If you are fairly sure that your finish room is operating at a reasonable level, and you still say that your finish department always loses money, then you need to ask yourself a question: are you charging enough for your product?
The answer to this question can only come through a fundamental understanding of your finishing system that is then reflected in your estimating system.
The purpose of an estimating system is to help you get to a price that will get you the job and allow enough of a profit margin so that you make money. Use your estimating system as a tool. After you do your calculations, you can always adjust your numbers up or down. Remember that there are exceptions in almost every job, so don’t forget to take notes and adjust your pricing accordingly.
A good estimating system will work accurately and quickly. To do so, there has to be some flexibility built into the system. If you spend all of your time estimating, that leaves no time for anything else.
I had a wise person tell me that if you got more than about a quarter of the jobs that you bid, then your prices are too low. The concept is to price projects to make you money. Some projects are not worth the misery at any price, so bid them high to discourage the customer. If by some strange reason you still get the job, then it is, at least, worth your time.
Every business is different. The equipment you have available and the size of the finishing area will ultimately affect the volume of work that can be handled at one time. People also operate at different skill levels, and companies require different profit margins to stay in business. Bid the job with an honest estimate of times and costs.
Estimating is often figuring out what your competition will bid. Then you have to ask yourself if you think your competition will do it for less and if so, should you lower your price?” I think sometimes people have a preconceived idea of what a price should be so they adjust their times or costs to meet that figure. Double check your figures and if you feel that these are the numbers you need to make money on the job, then quote that price and be willing to let someone else take the job. You should always be willing to let your competition lose money. You are better off spending your time and energy marketing your company and drumming up new business than working on a project that you are not going to make any money on.
Look at your current estimating process. Is the person doing the estimating familiar with all of the operations that are necessary to create the various finish and coloring systems. Secondly do they have a good idea of how long it takes to perform these operations in your shop. Has the estimator ever done any finishing. Most people in the woodworking business are familiar with building, not finishing. There is a big difference between imagining it and doing it. My guess is that this is one of the biggest reasons that, on paper, finishing often loses money.
The success of any estimating system depends on how well you set the system up and how well it reflects your actual results. Do not be lulled into a state of complacency once you have an estimating system. Talk with your finishers about time estimates. They are a great source of information. If they keep grumbling that you are not allowing enough time for jobs, then you should determine if your estimating numbers are inaccurate or if there is something wrong in the system that is keeping them from operating efficiently.
In reality, it doesn’t matter what estimating system you use. All that matters is that it makes you money.
My experience in the world of estimating has uncovered one universal flaw in almost everyone’s equation/technique. Only a small percentage of people go back and see how close their estimated times/costs were compared to their actual times/costs for a given job. We always check the fit of a joint or the setup of a machine so we don’t make scrap, but we are willing to go by gut feeling or intuition when it comes to the bottom line success of our company. Did you estimate the job correctly? The answer to that question lies right in your own shop, all you have to do is go back and check. If you never seem to be making money on your finishing, consider the fact that you might not be charging enough.
For estimating purposes remember that material movement times will vary greatly depending on the size of the job, whereas, set-up, clean-up and maintenance maybe influenced only slightly by job size.
On any given project, you also have to consider if there are any special circumstances that would require you to adjust your “normal” price. For instance, when working on a large conference table you might find that you spend a considerable amount of time just walking around it to get to where you need to be to work on it. Special effects like filled finishes and glazing also add to your normal finishing costs.
Finally, have confidence in what you do, and don’t be ashamed to charge for it. It is far, far, better to lose the job than to lose your shirt. When it gets down to fine tuning a price it seems that the first place people are willing to cut times is in the finishing operation. I think that’s because they don’t really understand all that goes on there. Considering the importance of the finish to the overall success of the job this is the worst place to try and cut times. I also think it is ironic that the first place companies are willing to shave costs is the exact place that they complain about not making money.