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Thread: working out hourly rate

  1. #1
    Join Date
    Jan 2017
    Posts
    55

    Default working out hourly rate

    hi there.
    I'm a site carpenter mostly but am trying to move towards workshop based. I'm trained in the workshop.
    I know how to price up my hourly or daily rate on site etc because I know all the variables.

    I'm struggling to think of all the variables and how to fairly work it out.
    things like cutter life and breakages,
    electricity used on the machine with dc ,pc vac table etc
    building special clamping jigs if needed,
    design time
    work on the cnc and work off it and how to integrate it into one formula.



    right now all I can think to do is
    do a basic rate for the basic workshop with basic electricity ,insurance etc
    then add on a rate for each machine separately
    divide this into a few different categories like quick cuts , medium volume cuts and constant use so that I can try to charge for blades at different rates etc (lets say I was using a chop saw a small bit I might add 1 euro an hour but if its constant I would add 10 euro an hour or what ever it worked out at. )
    how else would you allow for the different costs on using each machine. . to run the planer for an hour would cost a lot more that a drill press or chop saw.
    it would be a very complicated way of doing it but fairly accurate. hopefully.
    how do you work it all out.
    I'm more worried about the cnc side of it because it can get very expensive fairly quick with bits and all the electricity etc

  2. #2
    Join Date
    Jan 2008
    Location
    Hobby-Tronics, Chiloquin Oregon
    Posts
    1,228

    Default

    First off I do not run my Bot as a business, I am retired and enjoying it. However I will do some contract custom work if requested. My hourly rate is $75 per plus all material costs including substrates and finishes. This is for any of my time whether running the Bot or doing the artwork or whatever. I am a single person shop so my rate is actually pretty low. If I was making shop payments, labor force, etc., it would necessarily be much higher. I only do custom / specialty items and signs. I try and not compete with any locals that are feeding their families off their respective businesses. Russ
    AKA: Da Train Guy

  3. #3
    Join Date
    May 2011
    Location
    ny
    Posts
    776

    Default

    I don't charge by the hour on my work, most is one off or small quantity runs, I give a bid. I figure my material and get an idea of time and the complexity of the job. A simple but time consuming run on the machine if I do not have to babysit it and can make money on something else I am working on in the shop that job will be bid cheaper than if I have to stay on the machine feeding it pieces.

    Also the value of the work, is it complex that most shops can not do or have the experience those can have a premium price tag in the long run I think biding on jobs is much more profitable.

    Bits and electricity are my smallest expenses.

  4. #4
    Join Date
    Jan 2017
    Posts
    55

    Default

    Quote Originally Posted by Brian Harnett View Post
    I don't charge by the hour on my work, most is one off or small quantity runs, I give a bid. I figure my material and get an idea of time and the complexity of the job. A simple but time consuming run on the machine if I do not have to babysit it and can make money on something else I am working on in the shop that job will be bid cheaper than if I have to stay on the machine feeding it pieces.

    Also the value of the work, is it complex that most shops can not do or have the experience those can have a premium price tag in the long run I think biding on jobs is much more profitable.

    Bits and electricity are my smallest expenses.
    how do you put a value to each piece. is it that looks like 100$ job the next is a 300£ job

    what other expenses have you despite insurance etc

  5. #5
    Join Date
    Jan 2017
    Posts
    55

    Default

    Quote Originally Posted by chiloquinruss View Post
    First off I do not run my Bot as a business, I am retired and enjoying it. However I will do some contract custom work if requested. My hourly rate is $75 per plus all material costs including substrates and finishes. This is for any of my time whether running the Bot or doing the artwork or whatever. I am a single person shop so my rate is actually pretty low. If I was making shop payments, labor force, etc., it would necessarily be much higher. I only do custom / specialty items and signs. I try and not compete with any locals that are feeding their families off their respective businesses. Russ
    did you work that out or just decide its a nice easy number . I am hoping that this will be part of my income so it has to be worked out fairly acccurate

  6. #6
    Join Date
    Dec 2011
    Location
    Piedmont, SD
    Posts
    652

    Default

    You first need to establish whether you're vertical or horizontal.
    Gene, who sells wooden table ware, has repeatedly shared with this community how formulated his processes and pricing are, and he's very successful.
    I am horizontal - one month it's a kitchen, the following it is a custom piece of furniture with an entirely unique set of processes. This is where I thrive mentally - the variety keeps me happy, and I am constantly learning, updating and honing new skills. However, this makes the process of accurate pricing much more challenging. One person operations like us seem to suffer the same struggle - we give away more hours than we care to admit.

    I do keep a time card, though seldom refer to it except to tally hours and see how I did. A few years ago, I altered the form to include a description of processes. What did I do all afternoon? Analysis of this is what helps me to make corrections in calculating cost of any given process. My pricing has improved since doing so.

    Establish continuity of sub categories, such as drawers. I have graduated to a point that all I use is dovetail drawers, be it a kitchen, built in or free standing piece of furniture. I've also committed to a single style of high end, under mount drawer slide. I've realized they pay for themselves in savings over the cheap stuff. Every time I try to shave costs by using cheaper hardware, I loose it in extra time fussing for a good fit. Goal here is predictability, so every process you can formulate as a sub-category is a step towards accurate pricing technique. Bonus: nothing screams top quality furniture like a smooth, quiet drawer operation.

    Wish I could tell you this can be done before you start your first project, but it really is something that takes time and evolution. Your business is going to be as unique as yourself - How swiftly do you work? Are you a perfectionist, or can you accept a realistic level of sufficiency?

    I try to look at it this way: If the house cleaners are commanding $40 to $50 an hour, and the glass guys are pulling $75-90, you should be able to stand your ground as a custom designer/builder at least somewhere in that range.

    best of luck on your new direction,

    jeff

    Remember: If it was easy, everybody'd be doing it.

  7. #7
    Join Date
    Jan 2008
    Location
    Hobby-Tronics, Chiloquin Oregon
    Posts
    1,228

    Default

    "did you work that out" I have had my Bot for some time so I am very comfortable with it and especially Aspire. I have very little waste in either materials or my time. I usually work on job layout in the evening for an hour or two and then cut the next day for around 4 or 5 hours. That gives an equivalent to an 6 to 8 hour day, job dependent. So around $450 to $600 a day. During the summer months I work 3 or 4 days a week and much less in the winter. With less work in the winter my utilities are much less. Most of my equipment is 220v so is energy efficient. Electricity is expensive in Oregon so . . . . I am retired from regular work but the Bot keeps my wife and I very happy and allow us lots of opportunities that our retirement income would not allow. My shop and the purchase of all of the equipment was paid for within about 4 years using this $75 hourly rate. Early on I spent more time in the shop so had higher income. Also make sure you account for your time getting materials, transportation, and possibly installation if required. Installation can sometimes be the largest costs associated with the job. Hope this helps a little. Russ
    AKA: Da Train Guy

  8. #8
    Join Date
    Dec 2011
    Location
    Piedmont, SD
    Posts
    652

    Default

    I replied earlier today, but system said must be approved by moderator before posting, and is not showing up. I replied way before Russ, yet it's still not showing up. Lets see if this one works...
    Jeff

  9. #9
    Join Date
    Dec 2011
    Location
    Piedmont, SD
    Posts
    652

    Default

    Okay, since that worked this time, I'll try to respond again:


    You first need to establish whether you're vertical or horizontal.
    Gene, who sells wooden table ware, has repeatedly shared with this community how formulated his processes and pricing are, and he's very successful.
    I am horizontal - one month it's a kitchen, the following it is a custom piece of furniture with an entirely unique set of processes. This is where I thrive mentally - the variety keeps me happy, and I am constantly learning, updating and honing new skills. However, this makes the process of accurate pricing much more challenging. One person operations like us seem to suffer the same struggle - we give away more hours than we care to admit.

    I do keep a time card, though seldom refer to it except to tally hours and see how I did. A few years ago, I altered the form to include a description of processes. What did I do all afternoon? Analysis of this is what helps me to make corrections in calculating cost of any given process. My pricing has improved since doing so.

    Establish continuity of sub categories, such as drawers. I have graduated to a point that all I use is dovetail drawers, be it a kitchen, built in or free standing piece of furniture. I've also committed to a single style of high end, under mount drawer slide. I've realized they pay for themselves in savings over the cheap stuff. Every time I try to shave costs by using cheaper hardware, I loose it in extra time fussing for a good fit. Goal here is predictability, so every process you can formulate as a sub-category is a step towards accurate pricing technique. Bonus: nothing screams top quality furniture like a smooth, quiet drawer operation.

    Wish I could tell you this can be done before you start your first project, but it really is something that takes time and evolution. Your business is going to be as unique as yourself - How swiftly do you work? Are you a perfectionist, or can you accept a realistic level of sufficiency?

    I try to look at it this way: If the house cleaners are commanding $40 to $50 an hour, and the glass guys are pulling $75-90, you should be able to stand your ground as a custom designer/builder at least somewhere in that range.

    best of luck on your new direction,

    jeff

    Remember: If it was easy, everybody'd be doing it.

  10. #10
    Join Date
    Jan 2017
    Posts
    55

    Default

    Quote Originally Posted by jTr View Post
    Okay, since that worked this time, I'll try to respond again:


    You first need to establish whether you're vertical or horizontal.
    Gene, who sells wooden table ware, has repeatedly shared with this community how formulated his processes and pricing are, and he's very successful.
    I am horizontal - one month it's a kitchen, the following it is a custom piece of furniture with an entirely unique set of processes. This is where I thrive mentally - the variety keeps me happy, and I am constantly learning, updating and honing new skills. However, this makes the process of accurate pricing much more challenging. One person operations like us seem to suffer the same struggle - we give away more hours than we care to admit.

    I do keep a time card, though seldom refer to it except to tally hours and see how I did. A few years ago, I altered the form to include a description of processes. What did I do all afternoon? Analysis of this is what helps me to make corrections in calculating cost of any given process. My pricing has improved since doing so.

    Establish continuity of sub categories, such as drawers. I have graduated to a point that all I use is dovetail drawers, be it a kitchen, built in or free standing piece of furniture. I've also committed to a single style of high end, under mount drawer slide. I've realized they pay for themselves in savings over the cheap stuff. Every time I try to shave costs by using cheaper hardware, I loose it in extra time fussing for a good fit. Goal here is predictability, so every process you can formulate as a sub-category is a step towards accurate pricing technique. Bonus: nothing screams top quality furniture like a smooth, quiet drawer operation.

    Wish I could tell you this can be done before you start your first project, but it really is something that takes time and evolution. Your business is going to be as unique as yourself - How swiftly do you work? Are you a perfectionist, or can you accept a realistic level of sufficiency?

    I try to look at it this way: If the house cleaners are commanding $40 to $50 an hour, and the glass guys are pulling $75-90, you should be able to stand your ground as a custom designer/builder at least somewhere in that range.

    best of luck on your new direction,

    jeff

    Remember: If it was easy, everybody'd be doing it.
    thanks jeff.
    its the variability that's creating all the variables. if I was making one thing the whole time day in day out then it would be straight forward.
    I'm hoping to be making all kinds of things both on the cnc fully and partially on it.

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