Need to sharpen up on costings, advice needed please

[CG2000]

Hello

We have a (fairly new) kitchen business, we have a showroom and supply and install kitchens. We are still having teething problems when it comes to pricing up our work and we are in need of a little guidance?

Our prices are 2 form - supply of kitchen and installation of kitchen. We are only a small business (myself and my husband) and we have built up a selection of good, reliable trades to install the kitchens.

The areas we are missing out, are when it comes to costings - fixtures and fittings, we price up for the kitchen and then can sometimes forget about the 'extras' such as fixtures and fittings (screws, silicone, rubble sacks etc) it is very hard to price these bits per job, are we best adding a sum to each job to ensure we are covered for these extras as part of the sales of the kitchen.

Secondly, we project manage the whole job, but as the fitters are paid direct from the customer, we find we haven't allowed for a fee to oversee all of this - so the sale of the kitchen covers for the time it takes for us to meet with our customer at the showroom or their home, putting designs together, delivery of the kitchen etc. But when it moves onto the second phase we find we haven't covered ourselves for the added value of us project managing everything and I wondered if anyone else has experience in a similar area and how they manage this?

Thank you in advance

 

[estwig]

It's a big mistake getting the clients to pay the men direct. How do you make a mark-up on their time, how do you make a mark-up for your time organising them, you don't, which is what you have said. Completely mad not to make money on your men, what's the point of having them!

I assume you either explain that any problems with fitting, 'don't come to us, talk to the fitter', or they do come to you and you have to sort it. Either way you're losing time sorting other people's problems, or losing business by not offering any sort of guarantee.

As for sundries, just add a percentage for every cupboard fitted

 

[Root 66 Woodshop]

Hello

We have a (fairly new) kitchen business, we have a showroom and supply and install kitchens. We are still having teething problems when it comes to pricing up our work and we are in need of a little guidance?

Our prices are 2 form - supply of kitchen and installation of kitchen. We are only a small business (myself and my husband) and we have built up a selection of good, reliable trades to install the kitchens.

Sorry, do you mean that I could go out and buy a kitchen and you'll provide installers?

The areas we are missing out, are when it comes to costings - fixtures and fittings, we price up for the kitchen and then can sometimes forget about the 'extras' such as fixtures and fittings (screws, silicone, rubble sacks etc) it is very hard to price these bits per job, are we best adding a sum to each job to ensure we are covered for these extras as part of the sales of the kitchen.

Set up a simple "Materials used" on excel... the first 4-10 lines input at least

[x] x box of screws,
[x] x rubble bag(s)
[x] x silicone
ETC....

then leave the rest blank - you add on the rest and you can do a simple costing sheet per each job.

Your last line should be your cost for labour... Assuming your tradesmen have quoted you a specific day rate or hourly rate or whether it's a per job price... you can add it to get all of your costings in one area...

Then, simply add your mark up...

Secondly, we project manage the whole job, but as the fitters are paid direct from the customer, we find we haven't allowed for a fee to oversee all of this - so the sale of the kitchen covers for the time it takes for us to meet with our customer at the showroom or their home, putting designs together, delivery of the kitchen etc. But when it moves onto the second phase we find we haven't covered ourselves for the added value of us project managing everything and I wondered if anyone else has experience in a similar area and how they manage this?

Thank you in advance

See above... have a line for Project managing cost i.e. your time... add your mark up...

should be covered...

We use a simple similar way of adding our margin, we always allow for every costing then our margin is calculated by our uplift... as long as we're over 30% we're happy.

If you send me a PM I'll email you our form so you can see what I mean

 

[estwig]

We use a simple similar way of adding our margin, we always allow for every costing then our margin is calculated by our uplift... as long as we're over 30% we're happy.

That makes you 30% dearer on a like-for-like product that can be compared, there isn't any value added for the 30%, no guarantee, no come back.

I don't get it, how can you ask the client to pay for labour and at the same time, expect a mark-up on that labour.

 

[Root 66 Woodshop]

Nah, our form doesn't work in the labour

That's your assumption based upon the information I've given

Plus, that's the trade price from the Labour point of view as per the OP... therefore you want to make something on the labour anyway.

It's not always about how much cheaper you are, or how much more expensive you are... you want the customer to buy you... not your product... if you can sell yourself well you don't need to worry about competition.

I know a guy who makes 10 Jewellery boxes a month, and sells them for £100.00 each... he makes them purely for one customer only... that one customer could quite easily go online and buy something similar but he doesn't... Why? Because he's selling the idea of the custom made boxes that he sells on for £200 in his shop to all of his customers who buy his products...

 

[CG2000]

It's a big mistake getting the clients to pay the men direct. How do you make a mark-up on their time, how do you make a mark-up for your time organising them, you don't, which is what you have said. Completely mad not to make money on your men, what's the point of having them!

I assume you either explain that any problems with fitting, 'don't come to us, talk to the fitter', or they do come to you and you have to sort it. Either way you're losing time sorting other people's problems, or losing business by not offering any sort of guarantee.

As for sundries, just add a percentage for every cupboard fitted

Thank you for that. Our other concern is the vat - when a customer goes direct to our tradesmen they are not vat registered so they avoid it, when we did a bit of market research when we first started a couple of other businesses said they do it that way so the customer avoids the vat I'm concerned if we do it through us we may scare customers away? or am I over thinking?

 

[CG2000]

Sorry, do you mean that I could go out and buy a kitchen and you'll provide installers?

At the moment...Yes



Set up a simple "Materials used" on excel... the first 4-10 lines input at least

[x] x box of screws,
[x] x rubble bag(s)
[x] x silicone
ETC....

then leave the rest blank - you add on the rest and you can do a simple costing sheet per each job.

Your last line should be your cost for labour... Assuming your tradesmen have quoted you a specific day rate or hourly rate or whether it's a per job price... you can add it to get all of your costings in one area...

Then, simply add your mark up...



See above... have a line for Project managing cost i.e. your time... add your mark up...

should be covered...

We use a simple similar way of adding our margin, we always allow for every costing then our margin is calculated by our uplift... as long as we're over 30% we're happy.

If you send me a PM I'll email you our form so you can see what I mean

Thank you and you have helped as I think I just need to go back over our product and service and break it down to add it on as a margin?

 

[Root 66 Woodshop]

If you're VAT registered, you're VAT registered... you pay the VAT the customer pays it... simple as.

One thing that really annoys me about some customers is their approach to the cost of the product...

You go into a shop and ask for a product, you're given a price... for example, a high security padlock for £86.95 + VAT... which comes to £104.34 including VAT why on earth do some people think they can haggle the price or they say, I can get the same thing from B&Q for.... [X] ?

Do you go into Tesco's and haggle for a tin of beans? No... so why ask in our shop?

The old saying, If you don't Ask you don't get! always springs to mind... but if you're not prepared to ask in Tesco's then bugger off...

 

[DontAsk]

I asked in the Homebase closing down sale. They said no, but also said come back on Wednesday when the next price reduction is scheduled Got a bargain.

 

[estwig]

Thank you for that. Our other concern is the vat - when a customer goes direct to our tradesmen they are not vat registered so they avoid it, when we did a bit of market research when we first started a couple of other businesses said they do it that way so the customer avoids the vat I'm concerned if we do it through us we may scare customers away? or am I over thinking?

The vat is only a problem if you make it a problem. We're British, we pay tax on everything and we know it! Being vat registered is a badge of recognition, a sign of reputation, something to aspire to, not something to be scared of. The other problem is scraping the barrel for ars*hol* clients, the ones who want to avoid vat, want the cheapest price, aren't the best clients to have. Up your game.

 

[Financial-Modeller]

To be blunt @CG2000 it sounds like you have a kitchen supply business, and you outsource installation, effectively connecting your customers to professional fitters for free!

I imagine many customers would be happier to have a single point of contact - you - and pay one invoice - to you - for supply and fitment of a kitchen. Surely those wanting to arrange supply and fitment separately to reduce overall cost would just buy a kitchen online and source their own trades to fit it and/or DIY.

Back to the original question about cost, remember that you need to apportion all costs for your showroom (rent, rates, utilities, insurance, etc) and all other costs (banking, accountancy, marketing, etc) across the kitchens that you are selling.

I suspect that the pricing problems are far more significant than tubes of sealant and bags of nails!

 

[CG2000]

The vat is only a problem if you make it a problem. We're British, we pay tax on everything and we know it! Being vat registered is a badge of recognition, a sign of reputation, something to aspire to, not something to be scared of. The other problem is scraping the barrel for ars*hol* clients, the ones who want to avoid vat, want the cheapest price, aren't the best clients to have. Up your game.

Completely agree. Thank you!!!

 

[CG2000]

To be blunt @CG2000 it sounds like you have a kitchen supply business, and you outsource installation, effectively connecting your customers to professional fitters for free!

I imagine many customers would be happier to have a single point of contact - you - and pay one invoice - to you - for supply and fitment of a kitchen. Surely those wanting to arrange supply and fitment separately to reduce overall cost would just buy a kitchen online and source their own trades to fit it and/or DIY.

Back to the original question about cost, remember that you need to apportion all costs for your showroom (rent, rates, utilities, insurance, etc) and all other costs (banking, accountancy, marketing, etc) across the kitchens that you are selling.

I suspect that the pricing problems are far more significant than tubes of sealant and bags of nails!

Thank you, yes I think we need to revisit our costings and break everything down, thank you for your help

 

[Stedurham]

In a business im involved in we get customers to pay fitting on day to them, as they are self employed. We do tell customer they can pay us if the want it same price plus vat! However if theres an issue with fitting they will come back to shop no matter what you tell them and are legally able to as you recommnened them. We charge the fitters a fee per job, this is an administration charge for booking fitting dates etc. I suggest you do the same, they should be on a day rate, increase day rate and get some money off them for each job
Accessories price it worst case and double it and add it to every kitchen