Home remodeling projects have always been a hot topic of conversation, with every homeowner having their own unique story to tell about their experience. Often, the costs behind these remodeling projects are the only point of contention in the home improvement industry–both on the homeowner and contractor side of the fence. However, that hasn’t scared people away in the past, and it certainly doesn’t seem to be trending that way either.

In 2022 alone, kitchen and bath remodeling grew by 19% to become a $199 billion industry!(1)
That,paired with the fact that 86% of outstanding home mortgages are locked in at rates below 5% – significantly lower than the current market’s interest rates – in 2023, means that more homeowners than ever are opting for home renovations over buying a new home.(2)

Even with the growth we’re seeing in the home improvement industry, contractors and suppliers are continuing to receive questions about the costs behind some of the most popular home renovation ventures. So, let’s take a closer look at a few common remodel requests we receive and the true costs on both sides of each project.

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Home Renovations: Customer Costs

According to HomeGuide, the average cost to replace kitchen countertops ranges between $1.5k-$6k, with cabinet replacements ranging from $4.5k-$15k. With these being two of the most common home renovation projects done today, it’s no wonder that homeowners take a moment to consider the price tag involved before diving into a countertop or cabinet remodeling project. Here are some of the most common costs to remember and how each can get drastically higher before you know it.

Products & Materials

Whether the space that warrants renovation is the kitchen, bathroom, or family room, the first expense that comes to homeowners’ minds is the products themselves. Since these are tangible goods that anyone can browse in person or scroll through online and are the items that will be used and looked at every day, it makes sense that they’re given the highest priority.

Home remodeling products can be pre-fabricated by manufacturers or custom-made by those same manufacturers or by local craftsmen. While color and hardware may be the obvious first thing you notice, the materials used in the manufacturing process can be just as–if not more–important for everyday use. A cheap particle board can break down quickly if used in the wrong application.

Cabinets

At the Cabinet IQ home remodeling franchise, our focus is–of course–on cabinetry, but did you know that this product can be one of the most confusing to work with when a customer doesn’t have a professional designer or team on their side? This is because an individual, on their own, can be misled by a manufacturer, get confused about the dimensions of their kitchen or bathroom, or even get stuck with cabinets on backorder for months at a time. Also, when you consider that big box stores often display the cheapest options for each product, costs can quickly climb once you start to consider the correct sizes or more durable materials (i.e., hardwood as opposed to particle board).

Countertops

Countertops in both the bathroom and kitchen are some of the highest-touched areas in the home. Depending on the homeowner, they may need to replace or update their countertops multiple times during their ownership to accommodate for damage or a lifestyle change. However, countertops can be just as frustrating and confusing to deal with in a home renovation project, especially when a countertop professional isn’t involved.

Installation

When a homeowner gets surprised, or even upset, with a bill after finishing a home remodeling project, it’s likely because of the labor and installation costs they didn’t consider upfront. Depending on the company used for installation, this portion of the expenses can be even more expensive than the cabinets or countertops themselves. However, most companies in this line of work exclusively rely on old practices that may no longer work with the homes people choose to buy today. For example, if a company doesn’t have the skill to retrofit an older home’s kitchen, the cabinets could be improperly installed, leading to additional costs for the homeowners if they want to fix them down the line.

Home Renovations: Business Costs

When most people think of the price of home remodeling projects, they typically only think about what it might cost them as a homeowner. However, when you’re entrepreneurially minded, you may also wonder what the price tag of a project might be on the business side of things. While these can vary between businesses and the services offered, we’ve included the three most common expenses across the home remodeling industry and how they can easily eat away at profits today.

Showroom Expenses

While much of the world has moved to e-commerce, the home renovation industry is one of the few where customers still want to see and touch a product or chat in person with a professional before moving forward. While this can help the average sales process, it requires companies in this line of work to maintain a physical presence and operate out of a showroom. The associated real estate or rental expenses that come with this can range between reasonable and astronomical, depending on your region.

Sourcing Products

Keeping a showroom stocked with displays is not as easy as running to a local supply warehouse as you could in other lines of work. Instead, working within the home remodeling industry requires business owners to establish relationships with national manufacturing companies and trust their product enough to sell it to customers, in addition to several other tasks just to stock your showroom.

When the time comes to order products for a customer, you’ll be one of the lucky few if that manufacturer will have enough of their product to supply you after you’ve sold to a customer; however, you can always run into hiccups like backorder issues. These delays can cost you time, which can eventually lead to refunds and a loss in reputation if you don’t have reliable manufacturers.

Labor & Installation

As with any business, labor is one of the highest–if not the highest–expenses we see today with home remodeling companies. Maintaining a staff of skilled contractors can cost well into the hundreds of thousands each year, and if you need additional craftsmen on hand to assist with custom requests, that number only increases. While maintaining a roster of reliable professionals is essential to keeping a home improvement business like this operating–and growing–this expense can quickly eat up profit margins should something go wrong during a project.

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How Cabinet IQ Does Things Differently

Today, there are dozens of franchise opportunities on the market in the home remodeling industry. However, Cabinet IQ sits apart from the rest because of our unique business model and precise focus on a subset of the home improvement market. Before we opened home services franchising opportunities across the country, we found that many cabinet and countertop companies do a poor job due to their low-tech systems, outdated showrooms, poor communication, and subpar installation.

Instead, we maintain ourselves as a high-tech cabinet and countertop company with the goal of disrupting the sleepy, fragmented, outdated home improvement industry we’re in today. This not only provides us and our Franchise Owners with the ability to provide 6-star service with each customer interaction, but it helps us minimize the unnecessary costs that both business owners and homeowners often see. This is how we do it.

Subsidized Showrooms & Vendor Assistance

In a previous blog, we discussed the financial advantage of subsidized showrooms on your overall profit margins, which applies just as well here. The relationships the founding Cabinet IQ team developed with our preferred cabinet and countertop manufacturers will extend from us to you when you become a home services Franchise Owner. This gives you immediate relief with your real estate or lease expenses and helps to ensure your showroom is fully stocked with displays from the moment you open your doors on day one. Plus, the cost of your brick-and-mortar lease, utility, and security deposits are included in your initial Cabinet IQ financial investment, which currently ranges between $189k – $289k.

Laser-Focused Product Line

At Cabinet IQ, our top priorities are the streamlined product and service selections we offer our customers. Rather than presenting every service possible around home renovations, like entire kitchen renovations or resurfacing jobs, we’re laser-focused on offering only cabinets and countertops and their installation. While this can extend to the bathroom, the vast majority of our work lies in the kitchen. With this focus, our home services Franchise Owners can save themselves–and their customers–money on each project since those additional services aren’t offered or necessary. Why do we do this? Simple: it’s because our founder recognized that these offerings produce some of the highest profit margins in the home improvement industry.

Subcontractors

Rather than going the traditional route of hiring contractors as W-2 employees, Cabinet IQ enables every home services Franchise Owner to make connections with established local subcontractors in their territory instead. This means that you won’t need to take them through training or pay for any necessary certifications or licenses in order to get started. Additionally, you can establish relationships with multiple contractors in your area, allowing you to have a variety of price points to choose from when the time comes to pay a subcontractor for an installation job. All you’ll need to worry about is yourself and your one partner or employee that you hire to work with customers in your showroom.

Have you been through your own home renovation project, or have you ever given thought to how you could join the growing home remodeling industry? With Cabinet IQ, you can not only take advantage of our ground-floor franchise business opportunity, but you can learn more about the lucrative kitchen and bath remodeling industry. Take the first step to owning your own business with Cabinet IQ today; complete our request form to get started.

 

Published On: August 9th, 2023 / Categories: Design, Featured, News /