Tips for Making Money in Bathroom Remodeling

The very first bathroom project I did was…well, let’s just say it was a less than profitable job. It was, however, a very good learning experience.

I thought that since I was in the kitchen business, remodeling a bathroom couldn’t be that hard. At the time, we did not use licensed plumbers or electricians. We never took out permits and certainly did not know what a building permit was, or why we needed a signature from the fire marshal. Things have obviously changed quite a bit from the ’70s, and in many cases, gotten more complicated. But that doesn’t mean there aren’t plenty of ways to create beautiful, functional baths that are also profitable.

After reading the article “Billing for Baths” in the June issue of Kitchen & Bath Design News, I must say that I was surprised by how many industry professionals said they don’t make much money doing baths. For many years, the bath business has been a very profitable and very large part of our business. While I would agree that a bathroom project may be a bit more difficult than a kitchen, it certainly is no more difficult than a partial kitchen replacement.

Some of the comments in the article referred to bath project challenges such as more detailed drawings, more selections of products, more material changes and the need for plumbing drawings. While I would agree that maybe there will be a more detailed plumbing layout in certain cases, I would also contest that this is no more work than the average kitchen.

One of our manufacturers asked us a few years ago why our sales for cabinets were down with them. While our overall business was up considerably, our cabinet sales were down because we were doing so many bathroom projects.

Now, if you were to take the size of the room and figure how much less time it takes to design a bath than a kitchen, you must admit that you should certainly save some time on the design end. Building codes today affect all that we do in design, regardless of whether it’s a kitchen or bath. And, in many ways, the bathroom is like a kitchen, only we replace the appliances with the fixtures. If we replace the kitchen fixtures with wet water fixtures, and consider that the tile is basically the same – just more of it on vertical applications – we can see it’s not so different from a kitchen project after all.

Profitable Bath Jobs

So, how do we go about designing and selling bathroom projects for a profit? The first thing I would recommend is to have a way by which you can figure the labor charge for the project. After many years of being in the business, we have a labor rate that is piece-work pricing. In other words, we know what it takes to remove cabinets, countertops, ceramic tile (mud set or mastic – there is a difference), etc. We have a rate sheet that allows the designer to figure just what it would take to install the shower door or the medicine cabinet. We have worked with the same plumbing company and electricians for many years, so we know what they charge to do various jobs and options.

If the labor is figured correctly from the beginning, it is pretty easy to know where your profit is going to be. There are many different ways to figure jobs, and we have found that working from cost up allows everyone to check the price from the supplier and for the salesperson to know what the cost is and how much the mark up should be to get the profit needed to keep the doors open. Having the mirror company doing all of the mirrors or shower/tub doors can help add profit. If the shower or tub is a basic unit, then we use stock products that are available to us through our manufacturers.

As far as costs of changing materials, this is an administrative issue. It doesn’t matter if it’s a kitchen or bath, once the products have been selected and signed for, any changes carry up to a 25% change fee. This usually does two things: It keeps the changes down and makes the customers more aware of what they are selecting, and it pays us for the additional work that will be required to make a change, if that’s what they want to do.

We also added a 3% project management fee to our projects a number of years ago. You would be surprised how often this is presented without even a flinch from the client. It certainly helps the bottom line and goes a long way toward keeping the profits up.

Kitchens VS. Baths

Interestingly, when I asked our designers about bathroom projects, most of them said they would rather sell a bathroom than a kitchen for several reasons:

  1. You are usually in and out more quickly.
  2. It takes very little time to design and price such a project. And generally speaking, the less time you work on a project, the better the profit. Likewise, it stands to reason that most large projects may be fraught with all kinds of profit drains just because of the size of the job. Since baths are generally smaller than kitchens, they tend to have fewer of these.

The bathroom business will also frequently open the door to opportunities to do other work in the home. For one thing, there are generally two baths to every kitchen in a home. And in my experience, two bath jobs at $15,000 each can equate to what you’d do on one small kitchen – only the baths translate to more profit, less time on that job and fewer problems.

The article also discussed a comparison of bathrooms and kitchens in terms of sq.-ft. price of the room. However, I do not think anyone can compare the two. One of our other trade journals does an annual cost vs. value report and they have the comparisons for what is called a “basic (5'x7') bathroom” to replace all of the fixtures, and include a 30"x60" porcelain-on-steel tub with ceramic tile wall surround, tile floor and wall paper. The national average is $12,918.

The same bath, if it’s 9'x9' (fitting within the existing floor plan), with upscale features, costs $38,165. The upscale bath calls for a custom shower and equipment and better cabinets, flooring material, etc.

Now compare that to an average kitchen (figure 200 sq. ft. with 30 linear feet of semi-custom cabinets, a 3'x5' island, laminate countertops, appliances, vinyl flooring, and all labor including painting). The national average is $54,241 at the low end, according to the same trade journal report, while the same room with upscale products costs $107,973.

Armed with this information, I would never be concerned about qualifying the difference between a bathroom and a kitchen for our clients.

Master Bath Amenities

As we discuss bathroom projects, we must not forget the master bathroom. This is where the professional can make or break a project. Sure, there are more products available for this room. There are options such as steam units in the shower, body sprays, overhead rainshowers, air jet tubs with whirlpool functions and chromatherapy lighting, built-in audio and so much more.

Add to this project custom 3/8" clear glass shower doors and a design that is so workable the homeowners will not realize it is their home. You now have a project that can reach from $50,000 to over $100,000 in a heartbeat.

These projects are being designed, sold and installed every day around the country. Sure, you need to have the right tradespeople in place, and you must have your ducks in a row to handle these bigger jobs. But the high demand for luxury baths should make it obvious that there are plenty of profit opportunities in the bathroom business.

It is of no surprise to our customers that bathrooms can be very expensive projects. We’re very open about that, the same way we are about the expense of any remodeling project. But we’re also open about the end result: They will end up with a beautiful new room with all-new plumbing fixtures and equipment that will improve the quality of their lives and serve them for many years to come.

Because bathrooms exist in every home in the U.S. and Canada – usually several per home, in fact – you cannot ignore this opportunity without missing out on a great source for business, profits and a way to expand your existing company.

Mike Schwartze, CKD, is show-room manager/designer for the St Louis, MO-based Callier and Thompson Kitchens, Baths & Appliances.

Members of the BKBG address business strategies for kitchen and bath dealers in a regular bi-monthly column, appearing exclusively in KBDN.

Read past columns on Business Strategies by Mike Schwartze, and send us your comments about this story and others by logging onto the Kitchen & Bath Design News’ Web site, located at www.kitchenbathdesign.com.

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