Let's Play "What Would You Charge"

[Jeff Belany]

Keith says: It should be very easy to make two trips from your delivery vehicle to the second floor using a heavy duty cart to deliver 50 at a time.

You're a better man than me (or younger and much stronger) if you can lug a 250 load on a cart up a flight of stairs. That's a tough pull for most people. I'm sure I could have done it 25-30 years ago.

I couldn't do a job like this. As a one man shop I could never take the time to make the pickup and deliveries unless I could do it after shop hours.

Jeff in northern Wisconsin

[Scott Marquez]

I would bid the job based on $60.00 per hour, that includes transportation and handling. I would then suggest that the customer could save some money by doing fewer deliveries, or transporting them himself.
The fact that he is a large National chain doesn't make me wet all over myself, it's actually a strike against him. Since I'm a small shop, I know that he will only use me at his convienance. Since I have limited resources and time I won't be able to handle a huge job, which means a large player will swoop in and get that job if it comes up. Larger companies aren't always quick to pay so I would also keep that in mind.
Scott

[Keith Outten]

Per the original post there was no mention of an elevator so I assumed their customer was in a commercial building and that means they have to have an elevator due to ADA laws. It was stated that the shop was on the second floor with no elevator which means it would not be much of a problem to slide the job down the stairs in a plywood box. If my shop was on the second floor I would probably have a way to handle material either from a dumbwaiter or a lifting device to get my machines up and down the stairs.

I'm old and work alone so I have lots of options when it comes to lifting and handling in my shop Starting with a tractor and pallet forks, hydraulic tables and an overhead electric winch. I rarely do any lifting over ten to twenty pounds. I also have a pallet jack in my shop so I can stack sign boxes on pallets and move them to the door where the tractor can pick them up and put them in my van. Twelve foot long sheets of Corian are brought to my shop door and placed on a panel saw to cut them down to workable sizes. I then place each piece on hydraulic tables so I can roll them over to the CNC Router and start machining plaques. Finished plaques go back on the hydraulic tables and are rolled over to the laser engraver. Every step in the process is planned to minimise manual lifting based on my experience with lots of commercial buildings and thousands of Corian signs. Wooden signs are so much lighter they are not a problem at all.

FWIW I rarely install signs in commercial buildings until the elevators are working. This is my company policy and I make sure my customer understands this by placing the following in my job quote, without an operating elevator the customer has to provide the labor necessary to move everything up and down the building.

I must have misinterpreted where the elevator was
.

[Graham Facer]

$10each based on $90/hour and 1 hour each way for pick up and drop off (if they want me to do it rather than a shipping company I round up). Loading up and down is just part of the business if its located on the second floor (my laser is too though I could forklift up a pallet if I wanted. Good workout and making money...

Actually its $9.60 but again - rounded up. If I was liable for errors - I'd allow 5% of the material cost on top and if I suspect the customer is picky - add 10% or more. Deposit of 50% and balance on delivery regardless of what they say their large chain's policies are.

But I'm not really in the engraving business but that's how I'd look at it.

[Kev Williams]

1) It's for an existing good customer with a national name brand
Let's just say Bed Bath & Beyond for giggles.
2) The job is to engrave 500 maple wood cutting boards that weigh 5lbs each
No problem
3) It takes 5 minutes and 20 seconds to engrave each board (you are not allowed to do the job faster......so it does not matter if you have a 30 watt Rabbit or a 130 watt Trotec). This time does not include loading and unloading. Regardless of the size of your bed, you can only engrave one at a time.
No problem
4) Customer supplies the boards......so your material cost is $0
No problem
5) Customer wants you to pick up and deliver the boards 40 minutes (one way) from your shop.....100 boards per week for five weeks.
It would be cheaper to pay a courier $25 each way than to pay my gopher, or for me to take time off to deliver...
6) Your shop is on the second floor.
Yes it is, actually.
7) No asking for additional clarification.
Don't need any
What would you charge?
$8 machine time plus $2 in/out, plus $50 for the courier per hundred comes to $15 each
Would it be different if you were bidding on the job against 3 other companies?
Don't matter to me if I get the job or not, I'm already working 17 hours every day!
Would it be different is the customer was Joe's Automotive and Fishing Supply?
Big Fat YES. I would discount based on the business. If Joe owns one store, he'll get a better deal than if he owns 5 stores, etc...

As for my liability, I always get graphic proofs okay'd, and on a job like this they'll get a first article to inspect before I continue...

As for if the engraving's the same, as long as they furnish a copy/paste-able list of the variables, no extra charge...

[Martin Boekers]

Don't be surprised if the game changes in the process, one week they will have 50 boards ready and want you to pick up the other 50 "tomorrow"
You need to define everthing or you can and will face additional costs,. You don't know how the boards are even packed.

You need to quote each part separately and have it written into the contract that there will be additional costs if these are not met. Say you go to
pick it up and the client doesn't have them packaged and ready for you... (Check and see what UPS would charge for pick up and delivery )

Be careful when bidding on these type of jobs.... if you haven't dealt with the company before.... How will they pay you? When delivered each week, once a month?

Business is a learning experience... Good luck with this!

[Keith Winter]

You guys must have free labor working for you to be able to do these at $6 or $7 a board, or you're running yourself into the ground working 60-80 hour weeks (which I've been guilty of myself many times to finish a job ). 5 min 20 seconds per board + 2 minutes load machine and reload/stack would be 7.5 minutes per board. That's only 8 boards per hour. Let's say your worker is paid $14 a hour, average us benefits/admin cost per work is 30.7% for the private sector according to bls.gov, this tends to be higher with lower wage earners because the benefits and admin expenses make up a higher percentage of their salary. So let's just call a $14/hr worker true pay with benefits/admin expense factored in $20/hr for simplicity.

At $7 a board x 8 boards an hour you're only making $56 an hour. Subtract $20/hr for the employee running the machine $5 for all your electrical/lights/blower/ac etc so now you're down to potential profit of $31/hr. Subtract your machine rate. I think we'd all like to make a minimum $20/hr on the machine itself (I'd rather make triple or four times that per hour), which means on a $10k machine you'd have to run it 500 hours with no downtime or parts needing replaced, or 2000 hrs on a $40k machine just to pay it off and break even (and we all know you cannot run a machine and jobs 100% perfect all a time so this is optimistic). Factoring that in and your potential profit is now $31/hr - $20/hr = $11/hr for you. Congratulations you've just made $687.50 if everything goes perfect over the course of 1.5 weeks (62.5 hours to complete). Add in setup time, mistakes, defects, and any other things that might make the job take longer or cost more and you're probably at more like $587.50. At $587.50 every 1.5 weeks your annual profit for that machine for the entire year at this rate is $20,366 assuming everything goes perfect on every single job, and nothing ever breaks (very unlikely). If you are a sole shop that $20/hr for the worker goes to you, but we're also not even factoring all the other expenses that go into running a business, or other things that come up and take your time, so you cannot work and earn that extra $20/hr all the time.

My point is a $20,366 expected return if your machine and 1 worker is kept busy 100% of the time, no downtime, is really low for all the risks you take. It's never going to run 100% of the time, maybe 90% of the time in a really efficient shop, plus the wear and tear on the machine. Factor in all the real world stuff that happens and you're even lower, maybe making 2/3rd of that potential profit number. Just my two cents for what they are worth.

[Scott Shepherd]

You guys must have free labor working for you to be able to do these at $6 or $7 a board, or you're running yourself into the ground working 60-80 hour weeks (which I've been guilty of myself many times to finish a job ). 5 min 20 seconds per board + 2 minutes load machine and reload/stack would be 7.5 minutes per board. That's only 8 boards per hour. Let's say your worker is paid $14 a hour, average us benefits/admin cost per work is 30.7% for the private sector according to bls.gov, this tends to be higher with lower wage earners because the benefits and admin expenses make up a higher percentage of their salary. So let's just call a $14/hr worker true pay with benefits/admin expense factored in $20/hr for simplicity.

At $7 a board x 8 boards an hour you're only making $56 an hour. Subtract $20/hr for the employee running the machine $5 for all your electrical/lights/blower/ac etc so now you're down to potential profit of $31/hr. Subtract your machine rate. I think we'd all like to make a minimum $20/hr on the machine itself (I'd rather make triple or four times that per hour), which means on a $10k machine you'd have to run it 500 hours with no downtime or parts needing replaced, or 2000 hrs on a $40k machine just to pay it off and break even (and we all know you cannot run a machine and jobs 100% perfect all a time so this is optimistic). Factoring that in and your potential profit is now $31/hr - $20/hr = $11/hr for you. Congratulations you've just made $687.50 if everything goes perfect over the course of 1.5 weeks (62.5 hours to complete). Add in setup time, mistakes, defects, and any other things that might make the job take longer or cost more and you're probably at more like $587.50. At $587.50 every 1.5 weeks your annual profit for that machine for the entire year at this rate is $20,366 assuming everything goes perfect on every single job, and nothing ever breaks (very unlikely). If you are a sole shop that $20/hr for the worker goes to you, but we're also not even factoring all the other expenses that go into running a business, or other things that come up and take your time, so you cannot work and earn that extra $20/hr all the time.

My point is a $20,366 expected return if your machine and 1 worker is kept busy 100% of the time, no downtime, is really low for all the risks you take. It's never going to run 100% of the time, maybe 90% of the time in a really efficient shop, plus the wear and tear on the machine. Factor in all the real world stuff that happens and you're even lower, maybe making 2/3rd of that potential profit number. Just my two cents for what they are worth.

+1 - Fantastic post Keith. Someone paid attention in college One of the best posts I've seen on here in a long time regarding pricing.

[Keith Winter]

Thanks Steve!

+1 - Fantastic post Keith. Someone paid attention in college One of the best posts I've seen on here in a long time regarding pricing.

[Ross Moshinsky]

You guys must have free labor working for you to be able to do these at $6 or $7 a board, or you're running yourself into the ground working 60-80 hour weeks (which I've been guilty of myself many times to finish a job ). 5 min 20 seconds per board + 2 minutes load machine and reload/stack would be 7.5 minutes per board. That's only 8 boards per hour. Let's say your worker is paid $14 a hour, average us benefits/admin cost per work is 30.7% for the private sector according to bls.gov, this tends to be higher with lower wage earners because the benefits and admin expenses make up a higher percentage of their salary. So let's just call a $14/hr worker true pay with benefits/admin expense factored in $20/hr for simplicity.

At $7 a board x 8 boards an hour you're only making $56 an hour. Subtract $20/hr for the employee running the machine $5 for all your electrical/lights/blower/ac etc so now you're down to potential profit of $31/hr. Subtract your machine rate. I think we'd all like to make a minimum $20/hr on the machine itself (I'd rather make triple or four times that per hour), which means on a $10k machine you'd have to run it 500 hours with no downtime or parts needing replaced, or 2000 hrs on a $40k machine just to pay it off and break even (and we all know you cannot run a machine and jobs 100% perfect all a time so this is optimistic). Factoring that in and your potential profit is now $31/hr - $20/hr = $11/hr for you. Congratulations you've just made $687.50 if everything goes perfect over the course of 1.5 weeks (62.5 hours to complete). Add in setup time, mistakes, defects, and any other things that might make the job take longer or cost more and you're probably at more like $587.50. At $587.50 every 1.5 weeks your annual profit for that machine for the entire year at this rate is $20,366 assuming everything goes perfect on every single job, and nothing ever breaks (very unlikely). If you are a sole shop that $20/hr for the worker goes to you, but we're also not even factoring all the other expenses that go into running a business, or other things that come up and take your time, so you cannot work and earn that extra $20/hr all the time.

My point is a $20,366 expected return if your machine and 1 worker is kept busy 100% of the time, no downtime, is really low for all the risks you take. It's never going to run 100% of the time, maybe 90% of the time in a really efficient shop, plus the wear and tear on the machine. Factor in all the real world stuff that happens and you're even lower, maybe making 2/3rd of that potential profit number. Just my two cents for what they are worth.

But that only accounts for your business. Remember, people, lots of them on here, are running out of their homes and they are the only employee. So you have no operator cost (or you pay yourself to be operator), no real additional facility costs (how much does running a laser really effect your utilities bill at the end of the month?), anyone smart would have their insurance changed a bit to cover them, but that might add up to a few bucks a day. Run those numbers and it's not difficult to justify doing the job. Hell, if you're running a Chinese laser, this job pays could cover most of the initial investment.

I'd love to bill this job out at $15 a board. I don't think you can get that kind of money unless the company isn't shopping the job. I'm saying that living in one of the most expensive places to live in the US. I just got beat up the last month with people walking into my store asking to pay the lowest internet prices out there. It's 12 hours a week to knock off 100 boards without talking about delivery. It's an easy job to fit into just about any shop's production schedule. It's going to be bid at a low price because it's not a difficult job to do, based on the information given here.

You can preach about this stuff, and I'll agree with it, but there are other people just jamming out volume and as long as they're making money, they're happy. McDonalds, for example, is very happy dishing out $3.50 hamburgers because they pay their employees "nothing" and they sell a ton of them every week.

[Dan Hintz]

You guys must have free labor working for you to be able to do these at $6 or $7 a board, or you're running yourself into the ground working 60-80 hour weeks (which I've been guilty of myself many times to finish a job ). 5 min 20 seconds per board + 2 minutes load machine and reload/stack would be 7.5 minutes per board. That's only 8 boards per hour. Let's say your worker is paid $14 a hour, average us benefits/admin cost per work is 30.7% for the private sector according to bls.gov, this tends to be higher with lower wage earners because the benefits and admin expenses make up a higher percentage of their salary. So let's just call a $14/hr worker true pay with benefits/admin expense factored in $20/hr for simplicity.

At $7 a board x 8 boards an hour you're only making $56 an hour. Subtract $20/hr for the employee running the machine $5 for all your electrical/lights/blower/ac etc so now you're down to potential profit of $31/hr. Subtract your machine rate. I think we'd all like to make a minimum $20/hr on the machine itself (I'd rather make triple or four times that per hour), which means on a $10k machine you'd have to run it 500 hours with no downtime or parts needing replaced, or 2000 hrs on a $40k machine just to pay it off and break even (and we all know you cannot run a machine and jobs 100% perfect all a time so this is optimistic). Factoring that in and your potential profit is now $31/hr - $20/hr = $11/hr for you. Congratulations you've just made $687.50 if everything goes perfect over the course of 1.5 weeks (62.5 hours to complete). Add in setup time, mistakes, defects, and any other things that might make the job take longer or cost more and you're probably at more like $587.50. At $587.50 every 1.5 weeks your annual profit for that machine for the entire year at this rate is $20,366 assuming everything goes perfect on every single job, and nothing ever breaks (very unlikely). If you are a sole shop that $20/hr for the worker goes to you, but we're also not even factoring all the other expenses that go into running a business, or other things that come up and take your time, so you cannot work and earn that extra $20/hr all the time.

My point is a $20,366 expected return if your machine and 1 worker is kept busy 100% of the time, no downtime, is really low for all the risks you take. It's never going to run 100% of the time, maybe 90% of the time in a really efficient shop, plus the wear and tear on the machine. Factor in all the real world stuff that happens and you're even lower, maybe making 2/3rd of that potential profit number. Just my two cents for what they are worth.

There will ALWAYS be someone out there willing to take on that job... and at much lower prices, too.

The question then becomes... are YOU that person?

[Keith Winter]

Absolutely Dan there is always someone willing to take the job for next to nothing. That same person is going to screw up the job on their eBay laser or be late to deliver, or whatever else because they are super stressed out and over worked because they aren't valuing their time properly. Once they screw up the job, or go out of business wondering why they never could pay bills on time. I'll gladly take it, but but not at $7 a board

Ross if say you get that $20/hr since you have no staff, I'd figure you can only really work about 1/2 that time engraving. (Rest is spent doing all the business tasks, accounting, getting new jobs, working on your equipment/building, filing irs paperwork (a favorite of every business owner I know ), marketing, etc.) So $20/hr x 50 weeks x 20 hours a week (this assumes you celebrate 10 days of holiday/vacation a year you don't work) = $20000 + 2/3 of $20,366 = $33,441.56 a year in income. Not horrible, but not great either. Not going to put your kids through college with that, and not much reward for all the risks you take as a business owner. Is it really worth it being in business at that point you've got to ask yourself?

[Jerome Stanek]

2 minutes to load and unload seems like you must be disabled I cut plexi units and it takes me about 19 seconds to load and unload. I have a jig set up and the cuts are within 1/16 of each edge.

[Keith Winter]

Keep in mind I'm only pricing the scenario given with the $ per board posters gave. My intent is not to make anyone feel bad, rather I'm just breaking down factors and numbers for the group in the manner I would for any large job.

$ per year etc. are based on this being the job you do every day of the year, I realize some jobs are more profitable than others, so your actual income would be different, unless you priced every job this way at the same margin.

[Ross Moshinsky]

Absolutely Dan there is always someone willing to take the job for next to nothing. That same person is going to screw up the job on their eBay laser or be late to deliver, or whatever else because they are super stressed out and over worked because they aren't valuing their time properly. Once they screw up the job, or go out of business wondering why they never could pay bills on time. I'll gladly take it, but but not at $7 a board

Ross if say you get that $20/hr since you have no staff, I'd figure you can only really work about 1/2 that time engraving. (Rest is spent doing all the business tasks, accounting, getting new jobs, working on your equipment/building, filing irs paperwork (a favorite of every business owner I know ), marketing, etc.) So $20/hr x 50 weeks x 20 hours a week (this assumes you celebrate 10 days of holiday/vacation a year you don't work) = $20000 + 2/3 of $20,366 = $33,441.56 a year in income. Not horrible, but not great either. Not going to put your kids through college with that, and not much reward for all the risks you take as a business owner. Is it really worth it being in business at that point you've got to ask yourself?

Or you could say while the machine is running you're doing all that admin work at the same time. Assuming you can do 2 boards at once, you're looking at 11 mins per cycle to do other stuff. As I said, I don't disagree with your assessment, I just think it can be seen as incomplete.

The other thing to mention is, rate per hour is very rarely consistent. It's very common to have a very profitable job one day and a less profitable job the next. You want it to average out where you're making your goal rate, whatever that may be. Why do the less profitable job? Why not stick to just very profitable work? Well, if the choice is between no money and some money, which is better? That's why I believe this job would bid out at $6-8 a pop. Ignoring the delivery, it's a low burden job that even under worst case scenarios situations is profitable and low risk. My head says price it at at least $12 each but I also think someone else is getting the job because they quoted it out at $8.