Shop rates for HAAS TM-1

[bloefeld]

I am setting up a small machine shop. I have a HAAS TM-1 Mill.

I have a good business plan and a complete understanding of most aspects of job-shop environments like machine shops.

However, I have no experience in the industry and would like to get some idea of what people are charging for this type of equipment.

My guess is the rate is something in the range of $85.00 per hour.

Any information that someone may have would be greatly appreciated.

Cheers,

Bloefeld

[Donkey Hotey]

Wayyyy too little information to go on. First off: are you talking about $US or $Cdn? Are you just going to hang a shingle out and hope for local business? Bidding on here (RFQ)? Have your own products? Are you after high tolerance work or just general stuff? What is your local competition? Is this your only machine? What is your monthly overhead? What do you need to earn in order to eat?

$85 sounds low to me if it's your only machine and your only source of income.

Have you been watching this thread?
http://cnczone.com/forums/showthread.php?t=78445

[bloefeld]

Good questions. I am in Edmonton Alberta. The mill is my only machining tool, and was purchased to do prototyping for research and development.

Since I have it, and it is now possible to find skilled people to work in my shop, I thought it may be interesting to start into the field with this equipment as my starting point.

As I develop a feel for the market and for the industry I can deploy more capital to make this a going concern instead of a boat anchor.

The machine is incidental to my income, but I am hoping it can be an opportunity for me to hire someone skilled with the right background who can make a living with the machine and perhaps grow the company with me.

I will check out the link you sent and I thank you for your help.

Cheers,

Bloefeld

[Donkey Hotey]

I assume that you're running the machine on your own right now and that it's serving its own needs. The minute you have an employee, all kinds of other things enter into the equation: liability insurance, a regular shop location, permits, business licenses, etc.

It's a very bad time to be entering the market of 'general machine shop.' You don't have to look any further than that link I postedm to see. I don't see any way you could hire a person, pay the overhead and pay for depreciation of the machine for $85/hour. The problem is that there are plenty of guys giving away shop time at that rate, just to slow the bleeding.

Some guys live in agricultural areas and have on-site workshops. They can afford to get away with lower shop rates because they live there and they run the machines. I'm sure this varies but the minute you start brining in employees, I think it needs to be in an area zoned for light industrial business (not agricultural).

I'm curious as to how you came up with $85/hour. I don't think a single VF-2 could sustain a shop and all the other necessary stuff, and a $15/hour employee for less than $200/hour gross (based on 1500 billable hours per year or $300K).

[bloefeld]

I pulled the $85.00 out of thin air based on past experience with similar equipment in the printing business.

I am a long seasoned business person with all the cost accounting skills necessary to come up with an hourly cost for the machine and the $30.00 per hour guy to run it.

I am not interested in what the cost of the machine is, to me that is nearly irrelevant. What I am really interested in is how much I can charge for the machine. If my cost is $1,000 per hour but I can get $5,000 per hour for it, I am pretty happy with the result.

The biggest mistake made by people in business is basing their charge-out rate on an estimated cost per hour. The cost per hour is entirely dependent upon the actual utilization rate of the machine. If you are wrong on that, then the rate is wrong. If you base your prices on the rate, you leave up to chance your ability to be profitable.

My goal with this question is to find out how much others are able to charge for similar machines.

I can very easily come up with an hourly cost based on my real shop costs.

Cheers,

Bloefeld

[Matt@RFR]

Originally Posted by bloefeld The cost per hour is entirely dependent upon the actual utilization rate of the machine.

Which, by your own logic, means that your shop rate is entirely dependant on YOUR SKILL, and how well you utilize the machine. Seems like it's up to you to pick a number, go with it for awhile and adjust if need be.

[Donkey Hotey]

Originally Posted by bloefeld What I am really interested in is how much I can charge for the machine.

The condensed version of my previous post: the machine and the operator will not earn enough to keep themselves afloat (based on that other thread).

Your point about pricing out the costs of the shop is very true. The problem is that whatever that number is, that's your baseline rate of bleed-out. Are you going to send your $30/hour employee home, unpaid when there is no work? Your liability insurance isn't pro-rated by spindle hours. The rent is not pro-rated. Those are all fixed costs and will contribute to a minimum that you must earn to keep it alive.

If that cost is $100K per year, that's the minimum you must earn in a year. At $85/hour, you'd have to bill out 1176 hours to pay the fixed costs. Are you going to bill materials and cutters on top of the $85/hour? Is your bidding time captured in there or amortized across a number of jobs you think you'll win?

Or put it this way: the RFQ section on this site is your oyster. Take a look at some of the jobs and take your best shot at bidding them. I've bid a few just for the heck of it and been shocked at the winning quotes. Take a stab at it and see if your version of what something should cost, is anywhere close to paying for your trouble.

I'm not trying to stop you; I'm just trying to make sure you've considered all the costs before you get into something that will cost you more than it's worth.

[bloefeld]

Hi,

If my charge out rate for my mill is $85.00 per hour and I have a part that keeps my shop busy for 75% of 3 shifts, my machine will earn $397,800.00. If my labor cost is $30.00 for shift 1 and $40.00 for shifts 2 and 3 my labor direct cost is $214,500.00. Add 15% for benefits and you come out at $246,675.00. The difference is $151,125.00.

That leaves me with about $12,500.00 per month for rent, amortization, taxes, yadda yadda. The little $25 grand machine is making a nice living for 3 people and kicking off enough profit for me to buy and pay for at least 2 more machines after my first year.

If that is the machine rate I can get, and I can get enough work, that is a good proposition. If however the machine rate is closer to $60 bucks per hour, my risk is much higher and my return is marginal.

So can anyone actually answer my question; what is the going rate for a HAAS TM-1 mill?

I already own it, if I can get it working for about $85 bucks an hour, I can hire a person who is currently unemployed and give him a nice living and maybe make a buck or two for myself.

Cheers,

Bloefeld

[tobyaxis]

Your shop rate or machine rate as you put it depends on all of the above mentioned plus any maintenance and tooling that machine will require.

If your making your own products and have buyers for those products you can estimate the costs of doing business.

The question you asked has been answered as far as I can see.

Honestly it's your call.

There are shops charging anywhere from $40 to $250 per hour but that rate is determined by the difficulty of the Part, Material Cost, Time to Machine, Insurance, Taxes, Employees, Shop Rent, Utilities, and the demand of the product.

You mention you own the machine, but do you have ALL the necessary cutters, tool holders, fixture material, and hardware too? I stress the word All for a reason. It is pretty hard to have everything for every job if your quoting jobs and you usually have to order tooling and material.

What are you making? Tools, Dies, Die-Cast-Dies, Parts, Assemblies??
What you make has a large affect on what you will have to charge per hour. And even if you estimate it accurately, there are usually a few bumps along the way that one has to be prepared for.

[Donkey Hotey]

Originally Posted by bloefeld ...If my charge out rate for my mill is $85.00 per hour and I have a part that keeps my shop busy for 75% of 3 shifts...

Based on that logic, the spindle will earn you $400/ hour as a rocket nozzle consultant to Jet Propulsion Laboratories. If you go into marketing your own prosthetic joints, I'd say it'll earn a solid $300/hour. Doing your own aerospace designs (privatized space exploration) should get you $300/hour but you'll need investors.

[tobyaxis]

Originally Posted by Donkey Hotey Based on that logic, the spindle will earn you $400/ hour as a rocket nozzle consultant to Jet Propulsion Laboratories. If you go into marketing your own prosthetic joints, I'd say it'll earn a solid $300/hour. Doing your own aerospace designs (privatized space exploration) should get you $300/hour but you'll need investors.

Good point

[behindpropeller]

Originally Posted by bloefeld So can anyone actually answer my question; what is the going rate for a HAAS TM-1 mill?

I can tell you this....

We just bought a TM-2 for R&D work. The tooling price in 2 years will equal the mill. You also need support equipment (lathe, vertical band saw, horizontal band saw, air compressor....etc) which costs money.

Tim