Pricing contract work

[guitarwes]

How do you guys generally price cutout/Vcarve work from sign shops, cabinet shops, contractors, etc? I have an opportunity to get some business from a sign shop cutting HDU and cabinet parts from a small cabinet shop but want to be competitive without working for free.

[dlcw]

It's a matter of knowing what your costs to do the work are:

Insurance
Utilities
Machine maintenance
Bits
Shop supplies
Material costs
Etc.....

Then you need to determine what you need to mark up your material to to cover things like making runs to go get the material, etc. Then figure out how long it's going to take to get material ready to for CNC work. Then determine how much you need to make to have it worth your while to do the work.

With this info, you can determine what you will need to charge to cover all your costs and make some money.

Don't give it away. That is doing a disservice to you and other people trying to make a living at this. Our work requires skill and experience. Other trades certainly don't give it away, neither should we. I don't.

[Greencarvings]

Buck a minute minimum, they supply the materials.

[bruce_taylor]

Million dollar question, You really just have to pick a price that your happy to make and hope it works for the person that you want to work for, a lot goes into the valuation, if you have a lot of overhead and such then a buck a minute might not be enough, if you cut conservative and push your machine at 70% or so then it might be to much to charge the customer, if it is easy work and you can cut he job in 4 or 5 hours and are happy with $200 to do it then that might work for you, If you think it is going to take all day and your happy with $500 for the day then your good, but if you have rent and overhead employees etc, you might need $600 or $800, only you know what it takes for you to run your shop and make what you need or would like to make, It is hard to charge more once you set a rate with a client, and you can charge hourly or by the job , but don't sell yourself short.

[gundog]

I try to get $100 an hour and wont work for less than $50 this is plus material cost. Sometimes I make $200-$300 an hour and sometimes $20 that is part of learning to run your machines and estimate time accurately very few customers will pay you by the hour they want to know how much things cost ahead of time. I mostly machine products for my own business so I know how much time it takes to make things but I also do custom work, the custom work never pays as well so I try not to do too much custom work. I try to do the custom work when times are slow and in my business that is this time of year.

[RossMosh]

I've found this to be a tricky market. Around here there is a company that I actually buy most of my sheet goods from. Their cutting prices are cheap. Their quality is just okay, but it's so cheap. Like $10-15 to cut out a sign blank cheap + free shipping. Who can compete with that?

So my answer is ask them: "How much do you normally pay for this type of service?" Then sit down and figure if you can afford to do the job.

My only other recommendation is remember, stuff happens. If you charge $100 to carve a piece of $350 HDU that has 3 coats of "Matthews" paint and you screw up, how do you handle that? That's why you have to really think about doing customer supplied items. When you do material + labor, you can typically absorb a mistake and not end up truly losing money on the job. Processing sheets and finished products for other people, you don't have that luxury.

[guitarwes]

Great advice already as always. Thanks guys. Others keep chiming in please. I read somewhere where some people charge by the inch to cut out cabinet parts.....??? That may be what I need to look in to.

I have been charging $65/hour for the plastic parts I cut out. This includes setup, cutting, and cleanup. There are a few other larger plastic parts that I cut Just a small quantity of and charge by the part. It all kind of works out close to the same though. The only overhead I have now is a small quarterly machine payment and bit costs as I do this on the side out of my home workshop.

[genek]

Great advice already as always. Thanks guys. Others keep chiming in please. I read somewhere where some people charge by the inch to cut out cabinet parts.....??? That may be what I need to look in to.

I have been charging $65/hour for the plastic parts I cut out. This includes setup, cutting, and cleanup. There are a few other larger plastic parts that I cut Just a small quantity of and charge by the part. It all kind of works out close to the same though. The only overhead I have now is a small quarterly machine payment and bit costs as I do this on the side out of my home workshop.You have some hidden cost there. You are paying for electric on your home and you use that... if you do not have insurance I advise that you get some. Your Home owners policy will not cover you on your business. You have material cost etc.

[Gary Campbell]

One item that many small operators do not consider is that there may be an existing "going rate" for a product or service. Often we get hung up on a machine or shop time hourly rate, when a price per quantity is much more appropriate. Where this affect those of us with less capable machines (when compared to 6 and 7 figure production machines) is that our consumer may not be willing to pay more than those high volume shops charge for a given service.

A normal charge for service or shop time will include overhead, depreciation, insurance, labor and of course, profit. Those that do not have a legitimate business setup and pay for those items, plus licensing and taxes to their local and federal governments should not expect to charge the same rates as those who do.

A simple analogy from the gravel pit:
If you buy gravel from the pit, they have a large end loader available and will load your truck for $10, large or small.
Therefore it is worth $10 to load 5 yards of gravel. Takes about 5 minutes for these professionals.
If a guy uses a small tractor with a bucket and takes an hour.... it's worth $10
If 2 guys use shovels and it takes a day....it's worth $10
If you use a teaspoon.... you get the idea.

Remember that if you are to be successful that you must deliver a service to your customer that he perceives to be a good value. That the combination of your quality, speed, price and lead-time must be attractive to the customer or your plan will fail.