How to price a job correctly?

[kesuma]

I run a signmaking business and recently just acquired CNC router to expand the business further. But with any new machine, I have difficulties in finding the right method to calculate cost and hence, the price of a job. And with CNC router on hands, there are so many new things I can possibly do.

Since cnc router is not a new technology, so I believe surely there are ways that other have developed over the years to manage their shops, including way to price a job. So is there anyone out there willing to share some wisdom/experiences in this matter?

Thank you

[NC Cams]

A variation of this exact same theme got discussed about a week ago and, as I recall, it was a guy who was doing production routing of flat/plywood sheets.

Try doing a "quoting" or "pricing" search and it should come up quite readily.

[Geof]

A search using quote or pricing gives thousands of hits. A search using blue shark gives this one and a few others.

http://www.cnczone.com/forums/woodworking/43280-what_charge_production_work-post343869.html


Shop Rates

[NC Cams]

Thanks Geof, you listed the one I was thinking about.

Keep in mind, however, that the business climate in Indonesia may be all together different from what we have to deal with in the USA.

The gist of the problems remain the same.

You have to get paid for consumeables.

You have to get paid for overhead.

You have to get paid for your work (IE profit).

You have to figure a factor in for set-up and programming.

YOu have to figure a cost for scrap which the customer will NOT want nor should they realistically have to pay for UNNECESSARILY.

It is easy to GIVE away your service. How to sell it and get paid for it is the trick that we all strive to achieve.

[kesuma]

Thank you all for the advice. Though the market is different, at least this gave me some ideas on how to construct my cost system and what things to look at closely.

I will come back once I find the solution

[naytep]

I have a formula which seams to work well in my shop.
Raw material + 15% (this includes needed scrap)
Overhead (insurance+electric+cost of the machine/lifespan)
Tooling specific to job
Total hourly age of oporator (includes any benifits)
Profit (20% generaly, sometimes market will allow more)
The total gets me pretty close most of the time. The thing that is more important han the quote is getting paid. You have to run a lot of jobs to make up for one dead beat customer.
Good Luck

[cnc metalcraft]

im in the same boat do i charge by the letter or the size

[shailendrasingh]

I am using a Mori Siki SL4 size Turning Centre. On this machine i am turning rings of around 300 mm size, in which i have to clean the face and have to make ID of the Ring .
In ID operation i am facing one porblem in which i am getting size variation of .1mm . Some time machine works well for hours and some time every peice is different in size
I have checked the Ball scrow of X axies and Z axies and the Tarret as well but could not find any problem. All the moters and other electric system is also fine.
When i run the machine with single tool then their is no broblem . can someone please guide me what should i do to find the exact problem

thanks looking for the help
Dahiya

[daveallen]

Unfortunately you have to quote a job. and the job usually goes to the lowest bidder. You need to figure your time and cost and an hourly. If your not getting enough work you'll have to lower that rate, If your swamped you 'll want to raise the rate. If your rate is too low to cover your cost you'll need to find better customers or go out of business. Pretty simple.

[Alec-Eldifrawi]

What makes a job a "high-priced" job?

[ImanCarrot]

Technical difficulty, unusual material, unique tooling, tight tolerances, quick delivery, import/export restrictions or.. that you just do not want the job cos it's too much hasle

[Peldor]

Originally Posted by [LEFT naytep[/left];350591]I have a formula which seams to work well in my shop. Raw material + 15% (this includes needed scrap) Overhead (insurance+electric+cost of the machine/lifespan) Tooling specific to job Total hourly age of oporator (includes any benifits ) Profit (20% generally , sometimes market will allow more) The total gets me pretty close most of the time. The thing that is more important han the quote is getting paid. You have to run a lot of jobs to make up for one dead beat customer. Good Luck

naytep

has it right, I've worked as a contract administrator in both the structural steel and general contracting fields and his formula looks about right. I set up an Excel spreadsheet and input the following information:

1. man-hours (I separate the general laborers from the foreman to get a more accurate price)
2. raw materials (I only include the actual material used for the job, no consumables)
3. consumables (when I was quoting for a welding fabrication yard I would use a "yard charge", my yard charge was $3.50 an hour and this would cover the cost of welding rods, electricity, miscellaneous bits that were needed to get the work done. But in your case you may want to line item specific consumables for more accurate quote)
4. Galvanizing and or painting charge (having formulas and charts that tell the square-foot surface area of individual components really help in estimating how much painting or galvanizing is going to cost)
5. sometimes I would put a CMA (cover my ass) line item charge into my bid to cover any unforeseen expenses. (I usually would only do this on jobs that were $80,000 plus)

Afterwards I would take the total and add between 15% and 20% profit to it. The spreadsheet would also add up all the man hours and automatically calculate state taxes and insurance into the final price. With this formula I would win around three out of every five bids, which really isn't that bad I think. If you want some pointers or tips on how to set up an Excel spreadsheet like this just drop me a line, I'll help out best I can.
Good luck.