment. Thats not a reflection on your work just this example. 

What I mean is that if a customer comes to you for a kitchen and you can make it for £6k and make the margin you want, even with all the bespoke elements that you offer and yet MFI or B&Q or whoever make a similar but less tailored kitchen for £8,000 then I don't recommend that you charge anything other than a minimum of £8k.

My reasoning - the customer has no bargaining power - he can't get your kitchen for less money elsewhere - plus by underpricing versus this datum you are in effect removing any possible financial value from your points of difference. 

Of course you could say well he can't afford a kitchen from MFi and yet I can still make money for that price so why not go for it. 

Obviously that would be up to you but the danger is you get known as the man who does cheaper kitchens than MFI and while demand may go up, your profitability per unit won't and you could lose your bargaining abilities with the customer. Therefore if MFI have a sale (which seems to be all the time) then there is a potential that your customer base is only made of the price sensitive ones and you lose them.

Not sure its helpful but I thought I'd put it down for you to see.

Cheers

Tim


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## johnelliott (16 Feb 2005)

tim":229mi0xb said:


> What I mean is that if a customer comes to you for a kitchen and you can make it for £6k and make the margin you want, even with all the bespoke elements that you offer and yet MFI or B&Q or whoever make a similar but less tailored kitchen for £8,000 then I don't recommend that you charge anything other than a minimum of £8k.
> 
> My reasoning - the customer has no bargaining power - he can't get your kitchen for less money elsewhere - plus by underpricing versus this datum you are in effect removing any possible financial value from your points of difference.



Tim, I can guarantee that if a customer says to me (before I tell him or her my price) that the alternative from another source is £8,000 then I will ask £8,500 minimum. Unfortunately it doesn't work like that. We talk about what they want and then I give them my price. 
It was only by chance that I found out that I was under the MFI price, well after I had bidded. I don't even know which range or what items were included.
My original question, -
"When pricing my work, should I be thinking about the maximum I can get for any particular job, or should I be thinking about asking for the minimum that I need? I'm inclining toward the latter at the moment"
applies where I am bidding completely blind, not only against unknown competitiors but against the (also unknown) constraints of the customers' wallets
John


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## tim (16 Feb 2005)

Sure, I understand that. All I was saying is that the only information that you can't get is the customer's financial capability. 

I went out and got every price list under the sun and when I'm quoting, I work out what the nearest equivalent would be in a competitive set and make sure I'm competitive unless I particularly want to beat them to win the job.

Even if you are (or would like to be able to) quote on the spot, you could write a quick spreadsheet that has competitor info in it and turns out a couple of numbers - their figure and yours. The punter doesn't have to see that.

T


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## johnelliott (16 Feb 2005)

tim":3drqe9m2 said:


> Sure, I understand that. All I was saying is that the only information that you can't get is the customer's financial capability.
> 
> I went out and got every price list under the sun and when I'm quoting, I work out what the nearest equivalent would be in a competitive set and make sure I'm competitive unless I particularly want to beat them to win the job.
> 
> ...



Yes, but even if I did know the competitor's price (and I would also need to know which range the customers had been looking at, and the number/type of units involved) I still wouldn't know how much money they had available (I realise that you acknowledged that). That one fact could easily over-rule everything I might or might not know about the competition's price.
I think asking for (to continue the example) an extra £2000 is best left til there's plenty of confirmed work on the books

John


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## tim (16 Feb 2005)

John

Of course you aren't a mind reader but you do have to make assumptions - or at least I do anyway.

If I know what I'm quoting for a customer, then the only comparatives that are of any use are ones that involve the same number of units and the same sort of materials. That way if the customer says to me that he can get that at MFI ie a similar thing to what I'm offering then I know he's talking rubbish. If he says that he can get a kitchen, then that may be true, but you can only quote on what they ask for. 

If I ran a Ford garage and a punter sais they could get a Porsche for the price I was asking then I'd make damn sure that it wasn't anything other than a ten year old one with 80K miles on the clock. I never rely on the customer to tell the whole truth - why should they. 

I believe its my responsibility to quote a price I am happy with for the appropriate work. If the customer is unhappy with that because they actually decide that something half as good is acceptable and go with that from someone else then I can still sleep at night.

If you want to cut loose from market comparisons and create your own pricing structures then thats your call, its just not what I'd rather do. 

Cheers

T


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