Ways to Increase Your Profit Margin (Part 1)
You work hard for your money and nothing is more anger inducing than seeing the profits from that hard work lost to waste or unnecessary costs. Here are some ideas that some fabrication shops implemented to increase the revenue that stays in their pocket.
Slab Inventory
Having an inventory of slabs on site is essential to quick fabrication and job turn around. Everyone knows this, but it is a very expensive to warehouse stone that may go unsold for months or years if you make the wrong choice. So having all the slabs you want on hand, without going bankrupt, can be a bit tricky and problematic, but accomplishing this on a limited budget can be done. We’ve seen shops get some inventory without breaking the budget and this is how they did it. They will coax or persuade their supplier into selling them a bundle of slabs at a better price, and after doing it a few times, they would asked the supplier if they could wait until the slabs were sold so they can make the payment. Once a relationship has been established, they would ask for bundles of slabs that the supplier would want to “get rid of” and they setup a deal where they showed the supplier’s slabs to their customers and would pay the supplier for the slab after they had sold and fabricated the job. This is generally known as “Consignment”. This way, the fabrication shop was able to have an inventory of slabs they could quickly turn around using the suppliers slabs on a consignment basis. This scenario was a “win-win” for them and the supplier, but not all suppliers are willing to work out a deal like this with just any fabrication shop. Relationships are key in business and this situation was the result of a long standing trust between the two. Still, it can be an option that can increase your profits by not wasting money on slabs you don’t end up using. This is also convenient for the customer who doesn’t have to make an extra trip to the supplier. They can do the slab picking right from your inventory.
Start Selling Cutting Boards
Customers end up asking for a lot of extras on the typical countertop job and one of those things is cutting boards. Most shops hear this request after the job is sold and the customer is working their magic to get as much as they possibly can. It’s understandable, a kitchen is a big investment, and most shops usually say “Sure thing, why not? We can make it for you free of charge”. The thing is, that fabrication takes time, both machine time and usually hand water polishing and finishing time. So while the customer is very happy, the fabricator takes another hit. We’ve seen some shops start to get ahead of these customer requests by adding an option on their sales quotes for cutting boards adding a $80 charge for a 12”x12” cutting board. Over 80% of the clients agreed to this “upsale”. We don’t fully understand the appeal of a 50lb 3cm granite cutting board, but people seem to love to order them. The bottom line is the customer is happy and the fabricator didn’t have to give away any more free labor.
Laminating Edges Kills Profits!!
For years 2cm stone was the only thickness available; and that meant stacking a lamination to get a 4cm edge. Over the past 10 years or so, the industry has seen a switch to predominantly 3cm jobs and 2cm jobs that don’t require lamination. Some fab shops had trouble adjusting, but those with foresight were relieved. Most 3cm jobs don’t require laminations and this saves time and money. To fabricate a 4cm lamination requires another pass on the saw to cut out the lamination piece, labor to glue up and clamp the lamination, time for the glue to set, and time to water polish the edge. Stop doing this! Embrace 3cm slabs and stop wasting time on laminations. Now, some customers want custom 3cm stacks and that is fine because you charge them custom edge prices. Most often they are a double stack to 6cm (though we have seen a 9cm bullnose that turned out gorgeous) and when you do have a customer that wants this, happily charge them for it and put the shop to work. The point here is to stop doing the extra work of 2cm laminations and not being able to charge a premium for the work. For normal kitchens and vanities offer 3cm edges and when the odd custom job comes that wanted stacked 3cm edges, charge for the extra labor. Stop doing 2cm laminations.
In our next post, we will cover more money saving and making tips to help you keep more of your hard-earned money in the bank.