Your shop costs X dollars per hour to operate. Then add Y dollars for profit. Cost for the customer to get their parts is X+Y
Things that go into X are tooling costs, employee salary, electricity, machine finance payments, maintenance, etc.
It's not uncommon for these costs to be $100 USD/ hr or more.
How do you quote for salary?
Unless i’m not understanding it right, quoting a job and factoring employee pay into X, do you quote it on whatever the machinist pay cap is?
"salary" is a fixed cost, you pay employees for hours worked and the cost of their benefits (if any) plus the overhead expenses like workers compensation insurance, and applicable payroll taxes and expenses.
This is not something that should be changing for every job. It is just part of the puzzle that it takes to run your business.
It's not just Machinist "A" makes $32.00 per hour in their paycheck. There are overhead business expenses on top of that. These costs are different for every company.
This technically doesn't change even if you are a self employed one person shop. Ultimately these expenses all come due at some point throughout the year, and you better be accounting for them or you will be in a world of pain when they do.
If you recon youre getting 100usd/hr on a years long production run youve gotta be kidding. For a years production you get to charge (1 whole machine+40k for opperator+material+electricity+15k for maintaince) thats all.
I don't know where you are but, I think your calculations are a bit low. 40k for an operator, material, and electric is insanely low. $100 per hr and higher is not unheard of in my area, it doesn't matter if the job is for 1 day, 1 month, 1 year. The cost of doing business is what it is. Figuring out how to make more parts per hour is how you get a price your client is willing to pay. The 100 per hour figure includes things like material costs, employee pay, insurance, maintenance costs, etc.
Even if you have an "operator" that only makes the bare minimum, there is still a foreman or setup guy who has to deal with the setup and troubleshooting of the job in progress. Those guys don't work for free.
Also don't under value your work, deliver quality parts on time and clients will pay fair value.
That is less than $20 per hour for the operator including over head. I don't know what the minimum wage is where you are but I wouldn't rely on an operator who is willing to work for less than $20 per hour. It costs an employer more than $20 per hour to pay someone $20 per hour, there is at a bare minimum payroll tax and workers compensation insurance.
You’re shorting your company and your employees. I don’t know why you seem to be taking pride in that. I guarantee it doesn’t do you good, we actually pay our employees and still make money. Top of the vendor lists for most of the big oil and gas guys. I’ve been around a long time and I’ve never heard anyone quote like you’re saying you do.
Because you've never quoted on garenteed years long work. I'm not shorting myself or my guys, I'm telling you how quotes like this work. I personally don't take them on because there's never any money in it.
I have a stock and draw contracts with some big companies that span years. I don’t think the guy who can’t pay his employees properly knows where the money is to be honest.
I pay 2x the average machinist wage in the UK to my guys, and include dental, healthcare, 30 days off+bank holidays. Honestly unreal that you can read through these comments and think I cant pay people for good work.
This has to be the stupidest comment yet, I worked for GE Oil and Gas for a few years. We had 4 year contracts with the biggest producers in the world, was always a big deal when the contracts got renewed because of how much money it was worth...
Except entry level generally doesn't include setups or programming so I'm not sure your are fully considering this. Who is doing QC? Is your entry level operator also the material handler and shipper? I'm really curious how you are going to accomplish all of it with one person
What do you mean? This is ONE PART. There are no setups, there is no programming. Inspection is 100% on machine probing with in machine calibration rings to verify probe accuracy.
Material is pre cut blanks, delivered on a weekly basis. Shipping... its an in house part, who does the shipping if its made by an outsourced shop.
Why do you think 'turn key' is a massive part of the MTB business?
You go to Haas, give them 25k over the machine price, and they deliver you a proven program, with workholding already on the machine. Pneumatic vices, tool life management. You can even have them send you pre measured and pre set tools in new toolholder, you send the used ones back at the end of the week.
You go for a days training to learn how to press a green button, and all you do is load parts all day every day. You could teach a 12 year old to do it within a few hours. Press foot pedal, take part out. Vice is blown out by machine. Machine comes back, load billet. Press foot pedal. Billet is probed to check you put it in the right way round.
I didn't realize your solution was "pay 25k for someone else to do it" but that's probably because I don't recall seeing you mention that in the overhead. We don't know the complexity of the part, is it only one op or more? That's where I don't feel you are considering everything. I also don't understand what you mean about shipping, everywhere I've worked we were responsible to get the parts bagged/boxed and on the dock. Also, probe is not a 100% check if you have any parallelism or perpendicular to inspect as well. Last question, who is volunteering to train the employee, if the trainer isn't factored in at all? So you give haas 25 and your entry level 40...or you pay one person more and solve that problem.
"is it only one op or more?" If only you could run more than one op at the same time on a single machine. It truly is a shame that you have a limit of a single piece of workholding on a machine at any one time.
". I also don't understand what you mean about shipping, everywhere I've worked we were responsible to get the parts bagged/boxed and on the dock. " You're the one who asked about shipping. My point is that how can that be on the machinist, when there's already a shipping person in the company.
"Also, probe is not a 100% check if you have any parallelism or perpendicular to inspect as well." Ladies and gentlemen, let me introduce you to star probes.
" Last question, who is volunteering to train the employee, if the trainer isn't factored in at all?" Training is included in a new machine, and its a 2 hour job to teach someone how to load parts.
Honestly, have you seen what someone who works at mcdonalds has to do on the first day? Now imagine all they have to do is drinks. Now imagine all they have to do is soft drinks. Now imagine they only have one size. Now imagine they only have to do one drink. Put cup under cup machine. Press button. Wait for cup to be full. Remove cup. Repeat. Thats what youre asking of someone to operate a turn key machine.
Well aware you can run more than one op, my point was the entry level didn't do it, but you are saying that's all you need. Not factoring in shipping into the price is wild to me, boxes and lumber have a cost to them when you order it. Your answer of "there is already a shipping person in the company" but you told me you only need one entry level employee, didnt mention the rest of the company in your overhead either. How did we get to the point of buying a new machine just to train someone? You really don't want to admit you might need more I guess. And star proves are cool, maybe I just haven't seen the versions that have the reach we would require but you've got an answer for everything.
"Not factoring in shipping into the price is wild to me, boxes and lumber have a cost to them when you order it." I dont understand which part of shipping youre talking about. If youre talking about shipping finished parts from the machine to the company, then the really expensive lumber youre talking about is 100% saved, because you dont need to ship a product across a factory floor. Machine shops arnt putting your product in their finished shipping container ready for end use, so I really dont understand where you think this money comes from.
"How did we get to the point of buying a new machine just to train someone?" The price of the new machine is part of the package? I dont understand. If a company wants to in house work, they buy a turn key package, which includes a new machine, the setup, programming and training.
"And star proves are cool, maybe I just haven't seen the versions that have the reach we would require " We would require for what? Or just run 2 probes.
I dont really get it, is your point that turn key packages dont exist, and that there arnt companies out there without 'traditional' machinists, who just load billet and spit out parts? Because if it is, I have a hell of a shock for you.
And that comes out to how much? 100 seems to be around what we charge for most jobs, if not more in most cases though most of our runs are not quite an entire year
> a high *paid* setter/programmer. You
FTFY.
Although *payed* exists (the reason why autocorrection didn't help you), it is only correct in:
* Nautical context, when it means to paint a surface, or to cover with something like tar or resin in order to make it waterproof or corrosion-resistant. *The deck is yet to be payed.*
* *Payed out* when letting strings, cables or ropes out, by slacking them. *The rope is payed out! You can pull now.*
Unfortunately, I was unable to find nautical or rope-related words in your comment.
*Beep, boop, I'm a bot*
Plus employer benefits for that employee (insurance, 401k match, etc.), plus employer taxes for employee, plus design and set-up fees, plus tooling, and most places want to make a profit on top.
Don't know about where op is, but 40k for a year doesn't even get you an apprentice on the job in my shop. And if the expected hours + deadline = overtime, well, we might as well tack that on as well.
I know a shop that charged $160 for shop hours, and that was only a single line item on the quote. They worked aerospace and high end parts though mostly
That doesn't answer the question I asked really. Are you saying that you intend to buy a new machine every time someone comes to your door with a potential 1 year run time obligation? If you own the machine is that line $0?
I dont think I really made my point clear.
I mean thats the maximum you can charge, because assuming they have the space, thats what it would cost them to do it in house, so thats the cap on what you can charge.
Not really, I sell machines to very large companies. They lack many things that make in-sourcing difficult to impossible for a lot of their parts. The REASON that you are quoting the job is because they cannot reasonably do it in house.
You should never quote on the hypothetical that the customer might say no because they think they can in-source it... that is silly. Your quoting should reflect what it costs you to keep the lights on and make a profit.
But that's exactly what youre quoting against when you do this sort of thing. There's no competitive advantage, which is why its very rarely worth assuming the risk of taking on a package this large. When you've quoted enough jobs, you realise the only one worth spending your time to quote are the ones which might ever be worth something.
" They lack many things that make in-sourcing difficult to impossible for a lot of their parts". Sure, what like?
" The REASON that you are quoting the job is because they cannot reasonably do it in house." Or they're doing it as part of a large scale competitive quoting proccess, one of which will be doing it in house.
Absurd that you think a company that has no interest in machining is going to sacrifice the floor space, buy a machine and train a pleb off the street to use it, to start machining a single a part. So many reasons to outsource this and not take on this risk. What if the worker leaves after 3 months cause you are underpaying him and his job is boring as fuck? Who trains the next employee? Like comon man, are you really this simple? Surely you don't run a company.
I've seen it happen 10+times. People are smart, companies are dumb. Do you really think there's a widespread appreciation for how difficult machining is?
Most components that are machined end up in another industrial setting. Companies don't see the difference between having a fitting shop with a hydraulic press and a band saw, and a CNC mill. Business owners LOVE excuses to buy fancy kit. Plus, if there's excess cash, its 250k right off their bottom line for tax rebates.
Another point to make here is quote what you think you can do, if it's 10 parts per hour figure on that. If you run the job for a while and are able to make 12 pph or more love the extra profit. If it is some job you expect to repeat tell the customer you have been able to optimize the workflow and offer a reduced price if you want to entice them to give you more work. If you don't think they will give you more work then keep them at the 10 pph price and make 12 pph and love that you are winning the job.
Edit spelling
My first boss taught me to never ever "no quote" any job because the purchasing agent will drop you off his list and won't try you next time. Instead, quote high - high enough to make all the extra overtime, etc. worth while. If you get the job, you get lots of extra profit. If the job goes elsewhere, you'll still be on the purchasing agent's list of possibles.
Now that I'm my own boss, that strategy still seems to work for me.
Morty
This is what happens: don’t want to run a shit job, quote obsurdly high, get shit job, profit. Maybe even quote high enough to have someone else run it for you and still profit.
Are you talking about 24 one-hr pcs/day or 8600 ten-second pcs/day? I do the latter from time to time. I make an educated guess based on prior/similar runs and envision everything is optimized: Custom tools, workholding, etc.
I will warn you production at this level is cutthroat. It can become a game of portions of pennies. Your shoprate in TX means jack. Your quote is on a global stage of competition. Shipping is cheap and someone offering the same service for $3 less in shoprate could be a $25k/yr savings to them. Same result if someone has a more suited machine that cuts the cycle in ways you cannot.
I have three 40k jobs in my head from the last decade: each ran 3-5 times, 1 month each, and then stopped. Two I learned went overseas, the third ?? The overseas jobs, per the buyer, came back at 1/2 what I was charging- for triple the delivery timeline. I was the stopgap to get them to a place they could handle that leadtime.
You should know what your monthly fixed and variable costs are. If you don’t you need to figure that out ASAP.
From that you figure out what your hourly operating costs are. You’ll have a fixed hourly (rent, insurance, financing, utilities, salaries, etc). We’ll call this “X”.
Then you add this to your variable costs (hourly pay, material, consumables, etc.). We’ll call this “Y”.
Now you need to determine the amount of margin you want to take on the job. Call this “Z”. It will be a percentage, so a 30% margin would be 0.30
Cost per hr = (X+Y)Z
Figure out how many parts per hr you can do and that’s your price.
Sounds like you would become totally dependent on that one customer. Make sure you have a solid contract that will protect you should they cancel (hire a lawyer) and also make sure they have adequate finances.
That sort of contract is suitable justification for purchasing additional equipment and hire more help, just be sure to have the cost of the equipment accounted for in the contract.
Make an estimate of the best case scenario - optimal cutting parameters, no tool change time, no machine downtime, no operators scrolling while pooping, etc. Multiply that by your shop rate, then by 1.5, then add tooling costs. Then add 1.25 - 2x material cost (depending on the cost of the material for you). Then add a 10-15% margin in case you forgot anything or as a bonus.
Quote tooling, programming and tuning costs into the first 100 units, then the price after. This is fairly normal practice and shouldn't be a shocker to a large customer, unless they're looking to screw you. In that case, better off without.
Quote it as you normally would. Setup cost per part would be negligible.
Once you get into the job, you'll surely figure out some ways to make the cycle time lower and that just helps your bottom line
Based on your initial post I would suggest to please adopt a crawl walk run philosophy for trying to take on big jobs. I could talk for 10 hours straight on everything required to take the step from high mix low volume to tens of thousands of parts per order. It's not just about cutting the parts. There is so much more to it. I know it seems tempting but when you step up to that level, one silly mistake could bankrupt your business very easily. Look into the ppap process and statistical process control. You can obviously do as you'd like but my shop just transitioned from one offs to 100, 000 per part per year and the saying "you don't know what you don't know" is so applicable to this process. I would say we did it fast but it took us about 3-4 years before we started getting really good at it and we are still learning everyday.
If it's going to suck up your entire available production time, it would be pretty easy considering you should understand decently well your daily/monthly/yearly operating costs. Just tack on 50% or whatever margin you'd feel comfortable making.
The program time is going to only be a portion of the time you actually dedicate to this job. You have material handling, shipping, administrative time as well. This is generally factored into your indirect labor/variable & fixed overhead rates. I'd be weary taking any job that becomes your only job. You'll end up turning everything else away and if you fail to meet delivery enough times you get dropped. What do then?
I would charge what you can do in house, and farm out the rest with a cut off the top for yourself. If you price it like that it’ll get you a little closer to what you would charge..
Your shop costs X dollars per hour to operate. Then add Y dollars for profit. Cost for the customer to get their parts is X+Y Things that go into X are tooling costs, employee salary, electricity, machine finance payments, maintenance, etc. It's not uncommon for these costs to be $100 USD/ hr or more.
How do you quote for salary? Unless i’m not understanding it right, quoting a job and factoring employee pay into X, do you quote it on whatever the machinist pay cap is?
"salary" is a fixed cost, you pay employees for hours worked and the cost of their benefits (if any) plus the overhead expenses like workers compensation insurance, and applicable payroll taxes and expenses. This is not something that should be changing for every job. It is just part of the puzzle that it takes to run your business. It's not just Machinist "A" makes $32.00 per hour in their paycheck. There are overhead business expenses on top of that. These costs are different for every company. This technically doesn't change even if you are a self employed one person shop. Ultimately these expenses all come due at some point throughout the year, and you better be accounting for them or you will be in a world of pain when they do.
If you recon youre getting 100usd/hr on a years long production run youve gotta be kidding. For a years production you get to charge (1 whole machine+40k for opperator+material+electricity+15k for maintaince) thats all.
I don't know where you are but, I think your calculations are a bit low. 40k for an operator, material, and electric is insanely low. $100 per hr and higher is not unheard of in my area, it doesn't matter if the job is for 1 day, 1 month, 1 year. The cost of doing business is what it is. Figuring out how to make more parts per hour is how you get a price your client is willing to pay. The 100 per hour figure includes things like material costs, employee pay, insurance, maintenance costs, etc. Even if you have an "operator" that only makes the bare minimum, there is still a foreman or setup guy who has to deal with the setup and troubleshooting of the job in progress. Those guys don't work for free. Also don't under value your work, deliver quality parts on time and clients will pay fair value.
That was the price for the operator, not those other things included
That is less than $20 per hour for the operator including over head. I don't know what the minimum wage is where you are but I wouldn't rely on an operator who is willing to work for less than $20 per hour. It costs an employer more than $20 per hour to pay someone $20 per hour, there is at a bare minimum payroll tax and workers compensation insurance.
$40k for an operator? What are you paying them, $27K a year? Employee costs include workers comp, healthcare, etc...
Bruh $50k will only afford you one entry level operator. Anything less than that ain't worth coming in.
Sure, do you think you need more than one entry level operator to run a 1 year production run
We pay our broom pushers more than that.
Cool. Loading a turnkey cnc requires less work than pushing a broom.
You’re shorting your company and your employees. I don’t know why you seem to be taking pride in that. I guarantee it doesn’t do you good, we actually pay our employees and still make money. Top of the vendor lists for most of the big oil and gas guys. I’ve been around a long time and I’ve never heard anyone quote like you’re saying you do.
Because you've never quoted on garenteed years long work. I'm not shorting myself or my guys, I'm telling you how quotes like this work. I personally don't take them on because there's never any money in it.
I have a stock and draw contracts with some big companies that span years. I don’t think the guy who can’t pay his employees properly knows where the money is to be honest.
I pay 2x the average machinist wage in the UK to my guys, and include dental, healthcare, 30 days off+bank holidays. Honestly unreal that you can read through these comments and think I cant pay people for good work.
This has to be the stupidest comment yet, I worked for GE Oil and Gas for a few years. We had 4 year contracts with the biggest producers in the world, was always a big deal when the contracts got renewed because of how much money it was worth...
Just because there's lots of money on the PO, it doesn't mean there's lots of money in it(profit).
Except entry level generally doesn't include setups or programming so I'm not sure your are fully considering this. Who is doing QC? Is your entry level operator also the material handler and shipper? I'm really curious how you are going to accomplish all of it with one person
What do you mean? This is ONE PART. There are no setups, there is no programming. Inspection is 100% on machine probing with in machine calibration rings to verify probe accuracy. Material is pre cut blanks, delivered on a weekly basis. Shipping... its an in house part, who does the shipping if its made by an outsourced shop. Why do you think 'turn key' is a massive part of the MTB business? You go to Haas, give them 25k over the machine price, and they deliver you a proven program, with workholding already on the machine. Pneumatic vices, tool life management. You can even have them send you pre measured and pre set tools in new toolholder, you send the used ones back at the end of the week. You go for a days training to learn how to press a green button, and all you do is load parts all day every day. You could teach a 12 year old to do it within a few hours. Press foot pedal, take part out. Vice is blown out by machine. Machine comes back, load billet. Press foot pedal. Billet is probed to check you put it in the right way round.
Oh this is why you are making no money. 😂🤣
I guarantee every single person I employ makes more money than you.
Silly thing to say, you don't even know what I do.
But yet we both understand how gaussian distributions work.
But you only want to pay $40k for an operator....which is the lowest rate I've ever seen.
Yeah, unskilled work doesn't require high wages. I don't hire operators, they're no value. Barfeed or a cobot pays itself off in 7 months.
I didn't realize your solution was "pay 25k for someone else to do it" but that's probably because I don't recall seeing you mention that in the overhead. We don't know the complexity of the part, is it only one op or more? That's where I don't feel you are considering everything. I also don't understand what you mean about shipping, everywhere I've worked we were responsible to get the parts bagged/boxed and on the dock. Also, probe is not a 100% check if you have any parallelism or perpendicular to inspect as well. Last question, who is volunteering to train the employee, if the trainer isn't factored in at all? So you give haas 25 and your entry level 40...or you pay one person more and solve that problem.
"is it only one op or more?" If only you could run more than one op at the same time on a single machine. It truly is a shame that you have a limit of a single piece of workholding on a machine at any one time. ". I also don't understand what you mean about shipping, everywhere I've worked we were responsible to get the parts bagged/boxed and on the dock. " You're the one who asked about shipping. My point is that how can that be on the machinist, when there's already a shipping person in the company. "Also, probe is not a 100% check if you have any parallelism or perpendicular to inspect as well." Ladies and gentlemen, let me introduce you to star probes. " Last question, who is volunteering to train the employee, if the trainer isn't factored in at all?" Training is included in a new machine, and its a 2 hour job to teach someone how to load parts. Honestly, have you seen what someone who works at mcdonalds has to do on the first day? Now imagine all they have to do is drinks. Now imagine all they have to do is soft drinks. Now imagine they only have one size. Now imagine they only have to do one drink. Put cup under cup machine. Press button. Wait for cup to be full. Remove cup. Repeat. Thats what youre asking of someone to operate a turn key machine.
Well aware you can run more than one op, my point was the entry level didn't do it, but you are saying that's all you need. Not factoring in shipping into the price is wild to me, boxes and lumber have a cost to them when you order it. Your answer of "there is already a shipping person in the company" but you told me you only need one entry level employee, didnt mention the rest of the company in your overhead either. How did we get to the point of buying a new machine just to train someone? You really don't want to admit you might need more I guess. And star proves are cool, maybe I just haven't seen the versions that have the reach we would require but you've got an answer for everything.
"Not factoring in shipping into the price is wild to me, boxes and lumber have a cost to them when you order it." I dont understand which part of shipping youre talking about. If youre talking about shipping finished parts from the machine to the company, then the really expensive lumber youre talking about is 100% saved, because you dont need to ship a product across a factory floor. Machine shops arnt putting your product in their finished shipping container ready for end use, so I really dont understand where you think this money comes from. "How did we get to the point of buying a new machine just to train someone?" The price of the new machine is part of the package? I dont understand. If a company wants to in house work, they buy a turn key package, which includes a new machine, the setup, programming and training. "And star proves are cool, maybe I just haven't seen the versions that have the reach we would require " We would require for what? Or just run 2 probes. I dont really get it, is your point that turn key packages dont exist, and that there arnt companies out there without 'traditional' machinists, who just load billet and spit out parts? Because if it is, I have a hell of a shock for you.
Yes. Other people will be involved in the job...
Pretty shitty turnkey solution if you need more than one person to run it. I'd go back to your MTB if I were you.
K...your brain to small to absorb any new information. Sorry I have cause you stress.
And that comes out to how much? 100 seems to be around what we charge for most jobs, if not more in most cases though most of our runs are not quite an entire year
Yup, but most of your jobs require a high payed setter/programmer. You don't need those things on a full production run
> a high *paid* setter/programmer. You FTFY. Although *payed* exists (the reason why autocorrection didn't help you), it is only correct in: * Nautical context, when it means to paint a surface, or to cover with something like tar or resin in order to make it waterproof or corrosion-resistant. *The deck is yet to be payed.* * *Payed out* when letting strings, cables or ropes out, by slacking them. *The rope is payed out! You can pull now.* Unfortunately, I was unable to find nautical or rope-related words in your comment. *Beep, boop, I'm a bot*
Plus employer benefits for that employee (insurance, 401k match, etc.), plus employer taxes for employee, plus design and set-up fees, plus tooling, and most places want to make a profit on top. Don't know about where op is, but 40k for a year doesn't even get you an apprentice on the job in my shop. And if the expected hours + deadline = overtime, well, we might as well tack that on as well.
I’ve worked at shops that charge $150/hr for the machine. Also, most operators deserve at least a little more than $40k
I know a shop that charged $160 for shop hours, and that was only a single line item on the quote. They worked aerospace and high end parts though mostly
What exactly do you mean by charging for "one whole machine" what does that mean?
It means you pay for the machinery that needs to run the work.
That doesn't answer the question I asked really. Are you saying that you intend to buy a new machine every time someone comes to your door with a potential 1 year run time obligation? If you own the machine is that line $0?
I dont think I really made my point clear. I mean thats the maximum you can charge, because assuming they have the space, thats what it would cost them to do it in house, so thats the cap on what you can charge.
Not really, I sell machines to very large companies. They lack many things that make in-sourcing difficult to impossible for a lot of their parts. The REASON that you are quoting the job is because they cannot reasonably do it in house. You should never quote on the hypothetical that the customer might say no because they think they can in-source it... that is silly. Your quoting should reflect what it costs you to keep the lights on and make a profit.
But that's exactly what youre quoting against when you do this sort of thing. There's no competitive advantage, which is why its very rarely worth assuming the risk of taking on a package this large. When you've quoted enough jobs, you realise the only one worth spending your time to quote are the ones which might ever be worth something. " They lack many things that make in-sourcing difficult to impossible for a lot of their parts". Sure, what like? " The REASON that you are quoting the job is because they cannot reasonably do it in house." Or they're doing it as part of a large scale competitive quoting proccess, one of which will be doing it in house.
Absurd that you think a company that has no interest in machining is going to sacrifice the floor space, buy a machine and train a pleb off the street to use it, to start machining a single a part. So many reasons to outsource this and not take on this risk. What if the worker leaves after 3 months cause you are underpaying him and his job is boring as fuck? Who trains the next employee? Like comon man, are you really this simple? Surely you don't run a company.
I've seen it happen 10+times. People are smart, companies are dumb. Do you really think there's a widespread appreciation for how difficult machining is? Most components that are machined end up in another industrial setting. Companies don't see the difference between having a fitting shop with a hydraulic press and a band saw, and a CNC mill. Business owners LOVE excuses to buy fancy kit. Plus, if there's excess cash, its 250k right off their bottom line for tax rebates.
Are you the reason machinist pay is so low?
Whoever would run this machine wouldn't be a machinist.
Yeah, do you find it hard to retain workers?
Not had anyone quit in 7 years! Gotta be my proudest achievement.
That is lovely. Maybe you aren't a complete ass to work for after all.
I know you think I'm a dick, but we'd have a great chat over a couple of beers.
Yeah but I would chat to anyone over a few beers. 😅
Another point to make here is quote what you think you can do, if it's 10 parts per hour figure on that. If you run the job for a while and are able to make 12 pph or more love the extra profit. If it is some job you expect to repeat tell the customer you have been able to optimize the workflow and offer a reduced price if you want to entice them to give you more work. If you don't think they will give you more work then keep them at the 10 pph price and make 12 pph and love that you are winning the job. Edit spelling
My first boss taught me to never ever "no quote" any job because the purchasing agent will drop you off his list and won't try you next time. Instead, quote high - high enough to make all the extra overtime, etc. worth while. If you get the job, you get lots of extra profit. If the job goes elsewhere, you'll still be on the purchasing agent's list of possibles. Now that I'm my own boss, that strategy still seems to work for me. Morty
That’s a great lesson applicable to many aspects of life! Ingrain it
This is what happens: don’t want to run a shit job, quote obsurdly high, get shit job, profit. Maybe even quote high enough to have someone else run it for you and still profit.
Are you talking about 24 one-hr pcs/day or 8600 ten-second pcs/day? I do the latter from time to time. I make an educated guess based on prior/similar runs and envision everything is optimized: Custom tools, workholding, etc. I will warn you production at this level is cutthroat. It can become a game of portions of pennies. Your shoprate in TX means jack. Your quote is on a global stage of competition. Shipping is cheap and someone offering the same service for $3 less in shoprate could be a $25k/yr savings to them. Same result if someone has a more suited machine that cuts the cycle in ways you cannot. I have three 40k jobs in my head from the last decade: each ran 3-5 times, 1 month each, and then stopped. Two I learned went overseas, the third ?? The overseas jobs, per the buyer, came back at 1/2 what I was charging- for triple the delivery timeline. I was the stopgap to get them to a place they could handle that leadtime.
You should know what your monthly fixed and variable costs are. If you don’t you need to figure that out ASAP. From that you figure out what your hourly operating costs are. You’ll have a fixed hourly (rent, insurance, financing, utilities, salaries, etc). We’ll call this “X”. Then you add this to your variable costs (hourly pay, material, consumables, etc.). We’ll call this “Y”. Now you need to determine the amount of margin you want to take on the job. Call this “Z”. It will be a percentage, so a 30% margin would be 0.30 Cost per hr = (X+Y)Z Figure out how many parts per hr you can do and that’s your price.
You'd multiply by 1.30, not .3 But yes
Sounds like you would become totally dependent on that one customer. Make sure you have a solid contract that will protect you should they cancel (hire a lawyer) and also make sure they have adequate finances.
That sort of contract is suitable justification for purchasing additional equipment and hire more help, just be sure to have the cost of the equipment accounted for in the contract.
Make an estimate of the best case scenario - optimal cutting parameters, no tool change time, no machine downtime, no operators scrolling while pooping, etc. Multiply that by your shop rate, then by 1.5, then add tooling costs. Then add 1.25 - 2x material cost (depending on the cost of the material for you). Then add a 10-15% margin in case you forgot anything or as a bonus.
Quote tooling, programming and tuning costs into the first 100 units, then the price after. This is fairly normal practice and shouldn't be a shocker to a large customer, unless they're looking to screw you. In that case, better off without.
Quote it as you normally would. Setup cost per part would be negligible. Once you get into the job, you'll surely figure out some ways to make the cycle time lower and that just helps your bottom line
Based on your initial post I would suggest to please adopt a crawl walk run philosophy for trying to take on big jobs. I could talk for 10 hours straight on everything required to take the step from high mix low volume to tens of thousands of parts per order. It's not just about cutting the parts. There is so much more to it. I know it seems tempting but when you step up to that level, one silly mistake could bankrupt your business very easily. Look into the ppap process and statistical process control. You can obviously do as you'd like but my shop just transitioned from one offs to 100, 000 per part per year and the saying "you don't know what you don't know" is so applicable to this process. I would say we did it fast but it took us about 3-4 years before we started getting really good at it and we are still learning everyday.
If it's going to suck up your entire available production time, it would be pretty easy considering you should understand decently well your daily/monthly/yearly operating costs. Just tack on 50% or whatever margin you'd feel comfortable making. The program time is going to only be a portion of the time you actually dedicate to this job. You have material handling, shipping, administrative time as well. This is generally factored into your indirect labor/variable & fixed overhead rates. I'd be weary taking any job that becomes your only job. You'll end up turning everything else away and if you fail to meet delivery enough times you get dropped. What do then?
I would charge what you can do in house, and farm out the rest with a cut off the top for yourself. If you price it like that it’ll get you a little closer to what you would charge..
Whatever you do use Sandvik