View Full Version : bidding

steve schaeffer
04-26-2003, 02:14 PM
if anyone has some suggestions for bidding/pricing work or at least some experience as a small small shop trying to bite on some work your feedback would be greatly appreciated. i have the opportunity for some repeat work, not too complicated, and im trying to put something together for this guy that is attractive to him and also to me. i dont want to be greedy, however my freetime is short and i dont want to do work on my days off and not be worth my while. as far as the parts go, one of the pieces would take a while to set up and the quantity is 1-5 at a time. others are small jobs/parts 10-50 at a time with small set up times. any past experience or feedback would be beneficial.
thanks ,

Al Messer
04-26-2003, 05:35 PM
Hope you don't run into the situation I once had. Fellow at work heard I had a shop and wanted me to make a firing pin to replace the broken one in his ".22 automatic rifle". After looking at it, and checking the cost of one from Numerich, I told him it would be cheaper for him to buy one from Numerich. He said "Naw! I want you to make it for me!" And he handed me a piece of what he said was "tool steel". When I told him what my hourly rate would be, he exploded "But I figured you'd want to do it for the experience!" Nuff said.

Toolmaker Extrodinair
04-26-2003, 06:45 PM
Figure out what you would do it for, example(square up block of steel $30.00 anhour or whatever you think you're worth, if they don't like it tell them experiance isn't cheep and cheap ain't experianced.)Trouble with this trade someone always will do it cheaper but 99 out of 100 will be shady at best. Stick to your guns and good luck.

04-26-2003, 07:28 PM
I do nothing for the experience unless she is beautiful and UNattached and then I only reduce what I charge an hour. Bidding is difficult, and I only do one of a kind things these days. Depending on the machines or tools needed and how dangerous the process is, my prices vary and if it something that voids my insurance the rate goes up very high, beyond what most people can afford.


04-27-2003, 10:59 PM
I tell them if they want a ball park its $30 an hour however long it takes and I try to give them an accurate number,but tell them not to hold me to it,if they want a fixed price I figure it as close as possible then add 30%.On repair work the first thing I ask is how much does a new one cost?Often times I find that people don't have to good an idea as to how much work and therefore exspense is involed,in other words frank terms sometimes cut to the chase.Another thing to consider is that if you are working for him when you could be working on something of yours and you don't charge him a fair price for your work you are subsidising him ,if you want to do that then that is your choice,if he exspects you to do that tell him where to go,even the best of friends can take advantage of you if you are not careful.

[This message has been edited by wierdscience (edited 04-27-2003).]

04-28-2003, 12:28 AM
Tell you'll do one piece at your shop rate. then charge him that. If he studders to much you can discount for quanity, if you want.

L Webb
04-28-2003, 12:55 AM
When we quote work, we quote by the completed job, not by the hour. We know how much we want to make an hour and the customer doesn't really need to know that figure.
By quoting the completed job we don't have to clutter up the quote with too many details. We figure in our setup time, production time, handling time, materials, finishing, quality control and consumables. The only price that may be broken out separate is a non-recurring tool charge. Sometimes we bury the tooling costs in the quote as we know the ones who don't like to pay for tooling.
Very rarely do we get asked for an hourly rate. The ones who do are usually shopping for the absolute cheapest price, not a fair price.

We have customers who will just show up and drop off material and ask us to make them some parts. They know that the invoice they receive will be a fair price, but not a cheap price. If only all our customers were that way....
Good luck.

04-28-2003, 11:04 AM
I had a customer this morning wanting me to make a sword cane for him. He is about 450 pounds, so the body of the cane will be steel pipe.

My price, which is CIA (Cash In Advance) and the cash has to clear the bank, its whatever the law says is the fine for making such things times 2, and $60 an hour for any jail time (of course times 2).

He wouldn't take no until I told him that I want the money up front, that it's against the law and if you sticks around, I will call the police.

04-28-2003, 12:20 PM
Wierds* has the right of it.... There are two ways of looking at pricing. One is cost - your cost of doing it, your choice of doing something else... your materials and your time. That gives you one answer and if you don't like this MINIMUM answer, then you walk away. Go watch Mr. Ed again.

The other part is "Their Cost" - what does the new thing cost them? What are you fixing and how much does that cost? What are you saving them (!!!)? If that number is not good, then they walk. When the economics are bad for them, then why are you being asked to do it?

It is also true that changing batteries on a pacemaker costs more than changing batteries for flashlights. Don't take flashlight jobs when you could be changing - and charging for - pacemaker battery changes.


04-28-2003, 12:56 PM
Don't forget, there is no such thing as a quantity discount. Don't be bulldozed into one if there isn't a justification.

If you lose too much business on account of that, re-evaluate your operations and see if you rally do have savings that you are leaving on the table.

Either material or labor has to be less in larger quantity in order to make a discount reasonable.

Several things MAY make quantity cheaper per unit. They don't HAVE to, since they may not apply.

1) materials cost, may be less per unit for a larger qty. Might also be more, if your time to acquire and cut up is charged. A "cut-to-length" prep operation to produce a blank for later work costs labor the same as anything else.

2) Setup. If there is significant setup cost, i.e. time, then once you set up it is cheaper per unit to run more parts. It is NOT cheaper if you have to tear down to run something else "real quick" in the middle of your original run.
And if setup is nil anyway, there is no savings for more parts.

3) tooling. If your quantity produced means you can spend time or money to get a tool (or even a machine) that will speed operations, then you may be able to save money and offer less cost (or make more on the job!).

if you know or expect you will run a part again, a tool (or machine) may be a good investment even if the initial qty does not justify it. Later, your cost to set up, and to do each part may be reduced enough by tooling to make it well worthwhile.

But some tooling isn';t worth it, and you have to know or guess, which way it is in order to bid right.

[This message has been edited by Oso (edited 04-28-2003).]

04-28-2003, 04:08 PM
I have helped couple men get their small businesses running- and bid many jobsfor other companies. First of all, most single operators do not charge enough for their time and machine and knowledge.

Add up your fixed expenses, rent, insurance, taxes, phone, transpoprtation, equipment costs (too many have some equipment and when the equipment is worn out they have to get a job to buy more), Tax preparer, FICA, just keep adding those in as you encounter them. don't forget some expenses come just once a year.

Then add the hours you need to stay up to date (reading trade magazines, machinery handbooks, finding and buying materials for those jobs, the hours you spend talking to customers who do not send you work, answering questions (what size nut fits this bolt? or "I need a 5/8inch bolt about this long to fix my lawn mower - Yes I know its 5/8 inch, here is the wrench I put on the nut- says 5/8 right there"). Time you spend sweeeping up, repairing YOUR machine, doing paper work (who mails the sales tax to the state?), dumping trash, going to court if some one sues you, explaning why your prices are so high. Add up those hours.

Now there are about 168 work hours in a work month (at 8 hours per day). Deduct from 168 those "non working hours" you just added up and you have the MAXIMUM hours you can be working.

Then figure some sick time, vacation time, holidays at hours per day. There are 2080 work hours (again @ 8 hours per day) in a year.

You really don't have much time to spend on the job at 30 to 50 dollars per hour (the amounts you used to bid the work). You will be lucky to have around half your time available to work on the bidded work. Its the "overhead" that makes the self employed hunt for "cheap" labor (wife, minimum wage office help and janitorial service) which does not give you relief from ALL the above burdens- it just reduces the burden to some lower figure but adds in time needed to train and supervise the help. And each time you hire you take a big risk- you invest time and money hoping to get it back in the long run. Probably hire several times to get one that will stick with you- and if you are a compassionate "help the down trodden" type you will hire many times before you find someone who will be on time and give 8 hours work for 8 hours pay.

All I am trying to say is that most charge way too little in small shops. Production shops (like AMMCO, Midas) have low priced help and enough hired to man the shop. The small shop has ONLY one highly competant worker who deserves high pay because he has tools and machines. But too many customers expect him to under bid the place that hires minimum wage help- and the lowest paid man capable of doing the work does the work in those shops.
So the small shop must take only jobs the "big boys" will not take. Carve a nitche and develope a customer base.

04-28-2003, 04:48 PM
I just did some work for my Brother in-law. What i figured was just a couple of hours work turned into about 8. It would have probably been easier if i had shopped around for the right size metal and/or had some different tooling. Now he has been bugging me to know how much it is going to cost him. Now what. When i do landscapping for ppl on the side i always tell them it is X an hour. If they don`t like it then i will stay home. The good part is that i know they are getting their money`s worth. When i get a job that i don`t like then i know i am getting my money`s worth. Starting up is always the hardest. If things go well then voilĂ*. You made money. If things go s**t then you have learned something, hehe don`t do that again. No matter what, you end up with $$$ at the end. But money doesn`t make everyone happy. Just make sure you are!!!


04-29-2003, 12:20 AM
Good advice from all posts. Asking how much the part is worth is important because sometimes people think that it is cheaper to make than buy a part. Sometimes it is and sometimes it isn't. Sometimes the shopmade part is better, some times not.

The reason that it is important to figure out the smartest thing for the customer to do is that sometimes they plunge into something only to discover in midstream that it was a mistake. If you have a lot of time and trouble invested and the project goes south then you are usually stuck. If someone wants me to make something that doesn't make sense to me, I tell them before I start. If they insist on going forward, I get money up front just in case they come to their senses during the project. Thanks--Mike.

04-29-2003, 09:35 AM
Guy Lautard has some suggestions for bidding on work in one of his "Machinist Bedside Readers." I think most of it has already been covered by previous posts though. One thing he said: if you win all the bids, you're bidding too low.

The last time I hired an electrician, several years ago, he charged $50/hour. My local car dealership is now getting $72/hour shop rate. Other parts of the country may be different, but the point is, skilled labor costs money so don't be afraid to charge for yours.

L Webb
04-29-2003, 10:20 AM
Working cheap is a nasty viscious cycle to fall into.
If you bid work cheap just to get some, it will be tough to raise your prices and secure further work.
I have a couple of customers who have us blank and punch parts and then send them off to another shop for further operations. They have found places to do those ops cheaper and that is fine. I would never even start the machine for what they are willing to pay for that work.
Your quality and expediency is what the customer will respect. We have had customers go elsewhere and comeback to us. It seems we have spoiled them with our short lead times and 100 percent part acceptance.
Emergency work is just one of our niches.
When the refinery is down and they need six custom washers, price is not the issue. Having their parts completed and ready to go in a couple of hours is what we do.
It has required a considerable investment in tooling sitting on the shelf ready to go for us to maintain our niche. When we aren't running production we are making punches and dies. I have customers who are used to calling out dimensions to +/-.005" and expect the parts within 2 days. Try that with most stamping shops. It requires hundreds and hundreds of punches and dies to accommodate any diameter and thickness.
Build a reputation for quality work, not cheap work. It has worked for us since 1947.

steve schaeffer
04-30-2003, 12:28 AM
you guys are great, and thank you very much for your input. i bid the work based on a 35/hr rate, which i thank is valuable for my customer and myself as i have no overhead (virtualy). i had to figure in my head the time it would take for setup and the time to actually machine, and gave pricing in the above two aspects. i know i might be a little lean on my times, having not performed the work yet, and i also know that i did not include the time it take to walk to the fridge and grab a chilly one, but i feel confident that the price is very fair for him and i. i feel that if he thinks hes getting a good deal, (ill let you know if i get the bid, haha) and im making it worth my while, then im golden .i guess i wont know how i did until i actually do the work. if im sitting there all day saying in my head, "damn i f';d myself", then i guess i bid it low. but i think im bid where it will be worth my while and worth the education. i hope this doesnt end the post, if anyone has more input this is great advice for novice and expert alike.

as far as a niche, my niche is i can do anything and fix anything. if i cant ill find someone who can and take the credit for it, hahaha.
thanks fellas,

L Webb
04-30-2003, 10:52 AM
You can drive yourself nuts second guessing your bids. Just be confident in your bids. Don't EVER let a customer hear hesitation in your voice or make any excuses or try to justify a price to them without them asking.

A very wise man once told us: "a low bid won't hurt you, a mistake can kill you"

Good luck.

j king
04-30-2003, 07:09 PM
work in a job shop.We quote alot but only receive a small percentage.Owner says that people are looking for someone to make a mistake when bidding the jobs.They get burnt and customer makes out.There seems to be some out there low bidding just to pay labor and keep the doors open a little longer.

04-30-2003, 09:31 PM
My labor is as follows
Per man hour $35.00
Per man & machine hour $50.00
minimum shop charge for any quick jobs $35.00
No ifs ands or buts about it.
If you want it today you came to the wrong shop! Perfection takes time.
Or the one everyone's heard
do you want it fast or right cause you can't have them both, at least not at the same time.

05-01-2003, 12:53 AM
Illusions!!! There are illusions in bidding... These are some of the common ones....

The Quantity discount.... There is no quantity discount. It is always an excuse to get charged more or get paid less. REALLY! If I want to make 200 of something, but only 50 now - there is no quantity discount of 200 units... The is just 50 now and 150 later... So don't price at 200 all together.

More business later... A "good price" will get you more business later... That means you do more cheap things later if you fall for this one. Les made the point in another spot real well. Do a good job, deliver a quality product in a reasonable time, remember customer service is first listening to someone and understanding what they "are really getting at". It means being honest in your communications and work. It means being honest with yourself, too. It is those people who do this that I want to business with 30 years from now. If customers walk when you accurately quote, you can think about what you might be missing, don't know, or are not willing to do. That's fine. But taking the "shortcut way" as many do is really a "shortcut" to going out of business.

Keeping stuff on your floor... Lots of variants here... NEVER keep product on your floor!!! A year from now, you will still trip over it!!!! A key rule is this: A clean floor is a happy floor. Keep your floor Happy! Clean floors are not inventory taxed, no accounting for it, people don't trip over stuff and get hurt, you don't have money tied up in it..... You can see where this goes.... !!!

Terms stretchout.. You sell to the Gov't... you think you get paid in 30 days... then its 180 days... This happend to me repeatedly. That was the US Govt. The Canadian Govt. paid on time, evertime, and were straightforward to deal with. Mileage may vary.

Reams of conditions. This is another place to get devastated. You do business with a Fortune 500 company, there is a page or three of fine print. Go to Harbor Freight and get the 4x magnifier!!! read the terms. Then... there is the US Govt.. I recieved one purchase order a while ago. The item was sole sourced by us. The description was a paragraph long. The conditions were 22 1/2 pages of fine print! If I were delivering Space Shuttles, the conditions would have been the same and none of the conditions had ANYTHING to do with quickly delivering a quality product. Could be a part of the problem, you think?

Lastly... I could go on and on... But won't. I write too much anyway. So go to the SBA, Chamber of Commerce, a local trade organization, and the SCORE chapter. Especially the SCORE chapter. There are some brilliant, experienced, motivated people there that can help bring you up the business curve FAST in your area... Business works different in different areas!! Use local resources, if you can - doesn't cost much, you get leads, and they can SAVE YOUR POSTERIOR from more things than you can imagine, if you listen.


-- jr

05-01-2003, 02:11 AM

If you do a quotation for a job take everything into account and bid on a total job. A single unit should be considerably higher in price than multiples.

Take into consideration availability of materials requured. I refuse to bid a job that I cannot get a firm commitment on materials (reserved for me by the supplier). I have gone through the bull**** of tracking oddball stuff down and getting screwed on the cost - all because the owner of the company "did not think it would be a big deal and not to waste my time bothering". After he lost his ass on a $60,000 job he admitted I was right all along - after that fiasco, it never happened again. So cover all the bases to keep yourself from getting screwed.

And remember to charge for every single screw, bolt, washer, pop rivet, consumables (Inserts, endmills, coolant, power, heating fuel). It is the little thing that can kill you. We also had the "F-Factor" for wastage of material during production by the staff (it will happen).