pricing structure advice needed

[myxpykalix]

I mostly do stuff for myself on the bot but a local snowboard/skateboard company wants me to cut out racks for hanging the boards on and in one design i can cut 3 sets out of a 4x8 piece of 3/4" baltic birch
which includes sanding all exposed edges. And the other is 5 sets per sheet but it's alot of exposed edges to sand.

Rather then charge by the hour, i'd like to charge per set but am not sure what a reasonable price per set would be? It would include the cutting out of the sets plus (?) minutes of edge sanding each piece. They wanted me to price it including material and without. Baltic birch plywood here is $50./sheet

[feinddj]

I would price it with material only or labor only, not both ways. In my experience, giving them both results in the client demanding a lower price due to how much they can buy a sheet of ply at the big box store. If you can buy a sheet of 3/4 baltic birch for that, how much is it to have it delivered/go pick up, unloaded into your shop and paid for?

I encourage my clients to bring their own and let them know that I place a mark up on any lumber I have to go get or have delivered. This also avoids fluctuations in material price. I add 50 percent to the price I pay as a mark up. Then add your shop time, not just time on the machine, time to round over and sand. If they want to save money, tell them to sand it themselves.

David

[harryball]

I've never faired well when I break out the price. It just means they want to beat you up from every angle.

I don't do much custom work anymore, but when I did I generally gave them a solid fair price complete, materials and all.

The next thing that happens is they want to provide the material themselves. I tell them sure, I charge an extra $5/sheet fee and they have to deliver it ALL up front, I have to inspect it and if it fails my inspection they get it out of my shop. I got tired of receiving bargain Pringles brand plywood and gritty MDF with spoons and other shrapnel in it.

I agree, if they want to save money, let them sand and finish. I had a guy save $25/ea for those plyo exercise boxes I build by accepting them unfinished. Next time, he paid the $25 ea without hesitation... to tell the truth I'd rather he hadn't but he learned a lesson and I got paid what was fair.

/RB

[myxpykalix]

Harry,
If you look at the snowboard pic (one with 7 slots) he wants to pay $25.00/set that includes material, cutting and sanding.

3 sets per sheet=$75.00 minus cost of ply $50.00=$25.00 per sheet divided by 3=$8.00 each for cutting, sanding, going and buying, transporting material

The skateboard rack (5 sets per sheet) he'll pay $35.00 per set. More sanding for sure. I think these prices are way too low but i'm not sure.

Someone like you who has a production run knows how much material per house costs, cutting time, sanding time so you must know what your costs/labor per bathouse must be and can figure what your profit margin is.

I want them to be able to sell these and make a profit, but not at my expense.

[Kyle Stapleton]

That is way too low.
You have more then that in cad/cam time.

[jerry_stanek]

My price would be about $75 each for the 3 and $80 for the 5 as you have more sanding on one but less material. I have a minimum charge of $100 for a full sheet that goes up with the amount of cutting

[scottp55]

Too low Jack, sanding will eat your lunch!
I'd do one from scrap and finish all the way keeping time notes start to finish just to put your mind at ease that the guy isn't in the real world.
Just a thought, but maybe do one sheet for him(His cost) and do your smoothest cut and give him the entire sheet tabs and all(probably a single pass 180G with a soft pad RO both sides of the sheet), and let him finish it once--MAY turn his thinking around.
Watch your back--He sounds like one of those people you might Never please.

[dlcw]

Jack, when you talk about sanding, are you talking about rounding over edges or actually sanding the edges? I find that if I cut right, there is no edge sanding. For rounding over edges I would use a router table not sandpaper.

I agree with everyone, that is way to low a price. Your cutting time (to get really good edges) is going to eat much more then what they think is a fair price. Add in edge milling, table clearing, CAM time, purchasing and retrieving material, etc.... I would be in the $95-$120 each range. Especially in the quantities they are wanting. If they wanted thousands of these, then the price would come way down.

I find it amusing when people want 100,000 quantity pricing but only want to order 100. I tell them NO, wrong pricing model. I inform them that they can order a container from China (cash up front) for the price they are wanting to pay and wait 90 to 120 days to get it. If it's wrong, to bad, they have to eat it. You pay for small quantity, custom work. It's that simple.

[myxpykalix]

Don,
when you talk about sanding, are you talking about rounding over edges or actually sanding the edges? I find that if I cut right, there is no edge sanding. For rounding over edges I would use a router table not sandpaper.

No, we agreed we weren't going to roundover the edges. I'm just talking about sanding the edges to knock down the fuzzies, just a quick pass with the sander.

To eliminate sanding tell me (specifically) what bit you would use, feeds/speeds to get a cleaner edge with no sanding? Mine isn't bad but this "old dog" can be taught "new tricks":D

Scott,
These are not guys looking to screw me, but just young guys who are starting out who i don't think have a good grasp of all the steps involved in manufacturing. Currently i think what they do is have a manufacturer in another state and they just add a certain markup to the product and when someone orders the mfg just dropships it to the customer. The net result is probably a fairly low profit margin.

[dlcw]

To eliminate sanding tell me (specifically) what bit you would use, feeds/speeds to get a cleaner edge with no sanding? Mine isn't bad but this "old dog" can be taught "new tricks":D
.

I would use a 3/8" compression bit to get super edges.

I have a 2009 PRS Alpha. Climb cut leaving a 1/32" skin (I normally do this in 1 pass at 5.5 ips @12K rpm). Then conventional cut through the skin (4.5 ips @11K rpm). A little slower makes a cleaner cut. Climb cut will flex the bit away from the cut line. Conventional cutting 1/32" material will not flex the bit and will put you right on the line.

I have used this methods on hundreds of sheets of plywood to make cabinets and the cuts are always right on and ready to take straight to the edgebander. No sanding needed.

Make sure the bit is sharp. I use only new bits for cutting plywood. Just be careful. The edges will be sharp enough to cut yourself on. There shouldn't be any fuzzies left to sand. However at this point you might want to break the edges because they are so sharp. I use a piece of 150 grit sandpaper.

[Brady Watson]

I'm just talking about sanding the edges to knock down the fuzzies...

1) To eliminate sanding tell me (specifically) what bit you would use

2) young guys who are starting out

1) The term is referred to as 'mill finish' - meaning that there is NO sanding provided. With the proper bit, it is rare that sanding is needed, but this is usually due to cheap material. GIGO

2) Youngsters need the opportunity to sand from time to time. It may very well teach them the value of time/money & services rendered.

Beggars can't be choosers & everything has a price. In this case, it sounds like sweat equity in the form of sand paper and labor.

I personally do not sand. Ever. Mill finish only. Who wants to pay $125/hr for me to sand?

-B

[myxpykalix]

Sage advice from the master....:D makes sense, i'd rather just do the cutting and let them do the rest. (Now where is my Master Po picture??):rolleyes:

[maverickx50]

I've seen a lot of threads on product pricing here. The one cost item that always to be missed is "Depreciation" This is not just a nice year end tax advantage deductible item. It's a real long term cost. All your machines, tools and equipment with a life expectancy of more that 12 month; (not expense items like brushes, router bits, etc.) are depreciated over a 3 to 5 year time period. You really need to recover these costs. A $15,000 ShopBot depreciates at 1/72 of it's purchased cost every month. This is around $210 per month. If you do only 210 chargeable hours of work per month than you need to be adding $1.00 to every labor hour charged. The more equipment or the shorter the depreciation schedule the more you need to recover. The more chargeable hours the less per hour needs to be added to the rate. Your equipment and tools will need to be replaced and or upgraded at some point. you need to collect that cost as you move forward in your business so that you have the capital to stay in business.

The real reality is as an author named Vance Packard stated. "you charge what ever the traffic will bare." In other words you charge all you can get and yet still be competitive with your competition. Ten you work the calculations for costs and profit backwards to see if you really can afford to do the work.

Remember there is for most of us a love-pride factor without a real cost/price tag that is truly significant as well. If you love what your doing you can always find a way to do it and make less that you would wish to earn.