How to charge for shopbot jobs?

[Call-Tech]

Now that I have decided to order my shopbot. I have begun to think about how much to charge for doing work for others in my area. Can I get some feedback on how everyone is charging for cad, cutting of customer supplied files etc..

PS. Thanks Gary for letting me come look at your shopbot.

[dmdraper]

There are probably several strategies, but one I have seen (and use myself) uses a flat rate machine time charge, for example $100.00/hour. The log files that the Shopbot generates can be used to determine actual cutting time (during an "air cut") so it becomes a simple rate x time calculation. An Excel spreadsheet is a great way to automate all this.

Another thing to consider... don't give away design time. Charge for estimates and if the cusotmer decides to hire you, subtract what they have paid up front for the design/NC file generation. You might think this would drive away potential business, but you'd be suprised.

Dave D.

[carl]

Fred
You must be bad with names
my name is Carl

[elcruisr]

We charge for Cad time, any special jigging or setup, runtime and tooling. All is done at an hourly rate and we mark up our tooling a standard percent. I do have some large accounts that get a standard setup and cad fee irregardless of time. This simplifies our dealings with them and we get so much business from them that it all works out.

Eric

[superior]

Fred: We have discussed the hourly rate at both my camps here in Oklahoma, and seem to consistently come up with $60/65 per hour. Like all the above posts have indicated, that does not include all the prep work, nor materials. I personally charge $65.00 per hour of actual cut time. And, like Eric, we do take special care of our special ongoing customers. I will note we do not use our SB all that much. I am trying to develop some special jobs for it, but my nose is too close to the grindstone to see anything else. The opportunity is there, just too busy to look for it. My bad.
Like David and Eric noted above, there are numerous factors to consider, too numerous to get into here. Just be certain you charge enough to cover all expenses, including your pay check from the job.
Good luck, and as you already know, the forum is a great place for good accurate information.
Doug

[paco]

Hi all!

I've read (and learn) from this forum about this topic; thanks to all for sharing about a such delicate subject.

I'd be curious to learn more about the charge difference for one man shop about CAD/CAM vs machining time... personnaly, so far I'm charging about the same for both since, well, I only one so I got to cover for all my buisnees charges alone and can't be at two place at same time...

What do you think about this? What about you?

Thoses who actually run their shop with employee could join in too; they might have relevant infos about it too...

[gerald_d]

Rule no. 1: Charge a customer as much as he is willing to pay.

Formulae are only a guide. You also learn to read your customer - his wishes and his budget. Sometimes you give a huge discount if the customer can introduce you to someone else with a good budget, or if you are short of business. And yes, some guys get charged very inflated prices - typically the one-time visitors who come and shoot movies here.

We do not charge separately for setup/CAD time, or mention hours and price/hour to our customers. We don't want them to check our calculations. We do take time to explain how much work we put into their job, even if they give us a dxf - they must never get the impression that we simply plug their file into our machine. Also, if a customer delivers wood for a $200 job, and we finish cutting it within an hour, we will only call him a couple of hours later to say that the job is finished.

[mikejohn]

If you are in a competitive mass production markey (particularly if you are competing against far eastern imports) you are going to have to pare your charges much more than if you have a niche market with little or no competition.
As Gerald says, in the end, charge what the market will bear, but keep in mind the value of repeat orders.
..............Mike

[richards]

Being a one-man operation can lead to long hours and low pay - that much I know from running two consecutive businesses for thirty years.

I've found that the most important tool that I have to determine basic pricing is a shreadsheet running a break-even analysis program. Be sure to add in ALL of the overhead costs, not just a desired salary. After all, if you don't charge for it, no one is going to pay for it.

It's also very important to realize that, until your business is thriving, you might only be able to bill 25% of the hours that you actually work. As a one-man opertation, you'll spend a lot of your time acting as a salesman, a pickup/delivery person, a bookkeeper, etc. The hours that you're running the business are usually hours that take away from production.

Be realistic on how much you can do in a day. Just because the Shopbot can cut a file in 15 minutes doesn't mean that you can cut that file four times an hour. When you're fixturing material or cleaning up after the previous sheet, or moving sheets of material out of the way, the Shopbot will probably be sitting idle.

Also, don't try to compete with the local Home Depot. Instead of imitating the products that are sold by the boxcar load, try to add value by adding features that can only be done efficiently with a CNC router. (Anybody with a cabinet saw and strong back can greatly outproduce a CNC router if all you're doing is straight line cuts that can easily be done on a table saw.)

As for design time, I use two different methods. If the project is a one-shot with no repeat business, I charge the same rate for programming that I charge for cutting. On the other hand, if the project is going to be a repeat type job, I bill the job at a set price per sheet of material WITH A MINIMUM NUMBER OF SHEETS. That way, a less than honest customer isn't going to stick me for a lot of unbilled programming to get a 'sample' and then disapear.

[mikejohn]

Mike
Please allow me to highlight what you have said above,an absolute truth "don't try to compete with the local Home Depot. Instead of imitating the products that are sold by the boxcar load, try to add value by adding features that can only be done efficiently with a CNC router.
Try, wherever you can to 'personalise' the item your selling, making it a one-off.
.........Mike

[paco]

OK. So I was'nt too far from...

As for charging as much as possible; that's guessing... I might lack experience (and knowledge of my customers)...

I have this habit too to not deliver too fast as I tend to think it would give the customer a "wrong" idea... and proove fatal in some situation...

I sure have got this image that competing with the local retail supplier is, well like buisness suicide! I'm looking for specific nitche of work...

Thanks! Keep the post coming I like to hear about you! And I'm sure Fred like it too!

[fleinbach]

I am sort of in the same boat as you Fred. Even though over the past 40 years I have owned two businesses and done considerably well, I do not have much experience in charging for smaller shop made items. Both businesses involved the sale of large items containing many parts. I have been building additions and houses during that entire time. I also had a satellite TV company for 15 years. I have always had shop work to perform for both the satellite and construction company, but anything built in the shop was just a part of the larger job. In other words I never broke down separately the time that was spent in the shop. Some might consider this poor business practices but I never claimed to be business savvy. I just do a good job giving people what they want.

Now I will make one comment about pricing. I calculated my prices and charged the same amount whether I was working for someone on a fixed income or a multimillionaire. And most of my clients have been the latter. I have never felt right charging more just because someone has more money. I base my charges using both reference manuals to obtain the standard going rate and my own calculations averaged and factored in.

As Paco stated above charging as much as possible may give you a windfall profit once in a great while, or like PT Barnum said “there's a sucker born every minute”. Well that was in a different time. People today are much wiser, sure there are few suckers but do you want a few jobs a year gouging some poor sucker or do you want to get a reputation for being fair and have more work than you can handle.

[joe]

I'm gonna put a burr under the saddle most of the above postings because I don't think you guys are thinking.

I wouldn't ever, ever charge all I can get out of a client. You can't build a business that way. Second: A one man operation armed with a Shopbot can make a hell of a living.

Charging for Time: It doesn't make any difference whether you are routing or desinging, it all time.

So how do I price my work?

I won't work by the hour. I've tried it and loose every time. When you price a job that way, you have put on the harnas. Might as well lean forward and start pulling. For little guys like me, it's a donkey mentality. I never liked it. None of my hero's would do it either.

The big router guys will take your hourly work away from you every time or drive down the price so low it's not worth it. I've never wanted to do production work and punch a clock. That's the reason I got my router. Custom work pays off very well and that's all I do.

I'm a little one man operation, with some help from a part time chap. It's a good life. I have a nice home, good cars. Travel the world with my daughter, who has just completed her second year of med. school. I've got great clients and serve them the best I can. I don't do long hours!

When a customer comes with work, I look for problems in the job. Then I figure out, if I had that kind of work all day, every day, what kind of life would it be. I try to charge enough for my mistakes and production errors along with the time to do the job. Sometimes I need to explain that hourly pricing dosen't make much sence. The customer really wants a toatl cost. It doesn't make any difference if you charge $15.00 and hour, or $100, the customer only wants the grand total.

Lookover the monthly grand debt, it comes out this way. The regular expences are allways there. I add in a couple of thousand for maintenance,and repair, stick a little back for the rainy day fund and there is the vaction kitty too. This kind of accounting kills my accountant. He has know life. How would you like to count other peoples money all day?

Hope I didn't offend anyone.

I think the world of all you guys. And this forum is unique from any other.

Your friend,
joe

[gerald_d]

In case anyone is thinking that we believe in "gouging the suckers", that is not what I said. If we are back-ordered for 2 weeks and a movie set designer pitches up at 2pm wanting 20 fake cello's and violins at 7am the next day, he is going to pay 4x the formula rate. And he is going to do so with a smile plus refer us to his pals, even after telling him that he would have paid a quarter of the price if he was willing to wait 2 weeks.

If we find ways to speed up repeat orders, we don't automatically drop the previous job prices to the customer. We may have spent a lot of time and material in clamping systems or tooling and we would be gouging ourselves if we tell the customer we can now cut the job twice as fast and therefore it will cost him half the price.

[fleinbach]

Gerald,

Charging a premium for work that needs to be completed quicker than normal is certainly exceptable, and expected. I also agree that if the average person takes one hour to do a job but after practice is able to complete the same job in half the time he should still be able to collect the average going rate.

If nine out of 10 people can complete a specific job in 10 hours but one person is capable of completing the same job in three hours, that person should not have to accept one third of the going rate. He deserves getting the same pay as the other nine for either his improved skill or stamina.

[gerald_d]

I think the key message that is emerging here is to get to know what other choices your customer has. Where else can he go, for what price (or quality, or timescales)? What will make a customer willing to use you rather than someone else?

Hey, wasn't there a talk at the Jamboree on this topic?

[paco]

Hey, wasn't there a talk at the Jamboree on this topic?

Yeah!... and I'd really like that thoses who actually made presentation(s) and attended to join in the thread... please.

[richards]

One point that hasn't been addressed is WHEN to use the Shopbot as the primary tool. I got caught on that last week when I cut a bunch of particle board cabinets for a neighbor. Each cabinet had six major parts and six minor parts. Except for diagonal dados on four of the parts, all of the other cuts were straight cuts.

On the alpha, the log file showed that each cabinet took twenty-two minutes to cut. After the sheet came off the alpha, I spent another twenty minutes with a laminate trimmer and router table to finish each sheet.

Doing the same job using the Unisaw for all of the cuts, only using the alpha for the diagonal dados and then finishing the edges on the router table, took less than fifteen minutes per cabinet total.

The moral, of course, is to use the best tool for the job. The sub moral is to concentrate on finding jobs best suited for the shopbot. In fact, cutting these cabinets basically broke the rule that I posted above about competing with the Home Depot type stores that sell a product by the box car load.

As for pricing the job, I charged $30 per cabinet to cut the parts, about 1/2 what I would normally charge, based on time alone. Had I used the best tool for the job, I could have charged $22.50 per cabinet and earned my customary $90 per hour shop rate AND saved the customer money at the same time.

[gerald_d]

In that vein, we try and convince customers to add curves - "We'll do a 2" radius on that corner for free, sir". And next time the panel saw guy is out of the loop.

[paco]

Nice tip Gerald! Thanks!

To continue on this point; it's sometime heartbreaking but refusing a job can be life (money, time, stress) saving... Some people showed up saying they've heard that this or that can done on a CNC router but I've explained 'em (with proof) that it's not that it cannot but it would be MUCH MORE trouble than with other process. Sometime it's about time it would take, sometime it's about GIG needed to actually hold down the part, sometime it's that CNC routing it would not give the intended results...

[Call-Tech]

Thanks everyone for your input on pricing, In general its the same as all the other jobs we do in our sign shop. Calculate total overhead, add paycheck and a little extra and divide into total realistic hours you can actually produce work each day. Then add extra for rush job or for customer that will just be a pain. You can almost always tell which ones they are the moment they walk in the door. I'll probably be in the hole during the learning curve, but will make money in the long haul.

I chose shopbot mostly because of these boards! Everyone here is great and everyone speaks so highly of shopbot that I was sold.

PS Sorry Carl, I did remember your name. I was talking to Gary on the phone when I was entering message on board and just had brain fart while typing. (-;

[jeff]

As a quote reqestor (fairly new one), I want to chime in here...

One thing I find very useful is suggestions about how to make my product cheaper or better. I've had several situations, where I ask for a quote about one process, get a crazy high quote, and don't purchase the job. The problem is, there is another process that works better.

This just happened to me with some sheet metal parts. CNC punch operators were quoting me 3 or 4 times what I would pay. Then someone responded with a CNC laser quote... right in the ball park. Next time I will know what to ask for.

Also, I've learned to give a range of what I would be willing to pay. That way its more fair to the supplier, and gives me better information. They don't waste time writing up a quote that I'll never be able to afford, and hopefully they will suggest other options if they can't do it in that ball park.

I originally thought that by not giving a "what I'm willing to pay" number I'd get lower quotes, but by "showing my cards" first I tend to get better information, and eventually better quotes.

I've been using the free site www.mfgquote.com (http://www.mfgquote.com) and am finding it useful for some industries, and I like how it organizes the quote process for me.

-Jeff

[paco]

Hey Jeff!

Thanks for your opinions. I'd really wish that my customers were like you!!! I've begin to ask for price range when customer call in but most think as you did; they think they'll get lower quotes this way (by not telling about it)...!? Confuse me since I don't hesitate to suggest alternatives and other solutions to give 'em a better service... and lower quotes!

[jeff]

Paco-

One alternative is to give them a price range and see how they react. Or have some examples on your website with ballpark estimates.

One of my pet peeves is job shops that won't give ball park quotes even on a fairly well defined item. In one case I was asking about a run of drawn, shaped, tubing and they wouldn't even give me a an order of magnitude (closer to $1000 or $10,000)
quote before getting a dimensioned drawing.

-Jeff

[paco]

Thanks! I'll take note of this!