A panel of industry professionals led a Residential Countertop Forum for fabricators on Thursday, January 22, during StonExpo 2015/Marmomacc Americas, which was part of TISE West. The exhibition was held at the Mandalay Bay Convention Center in Las Vegas, NV.
The open forum provided an opportunity for fabricators from across the country to discuss with their colleagues many of the challenges involved in the residential countertop market. It covered everything from fabrication methods, equipment and materials to customer service, staffing and sales strategies.
Among the panelists were:
• Dan Riccolo, Morris Granite, Morris, IL
• Joey Marcella, Mario & Son, Liberty Lake, WA
• Ron Hannah, Cadenza Granite and Marble, Concord, NC
• Tony Neylon, Delta Stone, Mobile, AL
• Chris Garten, Signature Countertops, Inc., Scottsburg, IN
• Laura Grandlienard, Rockin’ Teriors, Raleigh, NC (moderator)
Hannah: The whole idea of this Forum is to have an open [discussion] of issues you are dealing with. Does anybody have something they want to start off with?
Audience Member: What percentage are referrals for you in the overall countertop shop?
Riccolo:What size shop do you have?
Audience Member: We do about two to four kitchens a day.
Hannah:We all have very different shops, sizes of shops — very different markets. My shop is in Charlotte, NC, and I would say that it is 60 to 65% referrals.
Neylon: In Mobile, we do a lot of commercial work. I would say ours is a little higher than that.
Garten: I am not as much as the first three guys, but then again, I say all of our markets are a little different. Are you in a metropolitan area? What is your market like?
Audience Member: I am from Colorado Springs, CO. We do mostly residential.
Neylon: Is it mostly residential homeowners, not builders?
Audience Member: It’s mostly homeowners.
Hannah: In residential remodel, I would say referrals should be a huge portion of it. A little tip we give is when a customer asks for your business card, give them five. One will go in their wallet, and the other four will go to their friends.
Also, keep in mind that referral customers are coming to you. They have already made their decision. You are pre-qualified, so price isn’t as important. Margins should be better on a referral.
Riccolo: With referrals, you might also want to think about what is the new word of mouth, which is Facebook. So get your customer’s Facebook [page] and have them like yours. You can send a picture to their wall and then all of their friends can see it.
Hannah:When your customer comes in to look at their slab, take a photograph of them with their material and then send it to them by Facebook. They are so excited that they are going to get a new kitchen that they will send it to all of their friends. So, they are doing your marketing for you.
Audience Member:How do you track productivity in fabrication? I try to keep two to three jobs on the board at all time — in different phases. I try to look at the cost per square foot. How do you track it? What kind of time set do you use?
Hannah:You have to know your costs. We watch our square footage. The challenge we have though in the natural stone business, unlike other surfaces, is no two stones are alike. So when you ask someone what is their fabrication rate, and they say $22 or $24 a square foot, it can’t be. You have to have a hard number. When you are dealing with marbles or quartzites or schists, you have to look at the properties of each stone. You have to watch your numbers. You have to have an anticipated proximity per week. Say you do 500 feet a week. If you get a dip or increase in that number, you have to know why. If it is the complexity of the job or the material of the job, just make sure there is a cost-saving revenue to cover that.
Garten: Define small shop, so I can get a better idea of what you do.
Audience Member: We do two to three kitchens per week — just stone.
Garten: You said you just started fabricating. Before you were subbing it out? Why did you start fabricating?
Audience Member: To have more control.
Marcella: I find in the stone industry a lot of fabricators obsess about how many kitchens they are doing per week and how much square footage per week they are doing. We track all of those numbers ourselves. But at the end of the day — I think Ron touched a little on this — if you are doing a 1,000 feet a week, just to throw out a number, a 1,000 feet of Ubatuba is a lot different than a 1,000 feet of [an exotic stone]. So in our shop, although we keep track of that, the only thing that really matters at the end of the day is the quality.
Audience Member: We are finding that a straight edge compared to a mitered or ogee edge throws off my rate chart.
Garten: How are you quoting something like that?
Audience Member:I do a base quote per foot price, and then I add per inch.
Garten:What’s your base quote price?
Audience Member: It depends on the stone.
Garten: That’s the right answer.
Hannah:You have to know your costs. If you don’t know your costs, you can’t price a job. Several years ago, in the same forum, someone asked the exact question, “How do you price a job?” One gentleman across the room said, “Well, there’s a medium shop across from me that charges $45 a square foot. I am a smaller shop, so I do it for less.” That is not scientifically right. No two shops are the same. No two shop’s expenses are the same. Your skill level is different. Your delivery is different. Sit down with your customer and quote the job at a price you are happy with. You don’t need every job. If it is a price war, what I love to do is get into it with my competitors. I will get that price down, and then I will walk because I don’t want that job.
Riccolo:I was wondering, because you add everything extra for your edges how did you come up with those costs?
Audience Member: Just by doing price studies — manual spreadsheets.
Garten: If you are already doing two to three kitchens a week and thinking that way, you’re doing something right.
Grandlienard: How many of you are working with quartzites and exotic material? Are you having any issues with that in fabrication or installation?
Hannah: How many of you are not doing quartzites because you don’t know how to work them? Learn how to use them because there is a big market for stones that are difficult. Dealing with difficult stones — mainly schists and marbles — learn the stuff the other guys are too lazy to learn, and you set the price — you set the bar.
Audience Member:In regards to quartzite, you said big margins. The one thing we are struggling with is that it is so expensive that it turns people off. How much do you stick with that margin or how much do you come down? What is your flexibility with that?
Garten:I have no flexibility on a quartzite price because the risk is exponential. The reality is if they can’t afford it, they can’t afford it. We don’t negotiate with price. If I didn’t give you my best price upfront as the consumer that should bother you because that means I cheated you a little bit. As a consumer, when I go to buy something — even a vehicle — I don’t haggle. I don’t negotiate. I tell you what I am going to pay for it. That’s just my philosophy. I’m not saying it is right, wrong or indifferent.
Hannah:Quartzites bring a certain quality of customer — not everyone is buying quartzites. So if people are in a certain price range, they expect value. They expect you to make money on the job, but you have to deliver.
Audience Member: I am in to taking risks, but especially with quartzites, you have to put a value on it. That’s something I see in this industry that I don’t think a lot of newcomers do. The liability in this business is very high compared to the amount of quality. When you start to get into those highly exotic stones like that you can’t speak on price. You have to factor in your risk.
Hannah:A perfect example of that is a customer, and we all have had one, who wanted a 117-inch-long sink front. They don’t want a seam, and they want you to carry it up four flights of stairs. The answer is “no” unless they are willing to buy you the slab when it breaks.
Riccoli:Something else to think about; we have all had customers where they come back and say, “So-and-so can do it $400 cheaper.” Think about why they are coming back to you, because if they wanted to buy it for that $400 cheaper, they would have just bought it then and there. They are coming back to you because there is a comfort level. There is a trust level. They might not even understand it. But if you understand it, and you understand where they are coming from and really what they are looking for, it will help you out in the sales process. Because we have all had that where we bid a job for $5,000 and then they come back and say, “This guy can do it for $4,200. Can you match his price?” If there was a better option, they would already be there. So, give yourself some credit.
Neylon: With the quartzites in general, most of the time — I’d say more often than not — you find a client looking at that who is already interested so go ahead and charge for it. Especially if it is a 61-square-foot job and the slab is 57 square feet. Be upfront. Tell them. You aren’t going to be pushing quartzite on someone who is looking for Ubatuba because that’s a hard sell.
Audience Member: On the quartzite issue, in my market, my clients are almost 100% buying their material from the suppliers now. I am not in the loop. I have a disclaimer or note on my estimate if the material hasn’t been selected yet saying that depending on the material they are selecting the price I have given them can change. And let’s say for Mother of Pearl — anyone who has worked with it knows how hard that material is — I add 20% of my bottom dollar. The number may not be correct. It might not be enough. Do you guys have a number for what you add for a material like that?
Garten: You said you mark it up 20%, how did you come up with that number? Because as you said, that might not even be the right number.
Audience Member: I came up with that number because I just looked at the extra time in working with the material. After my first job, I looked how much longer it took and said I need to make more money than that. I just came up with 20% because that seems to work for me.
Garten:That’s a good point. It works for you. In our market, we don’t deal with that. Our customers don’t buy direct from distributors, they buy through distributors. Most times they don’t even see those numbers. It comes to us. We mark-up that material 40% and then our fabrication rate is marked up an additional 40%. That’s not because it costs 40% more to do it. It’s probably more like 20 to 25%, but there is an extra 15% risk of us working with that material so that’s how I arrived at that cost. This is not for an Ubatuba market. It is for quartzite customers.
Look for the entire Residential Countertop Forum, which took place during TISE West in Las Vegas, in an upcoming edition of the Stone WorldFabricator eNews.