Is there a market for contract CNC programming?

[marine1775]

I am a Journeyman Tool and Die Maker and I have had a desire to start some sort of side business pertaining to the metalworking trade. But as many of you know starting a machine shop or tool and die shop is very costly and to maintain that business requires allot of overhead. So, I currently work for a small tool and die shop programming all of there CNC equipment. I am taking a second look at entrepreneurship, and the initial cost of a contract CNC or consulting business would be significantly less. I want to start out small and work my way up but I don't have a idea of what or how to charge customers for this service.
I understand about how we quote jobs at work but my question is do I charge by the hour or a standard "one size fits all" fee? And If there is not a market for it I would be wasting my time! Thanks for your time!

[txcncman]

I started my business in 1999. It took a while to really get off the ground. And even since having some success, there have been a couple of crashes. I even had to file bankruptcy in 2008.

The most difficult problem I have encountered is that very few machine shops want to hire someone that works off site or telecommutes. They want someone on site that they can "keep under their thumb." They falsely think that they "get their money's worth" this way. I have worked on site for several of my clients over the years. If they only knew how much money they actually wasted by having me sitting around, waiting for a foreman to make a decision or a customer to correct a drawing they would probably commit suicide. Even worse is while I have sat around trying to "look busy", I have watched their employees doing the same. This goes against my ethics, but when you have a family to support, you do what you have to do. If they would have allowed me to work from my home office, during these down times, I would not have been charging them, I would have been doing work for other clients. I still would have made the money I needed to support my family and they would not have been wasting money paying me to sit around waiting. Their loss. Right? Like Forrest Gump's mama always said, "Stupid is as stupid does."

The market for contract CNC programming is small. Many of your clients will not only want you to do the programming, but they will want you to set up their machines and run the parts too. Currently, I only have 2 clients. One in Florida and one in Texas. Ideally, based on how much work these 2 give me, I could make a decent living if I had 10 clients. My "hourly rate" is $40.00. I charge a 2 hour minimum per part program (operation/set up). 2 hours covers most simple parts. I give 1 "re-write" for no charge, unless I obviously screwed something up. In that case, I keep working on it until I get it right. If my client (or their customer) makes enough of a change to a part to classify as a revision (whether they call it that or not) I charge them for it.

I am also an instructor. I am also in negotiation to start a school for machinists here in Dallas, Texas. I intend to teach to the NIMS standards using NTMA teaching materials. I hope to have this school NIMS accredited for Machinist - Level 1 within one year. Our proposed study plan calls for 408 hours. Hope to start our first class November 1.

Don't know if that helps you make a decision or not. But there it is.

[marine1775]

Thanks for your reply! Your input helps tremendously!! I have always had a desire to venture out and take that 1st step. I understand as always there is risk involved. The first thing I have realized is that I am a toolmaker and not a business person and that is something that I need to work on. But I have a vision and a couple of ideas that I think could benefit the industry in my area!

With that being said I also teach part time at a local community college that once had a A.A.S. degree program for machining technology and now it has dwindled down to just a night time certificate program. I am currently using the NIMS text book and I really like it. I wish you the best of luck in the school!

[flyinchips]

So Mr. businessman, are you the sales department too? If the answer is yes, can you identify potential customers? If the answer is yes: go sell to them and get the work. If you are successful, you are on your way. If you aren't successful, repeat until you are or give up.

Repeat until satisfied.

Or like Nikie says: just do it. You will then know if this works for you.

I have been an independent developer for over 30 years using that formula. It works. Fear or lack of motivation are the usual downfalls. Yes, you'll screw things up, Yes, there are annoying tasks involved. It is like any other endeavor: learn from the screw ups and work to minimize the annoyances.

Good luck, have fun, make friends.

[txcncman]

Survey your market. Email. Snail mail. Telephone.

Ask: Do you ever have bottlenecks in your CNC programming? Do you ever need......? What are you willing to pay......? Are there any other services related to CNC programming that you might need?

[mcphill]

This is excellent advice!

In addition, this isn't an A or B decision. You can start your new business doing the work nights and weekends. If/when you build up so much work that it cramps your working hours, pursue working fewer days per week. If that isn't enough, you have to decide if the "side" job should take over as your "day" job. This of course doesn't mean you need to leave your current employer - it just means you would convert from a regular employee to a contractor providing your services to them on the terms of YOUR choosing.

Good Luck!

[txcncman]

Originally Posted by mcphill This is excellent advice! In addition, this isn't an A or B decision. You can start your new business doing the work nights and weekends. If/when you build up so much work that it cramps your working hours, pursue working fewer days per week. If that isn't enough, you have to decide if the "side" job should take over as your "day" job. This of course doesn't mean you need to leave your current employer - it just means you would convert from a regular employee to a contractor providing your services to them on the terms of YOUR choosing. Good Luck!

Right. The main difference for me between being a "regular" employee and a contractor is:

1) I usually take more say in the hours I work
2) I get to pay 100% for my own taxes and insurance

[marine1775]

Again,thanks for all of the advice!! It really has motivated me to pursue my dream. And yes I would be the sales department so I would have to do everything which is what it takes, hard work! I am going to a trade show next week and start my research. I can think of 10 potential customers in a 50 mile radius and that is just off the top of my head. I will never know unless I try!! Again thanks for the advice and good luck to everyone!!

[Shane123]

if you really want to start up as a code writer, you need to be different than what shops can do. target small job shops with your abilities to do 3d work, complex programming, fixture techniques.... we used to use a company for 3d work since our company didnt want to shell out the money for level 3 mastercam. i do believe the initial charge for one piece was around 200, but repeat use got better quoting, sometimes down to 50 bucks, depending on the complexity. after about 20 or 30 programs, the boss finally was able to justify the expense of level 3. plus at the time, you couldnt do peel milling on level one, so our company has seen the advantages of upgrading.

[Geof]

Does your present employer know you have these aspirations? I know the reponse of some employers when they find an employee is showing signs of independence is to get rid of that employee, but not all are like that. You might have a good one.

If you do have a good one maybe you can start a sort of joint venture. You go and look for potential customers but expand beyond just programming. Offer a service to maximize efficiency taking into account program structure, fixturing, sequence of operations. This would involve fixture design/manufacture and then integrating use of the fixture with modified programs for streamlined operations.

I think a lot of shops, both medium size and small, do not utilize specialized fixtures and multi-part fixturing anywhere near as much as is often possible. Even on relatively small numbers of parts it is sometimes viable to spend time making a fixture because the loading/reloading time can be reduced significantly. Also making multi-part fixtures can save large amounts of time especially on machines with slow tool changers or for parts with many tool changes. If each tool performs its operations on five parts before a toolchange that is equivalent to dividing the, per part, tool change time by 5; a five second tool change becomes a one second tool change.

This kind of venture could have appeal to your current employer because they stand to get business making these fixtures. And I would be creative in how you would charge the customers for the fixtures. Don't sell them 'lease' them. When you sell a finished product you have to price in all the design, labor, material costs, and overhead as well as a sensible profit margin. So the price is often high. By leasing you can moderate the initial cost to the customer. But don't lease based on the length of time the customer uses
the fixture, base it on the number of parts made. And possibly calulate the lease rate based on the time saved per part using the fixture. Above I mentioned how 4 seconds is saved per tool change per part. For ten tools this is 40 seconds per part so if the run was 500 parts the time saved is 20,000 seconds or 5.55 hours. So the lease charge would be some fraction of 5.55 hours multiplied by the customers normal charge out rate. For the first use you could charge 80%, second use 65% and for all subsequent uses 50%, and also offer the customer the choice of buying the fixture for its full price any time they wanted to. (Non of the lease payment would be counted toward the buyout price.)

I really don't know how viable this kind of approach might be but if I was forty years younger and just starting my own business I would probably give it a try.

[marine1775]

Shane123, thanks for the input! it is very helpful and give me a broader snapshot of the market. I have the same mindset, invest in technology that the other shops don't have and offer that service to them.

Geof, Wow your insight is wonderful. It has really got me thinking. I am a firm believer in thinking outside the box and what you have brought goes along the lines of making your competitors your customers too! One idea I have is to offer reverse engineering service. It takes several man hours to reverse engineer parts using mics, calipers, indicators, scales, gage blocks and pins. Especially on today's complex parts. Again invest in technology other shops don't have like portable CMM's and Modeling software like Solidworks. Thanks for your insight it has been very helpful.

[BruecknerCNC]

Originally Posted by mcphill This is excellent advice! In addition, this isn't an A or B decision. You can start your new business doing the work nights and weekends. If/when you build up so much work that it cramps your working hours, pursue working fewer days per week. If that isn't enough, you have to decide if the "side" job should take over as your "day" job. This of course doesn't mean you need to leave your current employer - it just means you would convert from a regular employee to a contractor providing your services to them on the terms of YOUR choosing. Good Luck!

That's an awesome paragraph right there! I'm working on that exact course...
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