HOW THE NUMBERS WORK
A typical breakdown of how a kitchen increases in cost from manufacturer to homeowner:
-
Cost of cabinetry to kitchen dealer - $10,000 -
Average dealer markup to contractor - 30% to 50% ($3,000 to $5,000) -
Cost of cabinetry to contractor - $13,000 to $15,000 -
Average contractor markup to homeowner - 15% ($14,950 to $17,250)
-
Your profit from the kitchen sale is
$1,950 to $2,250
An example of how YOUR PROFITS improve with Direct Kitchen Products
-
Cost of cabinetry to Direct Kitchen Products - $10,000
-
Our markup to remodeling contractor - 15%
-
Cost of cabinetry to contractor - $11,500
-
Improved contractor markup to homeowner – 30% to 65% ($14,950 to $17,250)
-
Your profit from kitchen sale is
$3,450 to $5,750
Our program enables you, the design oriented contractor, to have greater control over and receive more profit from your kitchen projects. Kitchen cabinetry is the most expensive component of a kitchen remodel and has the highest profit potential. Generally that profit goes to the kitchen and bath retailer, rather than to your company, because of their cabinetry expertise. Our program converts your contracting knowledge and design skill into greater profits.
Weekly we are working with contractors that have significantly increased their buying power (and profits) without having to open a showroom (cabinet manufacturers reserve their best pricing for displaying dealers).
We offer the following benefits:
- Design service using 2020 kitchen design software
- Order completion assistance
- Technical support for designing complicated areas and pieces
- Co-op marketing fund to help pay for samples
- Showroom for your use in Lancaster, PA
- Multiple lines of cabinetry to match budget needs
- Ability to purchase products like countertops, wood flooring, decorative hardware, and bath fixtures needed to complete your project
- A low risk way of increasing your profits by re-selling cabinetry
If being more profitable wasn’t a big enough benefit, here are a few more:
- You will avoid spending $80,000 to $200,000 on a retail showroom just to increase your buying power
- You will have the technical support needed to succeed in selling even the most complex kitchen project
- You will become a knowledgeable kitchen cabinet dealer and take control of the kitchen design process, as well as eliminate accountability questions
- Use your knowledge of the industry and commitment to our customers’ success to become a professional cabinet re-seller
Below is a story of two kitchens- price, size of the kitchen, and scope of work differ depending on where you reside in the marketplace, however, the principles and foundations that make our program a dynamic solution can be applied to any type of remodeling business.
The remodeler behind this story is not unusual or remarkable in any specific way. He is a member of the local NARI chapter in southeastern PA, has a design build focus- which is to say a focus on the overall job design not just the kitchen-and caters to clients that have strong, but not unreasonable expectations for merging form and function. He had a long term relationship with an area kitchen dealer, and was both skeptical and open to our proposal for buying cabinetry. After our initial phone conversation we met to discuss the main lines of cabinetry his customers buy, and matched them to those we offer. When he was comfortable that we were comparing equals I left with 2 kitchens to price-one Kraftmaid and one against Geppetto’s Cabinets (custom). Several days later I faxed back the pricing. We met again to make sure we were making an apples to apples comparison by going over the cabinet list item by item, and by comparing box construction, options, color palette, door designs etc…
We priced Kemper Cabinets with a paint glaze finish, plywood construction, and full overlay with an upper range door design- we were 17.33 % or $ 2000.00 less. Our price in Kemper was $ 11, 540.00 and the Kraftmaid price from his kitchen dealer was $ 13, 540.00. Is that a big enough a difference for him, or you, to secure more jobs in a challenging business environment? How else do you carve out a $ 2000.00 savings without compromising quality or design? There is no other way for you to increase the profitability without taking something away from your customer. I also know what the savings meant on this job for this remodeler. He chose to apply the savings to another part of the customer’s budget and gave his customer more than he could originally from their contract (it sure makes it easier to win jobs with a competitive advantage like that). He is our first customer to break from the increased mark-up/profit center model we showed above, and others have taken advantage of. My point is either strategy sets you apart from your competition and gives you additional opportunities to standout.
For the custom kitchen we priced Brighton Cabinetry against Geppetto’s Cabinets and the results were even more dramatic. This job was bigger in size yielding even greater savings in both percentage and overall dollars. His price of $ 16, 249.86 generated savings in excess of 30% or $ 4874.00. Again, your strategy can be either dollars in your pocket or in this case he again chose to give his customer more. This time it was inset construction (what they really wanted, but couldn’t afford) and credits toward some other non-cabinetry materials in the project.