Cost-Drivers #2: Construction Estimating Shortcut: Using Multipliers / Factors
/In a low-volatility market like lumber, it’s easier to track and calculate pricing data than many other industries. There’s a glut of good data out there to parse too, so why not take advantage of it? In q4 of 2023 I started focusing on building up our butcher block countertop division. There’s several different revenue streams that are marketed at different segments of the construction industry.
Homeowners: These clients want a turn-key product, so that’s material selection, finish selection, estimating, template, fabrication, sanding, profiling, sanding, finishing, delivery, installation, and warranty service.
DIYers and Other Carpenters: We can produce wholesale glue-ups for clients such as other cabinet shops, stair builders needing treads, designers wanting to use their own installers and finishers, millwork shops wanting door stiles and handrail blanks, turners wanting column or baluster blanks, etc.
Contractors: Builders wanting a one-stop-shop for any of the above.
Here’s an example that I use regularly to help calculate pricing on butcher block solid hardwood countertops. I do all of these calculations in Google Sheets.
Scrape all butcher block pricing from a company like Floor and Decor or Boos Blocks. You can do this with XML importing or simply copying and pasting.
Calculate square foot pricing, board foot pricing, delivery cost, and make note of details like the cut of the lumber and if it’s a continuous strip lamination or finger-jointed, how thick the laminations are, and if it comes sanded and finished.
Sort all of this data. Divide the total square footage by the total slab price, then sort unit prices low to high. Divide each unit price by the lowest unit price to yield a multiplier. This number should be a number between 1 and 3, where 1 is your cheapest lumber and 3 is your most expensive.
From there, If I know my base cost, I can simply multiply by that factor to estimate a unit cost in a different species, as long as it’s in my spreadsheet. For instance, if I estimate something in Beech, I know that is would be roughly 2.5-3x that price in Walnut. Now instead of pricing all of these products in all of these woods, just update everything quarterly and multiply as needed. Don’t forget to add real pricing for each item as it’s purchased so you can check your math.
The beauty of this method is for ballpark pricing even something like trim, take the unit cost in a known species and multiply to show the different price points available. Prices still fluctuate, but not enough to not be captured by your margin. I hope this helps.
