If you had a small parts run where you spent an hour programming the part, and seven hours in the shop running two machines at a time, do you charge eight hours, 15 hours, or somewhere in between?

Just a thought I was pondering over the weekend.

Thanks.

Gray

When you quote on a job it the total cost of the job. If it takes you 10 hours or 50 hours your price is the same as your quote

When you quote on a job it the total cost of the job. If it takes you 10 hours or 50 hours your price is the same as your quote

Let me rephrase that. If you think it will take eight hours, one hour programming and seven hours running two machines, do you quote $400(at $50 an hour) plus materials, or do you quote $750 plus materials?

Gray

you take your total machine time. You could use 7 machinist at once it will still be 7 hours of machine time.Bu now it 1 hour of labor

Yes it would be one hour of labor, but that is one hour of each of your seven machinists.

From my point of view I would charge 15, think of it as how much time WONT'T I be able to use my machines for other paying jobs. So 15 hours not 8

You charge what the market will bear! If your market is strong enough to get the 15hours and still have the customer happy then charge the 15hours.

But on the other hand if they look at you like your loco, then maybe teh 7 hours is the ticket..

If it was easy to figure out everyone would be running there own business successfully. And of course that isn't the case.

In my area and for the parts I typicaly do, I try to get 1.00 a minute of runn time plus material. This is close to whats fair for this market. On molds its slightly higher and on close tolerance stuff it can run alot higher. And aircraft parts are in a whole different league (do to pucker factor and PIA factor).

Good luck.

can you run 7 machines at once and have a broom up your @ss to sweep floor as you run around?

can you run 7 machines at once and have a broom up your @ss to sweep floor as you run around?


Mike, you sound like my first Boss in a Machine Shop. But you forgot the Bring your own T.P.

Gray,

Every market is slightly different and as you get more experience you will learn what you can get away with. Most shops think I'm nuts for what I charge for services but I'm the one they call when the other guy skipps out on them and won't finish or fix what they did. Then when they become a repeat customer I reduce the price by 10% for every 10 jobs. 2% Net 30 is what I charge with 50% up front to start.

Your going to have to check the market in your area and learn. This is tough, but most places don't want another competitor in their area.

Thank God there is a young man interested in something else besides video games.

Shop Rate(hourly)+Material+Tooling+Fixturing=Total
Additional Fees
10% Difficulty
40% Major Difficulty
2% net 30

Sorry, I had to change a few things because the old lady is now doing the books and she said I was being too greedy :D 5% net 30 ;)

Mike, this is for you ;)

Since the question was how much 'would' you charge I can answer this totally theoretically since I dont have any experience to say what I 'am' doing. So....

I would charge for the 7hrs + 1hr programming = 8hrs. I wouldn't charge the full 7 hrs for the second machine, but I would charge enough to cover the general wear and tear on the 2nd equipment plus the degradation for parts and consumables. In hours this might come out as two or three hours but depending on your eqpt you will have to calculate your consumables hours specific to your circumstances. Therefor my total charge might come up at about 10hrs = $500.

You have to consider your overall business situation. Is having a fast turnaround time for your customers important to you? Is there a lot of competition making cost a serious consideration? If you want to charge full for the 2nd machine then maybe you should run the two at the same time on different jobs and sacriface the turnaround time. Maybe you could charge full for the 2nd machine also. But if your running two machines maybe you would be better off having two seperate jobs going. How much business is knocking at your door. Lots of considerations.
M2cents.

How can you afford to put food on the table with such low costs?

Me or henry with his $50 ?
If me then I don't! As I said I have no experience. When I have my workshop up and running I may have to revise my 'logic'. :)

If me, I don't either. Look at my age, and you'll see that putting food on the table ain't my job :)

Gray

well if your really only 14 or so then you will run into age discrimination, sad but true. You won't be able to charge as much as an older guy that may have half your skills.

Once your rep is made then this won't be as much of an issue but until you look a little older some people will have problems with the "young wipersnapper".

Gary, at 14 years old, is this a hypothetical question, or are you one driven young man?

imo Miljnor had the right answer. look at this way, your 'hourly' rate is just a representation of what you the market will bear in your area - its a convenient to quickly price things. but you're in business to make money, so want to charge as much as the market will bear.

from another perspective, if all your machines are busy, you're going to want to charge 16 hours because machine time is a constraint, on the other hand, if machines (and/or labour) is sitting around, anything you charge over material/energy/consumables is contribution margin. in either case, whether they are full or idle is indicative of the market and what it will bear.

2% net 30

Sorry, I had to change a few things because the old lady is now doing the books and she said I was being too greedy :D 5% net 30


What!!!!

2% net 10, full invoice amount net 30, 1-1/2% extra per month prorated daily on overdue accounts. 25% deposit and balance on delivery for a new account. Are you running a business or a charity. :D

It sounds as though you price jobs very differently in the USA than we do in the UK. we price a job by so much an hour based on overall running costs and its the same for all customers, no favorites. If we charged different prices i.e. £30 per hour to one and £35 per hour to another then we would loose that customer. When you do get established, buyers do talk about the price you charge

Gary, at 14 years old, is this a hypothetical question, or are you one driven young man?

imo Miljnor had the right answer. look at this way, your 'hourly' rate is just a representation of what you the market will bear in your area - its a convenient to quickly price things. but you're in business to make money, so want to charge as much as the market will bear.

from another perspective, if all your machines are busy, you're going to want to charge 16 hours because machine time is a constraint, on the other hand, if machines (and/or labour) is sitting around, anything you charge over material/energy/consumables is contribution margin. in either case, whether they are full or idle is indicative of the market and what it will bear.

For now this is just a hypothetical question, but hopefully someday it'll be a real "problem".

Thanks for the help.

Gray

What!!!!

2% net 10, full invoice amount net 30, 1-1/2% extra per month prorated daily on overdue accounts. 25% deposit and balance on delivery for a new account. Are you running a business or a charity. :D


That's what I said today before leaving to another job. :D :nono:

Back up to 5% net 30 :D :D

Lets look at it this way.
The client needs 100 items that take 1 hour each to make. That's 100 work hours.
If you had 100 machines the whole job would take 1 hour to do, but still takes 100 work hours. Would you charge that person for only 1 hours work if you used 100 machines ? I doubt it.
Your two machines example is the same as my 100 machines example, except you just have a lesser number.

Answer = You charge 15 hours.

Besides, having the luxury of two machines actully costs you even more than having one machine. You need to cover this cost too.

I include labor in machine time

the answer is simpler than all this... just charge whatever you can get away with! :)

If you do not charge for your time than its a hobby, else charge for the complete job that includes the time to program and set up, clean up and put up. And if the call to run both machines at once to meet a customer set urgancy than the charge for the set up of the second machine pluss a $$ for the shorted time.

Think of it like this you could run two difrent jobs for two difrent customer at the same time with two difrent machines. So you would charge both customers for there
parts, not give one them parts for free.

Machines cost pluss electric and floor space and tooling else every one would have two or three machines themselves.

Always charg fair for all the work you do.

As a boss i had once told me, he could go broke at the lake he would not have to work at going broke.

John

Its about total machine time, one or twenty machines. my answer is 15 hours. sweeping up is not custumers problem. chipsfly

Even $50 per hour is low. Currently in Florida (near Orlando) the rate is $60 hour. That includes machine time and labor. Material is additional and so is any out of the ordinary tooling. Depending on number run the program belongs to the shop unless on prior agreement. In California, shop time will run more like $100 per hour (higher cost of living and other cost that impact shop operations - environment fees etc.). If you go by a quoted price, then thats it! If the time runs over you adjust by experience. The best way of doing business is to have a written purchase order with all the details spelled out. Money in advance (25%-50%), Balance on delivery, discount if paid within 10 days (2%-5%), full price if paid within 30 days, 1 1/2% per month over 30 days (I'm not a bank, I have people to pay). If you treat your Clients like a businessman should, then they will treat you like a business - regardless of age. Being younger means you just have more to prove like timeliness, responsibility, etc.

Running two machines will double the cost in tooling and consumables. It is fair to charge for rush jobs, or overtime - but the Client must be aware and sign off on the expenditure. Just remember that treating your Clients well will bring the business back. Business goes where it is asked for, and comes back where it is well taken care of (some old time saying - probably screwed it up)

Frank (old geezer machinist)

I know it seems odd to say the customer pays for the clean up but this is part of the over head unless the guys you got working for you do it for free (off the Clock). This would not show on papper other than time as it is part of the JOB and must be added same as set ups / change outs it may just simply be inbeded in the cost, but it is there.

And Frank is right treat your customers right. set there expectations and beat them. Cause lets face it they have customers to and they add your time to there's and set that expectation and have to meet that.



John

"The Road of Revenue is strewn with the bodies of Machine Shop Owners" - Frank Sperl
It’s all a state of mind and how you think of your business - because it is YOUR business. In our highly competitive market, we must maintain the edge.
I look at it very simply, if you my machinist don't take enough pride in your work and your work space and machine to keep it clean and well maintained - then you need to find another employer. I'm not a Banker, Baby Sitter, Hand Holder. If you come into my shop as a machinist you are expected to know your trade - otherwise you're an apprentice. I don't hire slobs that can't keep their area clean, I'm not Boyd Coddington that hires guys to take out the trash. I'm more the Paul Sr. on American Chopper, with a twist - I know how to run a machine. I was an Indentured Apprentice at General Electric 30+ years ago. When my guys are not doing something that makes money, they know to grab a broom - its part of the gig. Now a days there are companies that have machine operators that push buttons, and have highly paid people that do setups and proof runs. Not here, you are expected to know how to program, adjust compensation and monitor wear, etc. In other words know your craft, your trade - the day is done when the ship is tight - there is no Mikey to take out the trash.

In our area there are shops that are busy and quoting 6 - 8 weeks before they can get a job in the door. There are shops that have idle machines. What’s the difference? How they treat the Client. I don't have customers; I have Clients. It's all a state of mind. When you run a job shop - that’s all you run - a Job Shop. When you run an enterprise that serves an industry or serves a variety of businesses - that is a successful enterprise. If you work for me and run one machine - you are expected to bring in 120K of work per year, and get your benefits and two weeks vacation. If you contribute more then you get additional schooling in different trades that enhances your value and makes you more money.

So what makes you long term money? When you have Clients that keep coming back, because you are as concerned about making them successful as you are in keeping them as a Client. What makes you money? Having employees that are a part of the family, that goes the extra mile - work that 110%. Employees that have an interest in the shop making money so they have a bright and long-term future. Shops regardless of size need to invest in additional training so employees are not stagnant. They should also have extra activities - Shop Bar-B-Que's for the employees and their families.

Yep - there is a lot to running a shop, even more to running a business. Excuse me if I waxed poetic - but now a days we all need to be reminded that we are our own masters of our destiny. We all need to be reminded that being a Machinist is a time honored Trade. Machinists are the second oldest profession in the world (in my view) and the oldest was created to keep us happy. If it weren’t for Machinist you wouldn't have the stuff around you. The computer monitor that was molded, the circuitry that was made. This whole world revolves around Machinist and their trade. You can not touch one item in your whole world that isn't a product or by-product of a skilled Machinist.
When people ask me what I do, I don't hesitate telling them that I'm a Machinist. After all we help Businesses (companies) succeed.

Before you even ask if we have women in our shop, yes we do. We have a preference for women welders. Why? We have found that over time women take welding as artistry not a job. Women seem to have something to prove and the last thing that they welded is validation of their trade, their skill. So we have women TIG welding and stick welding. Guys that weld adopt a “good enough” attitude and then product suffers. So how do women get a job TIG welding in our shop? We test them. First is TIG welding a stack of aluminum cans. Second is TIG welding our product and have it pass hydrostatic testing.

Frank

When I run equipment (a tractor, in my case) , I charge what my time is worth + the cost of consumables (fuel, regular maintenance) + overhead + debt service (if any) + the hourly value of the equpment's economically productive lifespan. A tool that is useful for 1000 hours that was originally worth $100,000 costs its owner $100 per hour to run.

in my small business, i charge 3x whatever it costs me to do a job... if im going to use $10 worth of consumables, then i charge $30, and my time dont come cheap either.. i charge $100/hr design and then $50/hr production.. the materials i quote at 1.5x cost for standard raw materials... and then i charge a stock/fetch fee, so im not going to get the materails for free either.. if its standard steel, or something like 6061alum, then i charge $20 above the 1.5x materials cost, i gotta pay for the gas to go get it, dont i?
the way i figure it, i need to make enough money on each job/part, to afford to make 2 more of the same.. that way if business is good, im allways doubling up... if i have a repeat customer, then i will generally go 1:1 on materials + the $20, and if someone brings me a design, then i charge $50 for design proofing. but thats just me, i do lots of onexie twozie parts... so my setup takes time, if someone wanted 100 of something then the price per part would go down.....

in my small business, i charge 3x whatever it costs me to do a job... if im going to use $10 worth of consumables, then i charge $30, and my time dont come cheap either.. i charge $100/hr design and then $50/hr production.. the materials i quote at 1.5x cost for standard raw materials... and then i charge a stock/fetch fee, so im not going to get the materails for free either.. if its standard steel, or something like 6061alum, then i charge $20 above the 1.5x materials cost, i gotta pay for the gas to go get it, dont i?
the way i figure it, i need to make enough money on each job/part, to afford to make 2 more of the same.. that way if business is good, im allways doubling up... if i have a repeat customer, then i will generally go 1:1 on materials + the $20, and if someone brings me a design, then i charge $50 for design proofing. but thats just me, i do lots of onexie twozie parts... so my setup takes time, if someone wanted 100 of something then the price per part would go down.....

so your clients are obviously after the penny-pinching budget experience... :) :rolleyes:

Go with the Market price.

Know that your minimum is 8 hours + the overhead of two production machines

Around here that might work once and then we would never see that Client again. Our Clients are smart enough to price out materials and know what the costs are going in, that's why they are in business. We also get our materials deliveried and we have accts with the major material suppliers. We make a minor amount by paying up front for the materials or within their "Good Client" time line usually 10 days. We never nickle dime our Clients because we want them back plus more business. If you are so expensive that you affect your Clients base cost for their product then you are going to make them non-competitive in todays market place. Then again I want the 100, 1000, and 10,000 part runs. I want the lights out, load the Auto Bar Loader and run business that pays for the machines. I can check on the machines using the Internet and remote cameras. You have to have the Technology edge to run and survive.

We used to farm out the excess to other shops, but found that they were pumping the price with the little add on's. Well when times get tough for them, they will wonder where we are with work for them. Machine payments are hard to make when the sugar daddies are gone. Around here shop owners talk to each other because we serve different markets, its bad business to screw over another shop owner. They get black listed for farm out work.

I believe that the machine should have a rate for the amount of time running, and the man a rate for the time supervising the machine. Thus 50/hr for each machine, and 30/hr for the man, leaving 50*7+30*7 for the 7 hours ran. If the man is not needed then the overhead is down. Maybe these numbers would not be realistic, but you get the idea.

subcribes.....

I would charge total contact time..and never discount labor!!!

What I always did was treat each machine as 1/2 a man, myself also. So, based on your rate and senario, I figured $25.00 an hour for each "unit". That gives you a $50hr rate on 1 machine and operator and $25.hr on the 2nd machine. Programming I found I actually had to throw in for free to get the jobs.

YMMV

JohnF

14!!!!!!!!, and I thought child labour was only prevalent in the third world. What happened to enjoying life while you're young?
OK, so I'm casting a critical eye on a lucrative (for a likely lad that is still getting pocket money, maybe?) money making opportunity, that will age you before you come of age and ruin your health before you are old enough to know what work is.
In my wildest imagination I could not envisage a 14 year old competing in the metal working industry, unless his father is standing next to him and doing all the work and he only pushes the red button when the green light flashes.
However, if we have a budding engineer of 14 years with 20 years experiance who is capable of pricing a job down so low to win against all contenders then he will know what it is to cut corners, use the right machinery for the right job and where to buy the materials at the right price, and that does not include being able to converse with a customer who wants the job yesterday and expects to pay for it in three months time, oh yeah and also in the process be able to interpret a customer's drawings to determine wether the job can be done, or "redesigned" to make it profitable.
In addition to that he must also "from experiance" know when to walk away from a job and when to run.
I really think that this is just an excercise for a school project and as such has no meaning in the real world.
My father started work at the age of 14 at Woolwich Arsenal as a machinist, but that was in 1916 and he was one of 9 children.
Not knowing his personal means, how would a 14 year old have access to several machines, and the knowledge to use them. When did he start?
Ian.

Hi, FrankS put it in a nutshell. If you overcost a job then you'll get the "don't phone us we'll phone you" response.
I did sub-contract work in the early 90's, working in the garage after regular work hours and on weekends, and to compete against the other guys was a miracle of achievement.
I was lucky with a project at my workplace, that turned into a personal issue, and in the process led to me inventing a modification to a machine and so a business was born.
Even at that lower level of the engineering environmental strata there was still a stiff competitive neighbourhood.
If you overpriced the job, it didn't materialise, and if you under priced the work to ensure that you and not someone else got the job then you worked for peanuts.
One thing I never entertained and that was a huge capital outlay for minimal returns. Such as a job quoted at $10,000 requiring $8000 of outgoings. The upfront cost was just too much to outlay for a subcontract that would only get paid two months later.
When you start to get into the higher volume jobs then the playing field just gets bumpier as you come up against the bigger capacity shops.
Ian.

Wow handlewanker, I've already said this is a hypothetical question.

"What happened to enjoying life while you're young?"

I do enjoy this....why do you think I get up early to come to this site? Why do you think I got a job working 15-20 hours a week so I can pay for this hobby?

Right now I have a mini mill(that's a HF mini mill not a Hass) and a 6" atlas lathe......when I've learned the basics on them(heck I'm still working on squaring bar stock :) ) I plan on selling them and upgrading.

Here's my list of equipment I hope to have before I move out.

A vertical knee mill
A large bench top CNC mill

A large metal turning lathe (around 15x40)
A 12" CNC lathe

A Hydraulic press

Surface grinder

A Oxy acetylene, stick, MIG, TIG, and spot welder.

Assorted hand tools and small power tools(grinder,
dremil tool and the like)

A large (60 gal.) air compresser and bead blaster
and stuff to blue, parkerize, and anodize.

Do I have all these tools and the ability to use them? No, but I would like to eventually. There's no big industrial machines on that list. I just want to play around in the shop, and possibly do some small parts runs.

Gray

Hi Grey, I think you are way ahead of yourself. I admire your spirit and think you will go far, but in post #1 the question was about how much to charge.
This is really taking the hypothetical to the outer limits of your imagination.
At this moment in time you are just starting to "turn on the machine" and have a lot to learn.
This is good, but job costing is something that I would not think you would have any use for. It's like advanced marathon training for a toddler.
I have just been looking at your list of machinery. What exactly are you going to make?
listing the tooling before the product is daft.
A hobby shop will not pay any serious money, and those that tell you otherwise are dreaming.
If you are intending to make a definite product, then the tool requirements will determine which machinery you will invest your money on.
Before we dwell on the hypothetical costing could we have a hypothetical product and a machinery list to achieve production, also an envisaged production run, and if your tooling is going to be done "in house" or outsourced.
If this sounds too much of a bore and not much fun, then welcome to the real world, where crusts of bread on the table soon become a reality.
Ian.

Also:
Tooling (recurring and non- recurring)
Insurance (or cash ex works)- some of my jobs cost a lot,
Carriage,
Then add 25% to delivery times and costs cos it always takes longer than you think!

Always better to over Quote than to shoot your self in the foot later

Hi Jackson, better be carefull on the over or under quoat bit.
If you over quote then you'll always be wondering why the other guy gets all the work.
If you under quote, (you poor fool, thinking you will get all the work and still make it pay) then you will be forced to tread the downward spiral of crusts of bread on the table, paying your work force peanuts, employing schoolkid labour to just get a break even situation, and when all else fails just lowering the standards of workmanship and eventually doing it yourself.
The scenario is this, Anyone out there costing up a job will not necessarily take the lowest bidder, it depends on your RELIABILITY!
You can charge like a wounded bull, if you have a good reputation for quality and delivery.
One thing is for sure, engineering covers a broad spectrum and you can't hope to do all the jobs with your set up, whatever it is, and you also can't expect to be a jack of all trades.
In the end if you try to pick up every and any job that is going, by under quoting, you'll soon lose credibillity.
How many people fail when the lead time blows out and an irate customer is treatening to excommunicate you.
As far as quoting is concerned, you must cover your costs, labour and material wise to break even.
This does not mean crusts on the table.
Decide what YOUR minimum hourly rate will be, add the cost of materials, add some for taxes, add the overheads, insurance. workshop rental/mortgage/loans/ outsourcing and when you get paid for the job the labour part is what you will have left to play with.
The rest will go to paying the bills.
Now try and underquote on that, the only loser is yourself as your rate of pay gets smaller and smaller.
The other cost will remain the same.
There are some jobs that you don't touch and those generally fall into the " can you weld a bit on the bottom of my trailer" type, only worth a dollar to the "customer", but take you two hours to do.
Make a rule of $50 for the first hour and pro rata therafter, and if the customer jumps up and down, just continue to read the paper.
Better to do nothing for nothing than sweat for an hour or two for nothing.
When you've finally arrived and are putting out the work regularly to a client base, then you can re-evaluate your cost structure, but you must be giving value for money,AND ON TIME.
Ian.

Hi Jackson, better be carefull on the over or under quoat bit.
If you over quote then you'll always be wondering why the other guy gets all the work.
If you under quote, (you poor fool, thinking you will get all the work and still make it pay) then you will be forced to tread the downward spiral of crusts of bread on the table, paying your work force peanuts, employing schoolkid labour to just get a break even situation, and when all else fails just lowering the standards of workmanship and eventually doing it yourself.
The scenario is this, Anyone out there costing up a job will not necessarily take the lowest bidder, it depends on your RELIABILITY!
You can charge like a wounded bull, if you have a good reputation for quality and delivery.
One thing is for sure, engineering covers a broad spectrum and you can't hope to do all the jobs with your set up, whatever it is, and you also can't expect to be a jack of all trades.
In the end if you try to pick up every and any job that is going, by under quoting, you'll soon lose credibillity.
How many people fail when the lead time blows out and an irate customer is treatening to excommunicate you.
As far as quoting is concerned, you must cover your costs, labour and material wise to break even.
This does not mean crusts on the table.
Decide what YOUR minimum hourly rate will be, add the cost of materials, add some for taxes, add the overheads, insurance. workshop rental/mortgage/loans/ outsourcing and when you get paid for the job the labour part is what you will have left to play with.
The rest will go to paying the bills.
Now try and underquote on that, the only loser is yourself as your rate of pay gets smaller and smaller.
The other cost will remain the same.
There are some jobs that you don't touch and those generally fall into the " can you weld a bit on the bottom of my trailer" type, only worth a dollar to the "customer", but take you two hours to do.
Make a rule of $50 for the first hour and pro rata therafter, and if the customer jumps up and down, just continue to read the paper.
Better to do nothing for nothing than sweat for an hour or two for nothing.
When you've finally arrived and are putting out the work regularly to a client base, then you can re-evaluate your cost structure, but you must be giving value for money,AND ON TIME.
Ian.

Well thank for the thought but im pretty sure i know how to quote, or this company wouldnt still be in buisness making the amount of parts we make and the amount of money we make, and another thing to consider is if you quote a job and the first time you run it and you dont nesaserly home run the job the next time you should grand slam it, and most of my customers will say "hey your to high on this" so i will see if i can do any better on the quote if i cant well i cant they understand that but 9time out of 10 no one else can do it for what i can either so i usualy end up with the job cause my quality is exelent and i dont miss delevery dates and there is my reputation.

Handle has a good point on the "too high" vs "too low" conundrum. I always follow up a quote with a phone call to assure the prosepct that although others' lead times may look more attractive.. mines are set in concrete and WILL not change.

I have won at least 2 jobs that I was at least 25% more than the competition merely because I pointed out the technical difficulties and solutions to the problems that the others hadn't seen... when the prospect phoned the others to see if they had cansidered this they said "erm... actualy... can we re- quote" lol.

Then again, if I think we are just getting used as a "quoting house" (and everyone's had these) I shall "no bid"- even if they keep phoning... you get a feel for these things.

Jackson is right in saying reputation is important- a satisfied customer will tell 3 of his friends, a dissatisfied one will tell around 11.

Handle has a good point on the "too high" vs "too low" conundrum. I always follow up a quote with a phone call to assure the prosepct that although others' lead times may look more attractive.. mines are set in concrete and WILL not change.

I dont know how it is there, but i get jobs in to quote and they give me a yearly quanity or say a one time run quanity and i quote that. Now if the quanity changes so does the price more parts i buy my material so if cost of material goes up so do the parts. So i cant say my price will stay the same.

Shop rate is shop rate. If you had 2 customers and had one on each machine would you cut both of them a break on cost? (the correct answer is no). Now if you have a good customer who pays well and gives you work because of trust and he has been with you a while. I would cut him a slight break. But you are still paying for your machines running. And cutter wear and machine wear. You are also paying for the down time when only one or no machines are running. And the next time when you are running only one machine the price is higher and he will think you are screwing him over because the price jumped. I chager the hours for each machine and stay consistant. By the way I run a shop myself.

Shop rate is shop rate. If you had 2 customers and had one on each machine would you cut both of them a break on cost? (the correct answer is no). Now if you have a good customer who pays well and gives you work because of trust and he has been with you a while. I would cut him a slight break. But you are still paying for your machines running. And cutter wear and machine wear. You are also paying for the down time when only one or no machines are running. And the next time when you are running only one machine the price is higher and he will think you are screwing him over because the price jumped. I chager the hours for each machine and stay consistant. By the way I run a shop myself.

Yeah you have to have a minimum shop rate and you can keep it the same, what im saying is once a price is set for say you quote 1,000 ok your material cost go up after a couple of runs do you pay for that or does the customer?"the customer"!!! now say they drop the order to 500 do run them for the same price per part as you did the 1,000 "no" you increase, so you dont loose that machines "Hourly rate"

The purpose to be in business is to make money. If you are running 7 machines and you are the only one that’s great but you do need to cover your time and machine ware and tare on all machines plus tool ware, electric, gas, water, material costs and your $50 per hour, per employee.

Hope this helps
CVV

I'm working on this:
http://www.cnczone.com/forums/showthread.php?t=44490
and would like input/comments.

Please remember its at an early stage so don't be too harsh! :)

Hi THK, most of the people I had dealings with, either working with or competing against, just do it the hard way, that is cost of material, as near as dammit, using up all the bargain bits under the bench, time spent plus a bit here and there, general cost of running the show, which all adds up to a dollar cost per hour for as long as it takes the job to be done.

How do you cost up a disc grinding wheel that is used for most of the jobs on and off?
Nobody takes note of the hours a disc will last, or for that matter how long the disc grinder will last.

Then you check to see what the others are charging, try and cut a bit off and quote with the hope that everything will pay out OK in the end.

Most of the time the hours just blow out, so the original quote gets a bit hazy, and in the end the payout just gets smaller.

I've only come across one person who had a formal costing system, and that was for steel tubing fabrication jobs.
Even then the hours were an estimate, based upon how long it was thought the job would take.

At the end of the day, if you covered your costs you could bet your boots that the others would undercut you no matter what you did to balance out, so the hourly rate paid was always under what you would like to get.

The biggest unknown, unless you are doing a regular continuous production job, is the time factor, especially on one off jobbing work, which doesn't pay anyway.

Material cost are fixed to the current supply and delivery charges, that leaves the overheads, which comprise the rentals, rates, electrics, vehicle cost and weekly payroll.

If you are working alone and rent or mortgage a factory, before you even do a stroke of work you have a rent/mortgage, electric, rates and transport cost to meet.

You have to cover this cost plus the cost of material for the job, and add your hours for the week that you have spent in the factory or running around on work related items, eg delivery or quoting.

You can spend a 100 hours a week just working, but the job will not pay the 100 hours if it's trivial waste of time.

In the end the cost per hour rate, which is $65 per hour approx for 2007, for engineering jobbing work, shrinks to $30 per hr, and there is still a tax factor to take in consideration.
The tax man is not interested if you spend 100 hours a week 52 weeks a year, no weekends off and no holidays.

You will be required to pay the tax from the net profits, and that ultimately hits your hourly rate down.
So in the end you could be working for $15 per hour take home pay, hardly enough to put food on the table.

larger organisations have an accounting department that is well versed in costing and can carry a non productive staff as part of the overheads.

So, who will use the system?
Someone who is very meticulous and saves bits of string and counts the paper clips each night.

Someone who is an accountant and not really on the shop floor, with a complete database of currently used items at their fingertips, or who would have the mental capacity to search out the hidden costs, and who has the time to sit and worry about the pennies and tuppences instead of hacking away at some metal on a machine.

Looking at it in the cold light of day, you could spend 1 or 2 hours on a computer per quote, searching out the costs and quantities to be used, filling in all the particulars to get the cost just right, but this has to be added to that particular job, and so from the start you are behind the next guy's quote.

I think if the system is simple enough to apply, then it just takes having a database of all the known cost items that are allied to your line of work, without having to do a majour search to find the odd item not used before, or a cheaper alternative.

Most people will balk at having to fill in forms, even on a computer, where the information is not at hand, the income tax return for a one man business is a typical example.
Ian.

BTW THK, the charge for quoting on a job is currently about $50 per quote up front, and this cost is waived if the customer accepts the quote and goes ahead with the job.

This cuts out all the time wasters, as it takes about 1 hour to properly estimate a job, without a five minute wild estimation that puts most customers off anyway.

I instituted this method at my last place of employ, as we were getting dozens of requests for $5 jobs that took 2 hours to do.
Ian.

Thanks for the comments Ian, constructive criticism is always good. :)

I've been using a basic version of this database for the past year and it takes about 10minutes to do up an accurate quote for a job using it.

Yeah, there's time involved in inputting your items and their price initially, but this is spread out by entering the prices for a sawblade today and a grinding wheel tomorrow etc. It only takes a few seconds at once, and after a while your left with a fairly comprehensive database of items you use and their costs.
To do up a job you simply run down the list and punch in the amount of each that your going to use.

A workbook in a database program is just what it's called....a workbook. You could do the same thing by recording your costs in writing with a paper workbook, and referring back to them, but that takes longer, requires more 'donkey work' to do calculations on your part (Which takes longer again), and ends up not being used, or books get lost or damaged or torn/worn etc.

Yeah you estimate for hours, but no matter how your pricing a job, your always going to have to estimate for hours involved. Sometimes it'll be accurate, and sometimes it'll all go arse end up and be way off. This program doesn't miraculously pull perfectly accurate hours out of thin air, you still have to estimate yourself and enter the amount, but thats not a drawback.

No I dont count paper clips or save bits of string! lol :rolleyes: But I do try to be as accurate as possible if I'm pricing work, and using this program makes that easier and quicker for me.

Plus, having your item prices databased means if you do find a spare few minutes once a year you can go back in and look at where your buying different items cheaper or more expensive. Its not rocket science, it just saves you spending hours going back over the years receipts to do the same thing. How you use this information is up to yourself.

I would contest that larger organisation's accounting departments are non-productive. Yes, organisations often become more beureaucratic as they grow, but plenty of them constantly monitor the bottom line, and make sure that they don't carry unnescessary overheads.

"Looking at it in the cold light of day, you could spend 1 or 2 hours on a computer per quote, searching out the costs and quantities to be used, filling in all the particulars to get the cost just right, but this has to be added to that particular job, and so from the start you are behind the next guy's quote."

"I think if the system is simple enough to apply, then it just takes having a database of all the known cost items that are allied to your line of work, without having to do a majour search to find the odd item not used before, or a cheaper alternative."I'm not sure what you mean by this? This program is a database of items, but instead of having the database sitting there and scribbling values on a piece of paper, it uses the database to get the maximum benefit. What do you mean about the major search for that odd item? If you buy an odd item, just put the price and name in the database, if you use that item a year later then just select it in the database to be priced for this job. If you don't want to include it in your price for this job then dont bother..... :confused:

"Someone who is an accountant and not really on the shop floor, with a complete database of currently used items at their fingertips, or who would have the mental capacity to search out the hidden costs, and who has the time to sit and worry about the pennies and tuppences instead of hacking away at some metal on a machine."

"....just do it the hard way, that is cost of material, as near as dammit, using up all the bargain bits under the bench, time spent plus a bit here and there, general cost of running the show, which all adds up to a dollar cost per hour for as long as it takes the job to be done."I started on this because I don't have employees, I just work away by myself, and as such I wanted to maximise the amount of time I could spend 'hacking away' and minimise the time drawing up quotes. There's no mental capacity involved, that also saves time, you simply save your items and their price as you buy them, then next time put in the amount of them your going to use. The program does all the brain work.
Why should I 'do it the hard way' when I can price a job more accurately and quicker this way?

...oh yeah....How do you cost up a disc grinding wheel that is used for most of the jobs on and off?
Stick in a nominal cost of about 10c for each job. How long does it take to type " .1 " (Excluding the "" !) ? :D

Ok, so your not perfectly charging the exact amount for each wheel on each job, but at least your not charging way too little or way too much. All those grinding wheels add up after 1 or 5 or 10 years......especially if your charging too little or not at all!

Most people will balk at having to fill in forms, even on a computer, where the information is not at hand, the income tax return for a one man business is a typical example. The whole point of this is that the Information Is At Hand!

But hey, it's probably not for everyone, especially not at this point....

For example, at this point if you have employee's it probably wont suit you because I don't have detailed calculations in for that yet.

Also its based more toward the wood insdustry at the moment because I don't really know anything about the metalworking/engineering insustries.


....Then there's the people who just don't like computers, and prefer to spend hours by hand doing what takes a few minutes on a screen, fair enough.

Then there's the people who prefer to do things 'The way I've always done things' just because its the way they do things and that's it....these people usually go out of business in the long term because they're unwilling to adapt to changing market environments.

Then there's people who won't try something because their competitors are not doing it, they usually don't get a competitive advantage, and they're almost as bad as the people who do things just because their competitor IS doing it! :eek:

Anyway, I use this and it works for me, when I've finished Version.1 I'll be offering it to anyone else who wants to try it, it won't break the bank, about $20. If you want it well and good, if not that's up to you. Undoubtedly your more experienced than me, and if you have a system that works and your making a profit then I applaude you 100% (Im being genuine).

Incidentially Ian, how would you like a free copy? I think you'd be the perfect person to tell me what to change or add when Vers.1 is nearly finished. I'd definately like comments on how to account better for businesses with employees. PM me if your interested.....it'd be for free!:cheers:

L8rs.

I think your best bet is to decide now that your gay so you will have lots of disposable income to spend on equipment. From the looks of your list your going to need lots of it. lol j/k but once you get into wine and women your $$ will be much less then you think.

Good luck,

Bowman

I think your best bet is to decide now that your gay so you will have lots of disposable income to spend on equipment. From the looks of your list your going to need lots of it. lol j/k but once you get into wine and women your $$ will be much less then you think.

Good luck,

Bowman

Are you referring to me?

If so, Im a happily married man...and yes my 'wife' is a woman. And I spend my disposable income on many things, including wine and....wife....:rolleyes: :D

Didn't get the gay part, but what the hell it's a big world.
Some of my best friends are hillarious, not gay, but just happy.

Anyway, THK, I'm retired now so I don't have a lot of use for cost factors, but I don't see why the system shouldn't be very usefull.

Reading your post carefully, I think if you keep adding the items you use as you buy them, and the current cost and competitors prices, you would be able to have the information at your "finger tips" keyboard wise that is, without paging through hand written lists in notebooks, and a search capability to find the items would make life that much easier.

I can see where the advantage lies for someone who is on a small planet and needs to get a quote without the scratching through drawers for leaflets and brochures that come through the door daily.

Before I retired I was employed to update the tooling database for tool requirements for every operation of every job and on all the possible machines that could be used.

This is like your system in a way, and I can see the distinct advantage of having the information centralised and at hand.

I reckon $20 is a pretty fair price for a system for co-ordinating costing, and I agree that where you have an item that lasts for weeks and is used on a daily basis, it is better to add some of it's value to all jobs, thereby covering the cost that norrmally just nibbles away at the profits unseen.

The assumption is that everyone has a computer and knows how to use it, those that are still in the stone age will die a natural death anyway.

Over a period of time the database would get streamlined, and the more you use it the better it gets.
This is a characteristic of all spreadsheets, and certainly beats the pencil, notepad and calculator path.

I think in addition that the costs for constant used consumables, such as odd strips of emery cloth, bought on a bulk roll and use randomly, and other items that have a varied life such as a bandsaw blade or grind stones and coolant supplies could be lumped together and applied to a quote at a fixed percentage factor price, thereby covering as well as spreading the load.
This means each and every one of the variables is added to the successfull quotes at a percentage price.

The more jobs you succeed in performing per year means the customers are having a smaller and smaller "shared cost loading" added to their bills.
I don't think anyone would feel ripped off if they had $1 added to their bill if this is what it cost for all the odds and ends spread over the year.

You still have to pay these costs up front, whether you are a big producer or just a one man show, and they will have to be paid by the customer in one way or another anyway.

Incidently if you are earning the money, what better way to spend it than on wine, women and song, beats Butlins and sandwiches.
Ian.

Thanks for the comments Ian,

I didn't get the gay part either! lol

Anyway, I think a search feature is a great idea, although I'm not sure that it would be needed until each individual subsection in the database reached more than maybe a hundred items. But I'll look into it also.

The information is at your fingertips and up to date, and you can update it annually or whatever you want to keep pace with any supplier price increases.

L8rs.
L8rs.

Hi THK, as I used to be a numbers person with the tool databases I worked with I would like to see a universal product/item description, similar to the ISO codes that are used for carbide tooling, which is internationally recognised.

I don't propose that you should produce a major work to identify all items used in the manufacturing industry, otherwise you would trip over your beard by the time it was up and running, but as an idea that I once used to identify tooling types.

For example, if abrasives were coded as 12, with paper as -1 and cloth as -2and sheet as -3 and roll as -4 etc and a further grade type as -1,-2, -3 etc, with abrasive medium as a further -1 -2 -3 to cover carborundum, silicon carbide or diamond etc, and then when you access a suppliers website you just fill in the code instead of trying to think what the product would be called, thereby getting the information as to the stock level and current price.

This would look something like:- 12-2-4-3, which means the suppliers computer recognises that you want a roll of carborundum abrasive cloth with a grit size of 120, otherwise if you requested "emery tape" you might get something entirely different.

The system could be divided by alpha/numeric coding whereby the first prefix is A for abrasives, B for rotating cutting tools, C for hand held cutting tools etc etc.
I know for a fact that if you want a TNMG type carbide tip you will get a specific tip no matter if you are an eskimo using it for a necklace or a CNC programmer tooling up for a rocket motor, it's a universal tooling Esperanto.

The advantage is anyone and his dog can generate the part description accurately that a computer will recognise, using a few alpha numeric symbols from an internationally recognised part description, whereas a computer would not know what a floggle toggle was even if it was a common tool used in Brazil and UK mining sites since Brunels days.

This system exists for parts, but it is unique to each firm that makes them, and is not recognised by any other firm. I may be wrong on that one, but if it already exists internationally, good oh.

I think the millitery has a code that has an enormous number content, so if you get one symbol out you get bed pans instead of rocket launchers for the troops in the front line.
Ian.

I'll have to look into that one. Not for this version, but definately for future. Programming the system to accept codes (Or not) wouldn't be technically difficult. If there's a standard internatinal designation for most of the item types it'd be great, but If not I'm sure we could figure something out.
Thanks Ian,
L8rs.

If Joe down the street has a machine that will produce 2 or 3 parts an hour and you are producing 2 parts per hour on two machines, then to be competitive you should only be charging for one machine + your setup time. You rarely can charge the customer for either your lack of skill or up to date machinery. Skill level (expertise) and the difficulty of the job should be a major part of your quote. Sometimes I miss on my quote and it will take me 15 hours instead of 10 or 7 hours instead of the 10 quoted, In either case I would charge for the 10.

Marshfeet

i would charge them 3 times the pay of my machinist this pays for the machine some for transport and setup and a little for me the rest goes to the goverment lol

Holy thread revival BATMAN!