by William Sampson
email@example.com PRICING SURVEY
Two shops bid on the same Plain Jane kitchen. One in Pennsylvania says it’s a $4,500 job. Next door in Ne w Jersey, a shop says, oh no, $32,000 is closer to the right price. Not to be outdone, another Ne w Jersey shop takes the same specs, sharpens their pencils and comes up with $25,000. The New Hampshire shop that actu- ally did the job priced it at $12,500. Can the highest bid really be seven times what the lowest bid is? W hat’s going on?
Actually nothing unusual at all.
These are some of the
results from the 2017 FDMC
Pricing Survey that show huge
variances in price on bids
for the same work. Another
kitchen attracted bids from
$18,500 to $95,000. The results
reflect the same kinds of wide
variances consumers face
when seeking custom woodwork. Based on real jobs by
real shops, the survey makes
original bid specs available to shops across the country
to price as if bidding on the jobs in their own shops.
The results show not only wide variances in price, but
also striking differences in breakdowns for materials,
construction hours, finishing and installation.
Even with decades of business experience, as most
of the survey bidders have, they clearly still struggle
with pricing. There are as many pricing systems as
shops. Complexity of the process leads to errors and
Even when they come up with clearly questionable
numbers, they are reluctant to make adjustments. For
example, one experienced estimator in the survey was
confronted with clearly inadequate materials numbers,
such as $163 in materials cost for an entire kitchen. The
estimator’s response was that the low number came out
of the spreadsheet program the shop uses. We bet lots of
shops would be able to bid low on a kitchen if they actu-
ally could buy all the materials for under $200!
Similar wackiness shows up when you look at time
estimates even on a low-hours project such as a custom
contemporary coffee table. The original maker said he
had 32 construction hours in the table. Other shops
estimated from a low of 20 to a
high of 68. Still, the average came
in remarkably close to the actual
hours at 34.
So, what accounts for the huge
span in numbers? Clearly, there
are shops with high overhead and
low overhead. And they are located in diverse areas with higher or
lower price clientele. Some shops
are more automated than others.
Some have more experience than
others. But none of those factors consistently correlates
with the bids.
Shop rates probably come the closest to correlating
to high and low bids, but even that measure doesn’t
work. In the most popular project in this year’s survey,
a home library, the second and third lowest bids came
from shops with above average shop rates. The shop
with the highest shop rate ($145 per hour) actually
bid thousands less on the project than the high bidder
with a shop rate at $95 per hour.
So, if the numbers vary so much without consistent
correlation, you might well ask what value does the
survey have? To start go back to that estimator with
Custom work attracts pricing so wide that some high bids are five times
the low bid for the same project.
FDMC Pricing Survey: $18,500 or
$95,000 for the same kitchen?