quoting a small job.

[billystein]

Hi guys,

I have seen a few threads lately about quoting. many of the jobs that I do are very small quantity. some are up to a couple of hundred $ per part.
I am like most guys that are new to quoting and have made some errors on jobs. you look at something and you say that is a $10 part. simple program 5 pieces short run time.
then you make your program and setup and buy end mills and a tap or 2 and you already have a drill index. now 4 hours have gone you spent $90. on tools and you run your job in 25 minutes and made $50.
It sounds dumb but you look at the part and it still looks like a $10 part.
The thing that I learned is to ask yourself how many days are in this job.
Can I load a vise,set 10 tools make a program go to store and get tools in 1/2 a day or will it be 2 days.

the reality seems to be that the part is a $10. part if the person wanted 50 pieces but for 5 pieces the price goes up to $60. (not counting tools)
that's because I just happen to have the tools on the table by the tool grinder and they are paid for or basicly free.


food for thought

billy

[Geof]

Originally Posted by billystein .... the reality seems to be that the part is a $10. part if the person wanted 50 pieces but for 5 pieces the price goes up to $60. (not counting tools)... billy

I would add another zero to the 50, and may even increase the $60.

Back in the days when I was doing contract work pricing was my big problem and I never really solved it. Some jobs I took a bath some made hay; the problem is I was bathing far more often than necessary, boy was I clean .

One thing I did start was having a minimum of half a day, around $200 back then. When a customer came in the first question was is the part worth at least $200 to them, and if the reply was no I told them I couldn't do it. I defintely lost some jobs that way but overall made more money for my time.

[DareBee]

Geof may sound a little jaded but he is right.

I would be $90 - $110 each on your 5 parts - take it or leave it.

I shock the hell out of farmers and civilian walk-ins, when the come with one of those "$10 parts" and figure I can custom machine/fab one for less money.
I have also learned to MAKE sure to do so (shock them) as well. Have had more than 1 occasion when 1 of these people just leave me something to make and don't seem to care how much it will cost. I don't enjoy them freaking out when I give them the bill.

[Geof]

Originally Posted by DareBee Geof may sound a little jaded but he is right...

I am not a green rock!

Although on second thoughts maybe I was. I remember one customer, a Geotechnical Consulting Company; one engineer asked for a quote and ordered a piece of custom lab equipment, a second engineer came to pick it up and balked at the price...even though it had been quoted. I dropped the part in the scrap bin and told him to get out. Boy did he splutter when I refused to give it to him even though he was willing to cough up the quoted amount. Thjat was after I had come up with my own product and no longer needed the aggravation of dealing with idiots.

[billystein]

I know you guys are right on the amount but it is nice to know that you do consider the 1/2 day price instead of piece price for the short quantity. recently I have been dealing with quantities of 200-500 pcs. and multiple part numbers. when you deal with some customers on a larger volume how much does that consider into the quote.
example, you quote 60 per hour for 30 hr job for customer b. if a customer a gives you 400 hours a month does it warrent a discount?

[Geof]

Originally Posted by billystein ...... example, you quote 60 per hour for 30 hr job for customer b. if a customer a gives you 400 hours a month does it warrent a discount?

This is a good question. It is analogous to my situation where I have some customers who take one or two of my products per month and some who take one or two hundred; yes the higher volume customers do get a discount.

But be very careful that your basic rate is high enough that you can afford the discount; you may have to boost your rate a bit and then give a discount for regular volume.

And be very careful it is regular volume; if someone has been taking ten a month at full rate and then they place an order for a hundred and get a discount but dont't come back for ten months, you have shot yourself in the foot. This is the same as some of my low volume customers who want to get a years supply at a better discount, the answer is no.

[DareBee]

If the high(er) volumes make you capable of running lights out or hire a minimum wage worker to put parts in the machine then a discount can be applied.
Never forget that the more hours you run a machine the more it wears out. 10hrs a week it will last for 10 yours, 16hrs a day, be prepared for replacement or rebuild in 2.

I tend to give my customers discounts for payments within 15 days.
I deal mostly with large corporations and some of them have their accounting offices overseas (India). It often can take 90+ days for me to see a cheque (5 months once), but some of them will go for a 2% discount.
I often nail the long payment term guys with down payments as well - they like to prey on the new shops that don't know any better.

[fizzissist]

Having owned a short-run/production job shop I understand the intricate nature of bidding. We did 1 to 50,000 (or more) and took in anything that came in the door. One thing that was never easy to convey to a new customer, or even many old ones, is that most of the time you'll get a better end price if I just charge time & materials.

When you bid, you've got to add a mystic margin for surprises.

It's an art, though it should be a science, and you've got to be good enough to know how long it's going to take to make a part by breaking it down into operations.

At the old shop rate of $35/hr (yeah, that was a long time ago!!) I'd simply add 5cents every time a piece had to be handled for a second op, plus the machining time.

Figure the number of tools that would be totally consumed (and hope you actually used less), and their cost. I'd buy good quality tools too, so they'd be useful for other jobs. The less you have to add to a job for all the customers, the better. You should also add a small percentage profit into the cost of the tools. After all, the customer is actually buying the tools...he just doesn't get to keep 'em. If the customer DOES keep the tooling, as is often the case with dies and special fixtures, then the percentage is higher.

Same goes for material. One good reason to buy in quantity when you can, so you get a better price, get a better profit, and still save the customer money.

Estimate set up time, run time, and clean up. A lesson from my dad....the customer should pay to clean up his job. Nowadays, there's programming time too.

There's a local job shop that does our overflow or jobs that are beyond our capacity. Just happens that our dad's knew each other back when we were snot-nosed kids sweepin' floors and runnin' the drill press....but anyway...for reference I've checked the prices he's charged for a number of jobs just to see if I've still got my chops up...and yup. Still in the ballpark!!

All things being equal, and your quality and delivery are good, then too much business and your priced too low. Too little, and ....you're too high, or .....?

Bidding is extra tough these days. For me, it was a fun (and profitable) challenge. Hope it is for you too.

....one screw machine job I bid on we lost to a company that underbid me by 1/2cent/part.

One serious caveat.....
Be very careful on partial shipments!!

There's people who will get you to quote on 1000 pieces, accept that price, take partial shipments, then cancel after they've received 300 parts. They really wanted 300 pieces, but at the 1000 piece price!!