It’s the question we’re often asked: Why are Fitted Kitchens so Expensive?
There is no denying it, having a new fitted kitchen designed and installed is expensive and the price tag often gives potential customers pause for thought. However, what seems like a hefty sum is the sum of various costs that ensure you get a quality product and service. In this article, ‘Why are Fitted Kitchens so Expensive?’, we want to help clients understand the costs that go into the makeup of the quote we provide.
First up, what is it you’re actually buying? If you see it just as the replacement of cabinets, appliances, and worktops, then, certainly, the price may well seem expensive. However, if you’re viewing it as either a long-term financial investment in your home, correcting years of low investment or a lifestyle upgrade, one that will serve you for years to come, the costs involved are often viewed in a different way and might just make that figure a little easier to digest!
But, to help you understand the costs that go into making up the price we quote, let’s break down the expenses to shed some light on why fitted kitchens are priced the way they are:
Cost of Goods
- Cabinets, worktops, and appliances typically make up 50-55% of the ex-VAT costs, depending on the type, ‘bespokeness’ (eg paint-to-order doors rather than off the shelf colours), brand and quality you’ve spec’d with the designer
Contractor Installation
- Installation costs from experienced tradespeople are not cheap. Expert carpenters, electricians, plumbers, plasterers and other are essential to deliver a high-quality fitted kitchen. There costs also include the taxes they need to pay the government, including VAT (where applicable) and Constructor Industry Scheme (their version of income tax). Depending on the number of tradespeople you need, this element of your new kitchen accounts for about 15% of the ex-VAT price
As we explain in our article https://nhkitchendesign.com/blog/how-to-get-a-stunning-fitted-kitchen-on-a-budget/, there are many choices you can make that will help to cut these cost while delivering the kitchen you’ve always wanted without too many compromises.
The second element of the price of any product and service are any company’s overheads, virtually all of which can’t be attributed to specific projects. Many of these may surprise you but are the reality of running a business of our scale. We work hard at reducing these costs but they’re all unavoidable and account for about 25% of the cost of your new kitchen.
Overheads
Employee costs:
These include salaries, Employers’ National Insurance, healthcare, and Employers’ pensions contributions. From those people you see and meet such as the designers and project managers, to those in the back office making everything tick to ensure the project is delivered to the quality standard on time, have a cost that has to be recouped. Even as the lean operation that we are, these costs account for 60% of our total overheads.
IT and phone costs:
Design software, IT back up, support, Microsoft licenses, our project management system, landline and mobile phone costs all add up.
Utility Bills:
The electricity, water, and heating required to operate a business are often overlooked but are a steady expense and increasing in the same yours are domestically.
Vehicle and Fuel Costs:
For consultations, deliveries, and installations, a fleet of reliable vehicles is essential. This includes not just the purchase of the vehicles, but ongoing costs for fuel and maintenance.
Rent and Business Rates:
Commercial rent and associated business rates are substantial, especially as we have two premises, the showroom, and our warehouse/administration offices.
Bank Charges:
Credit card transaction fees and bank charges for our level of turnover are expensive and unavoidable.
Insurance:
From the legally mandatory Employers Liability to Public Liability cover, buildings and contents, and fleet cover, insurance is a significant business cost.
Miscellaneous:
Other costs like marketing, advertising, office supplies, and even the coffee in the break room contribute to the overall budget.
Taxation:
Then, of course, the government wants its share! In addition to the numerous taxes payable mentioned above, VAT corporate taxes on goods and services, like VAT, over which we have no control, is added to the price you’re quoted, taking it up by another 1/5th.
Profit:
Like every business, we have to make a profit in order to survive and invest in new capital costs (eg showroom refurbishment, new delivery vans) and to put some by for rainy days such as Covid! As a private limited company, our published accounts are available at Companies House. However, we’re happy to share with you that our average net profit over the last five years is only about 3% (on which we pay Corporation Tax). And without careful management of all the costs above, that figure can – and has – dipped into loss when turnover or costs are impacted by shocks such as Covid and the war in Ukraine. SO, if you were thinking the answer to the question why are fitted kitchens so expensive was because of our profit margins, I hope we’ve been able to correct that!
Wrapping Up
In conclusion, while the price tag of a fitted kitchen may induce a momentary gulp, an understanding of what goes into that figure may offer you some financial solace. You’re not just paying for a room full of cabinets, appliances, and quality countertops; you’re investing in a lifestyle upgrade, one that will serve you for years to come and could significantly increase the value of your home. So, the next time you experience ‘sticker shock’ at the cost of your dream fitted kitchen, remember all the elements you’re actually investing in, many of which are outside our control. Hopefully, it might just make that figure a little easier to digest!
All the various costs contribute to a final product that, from us, will stand the test of time, be functional, and provide a living space of which you can be proud. We hope that by understanding the breakdown of these costs, you gain insight and an understanding into the question why are fitted kitchens so expensive? and, hopefully, understand the value offered by a reputable supplier who’s happy to be transparent about what you’re truly paying for.
And, if there’s one takeaway here, it’s that quality and reliability have a price. Knowing where this price comes from can help you make an informed decision about your home investment.
Inspired?
At Nicholas Hythe, Cambridgeshire’s only Trading Standards approved kitchen designers and installers, we’re well used to helping clients make the decision that’s right for them while still making the refurbishment process as simple, efficient, safe and stress-free as possible. So, when you’re ready, why not book an appointment with us, free and with no-obligation?
