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Pricing of HSM jobs...

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  • Pricing of HSM jobs...

    Hi all,

    I've been asked to make some simple stuff for the place i work during the day. I'm trying to find out how to price it so i'm not doing it for nothing but wont get told f*@k off when i put the bill in.

    A little background, i'm in full time employment at the family company, i'm the production manager. I also run a small home business of scroll-work in steel so i'm registered as self-employed and will have no trouble presenting an invoice for works done etc.

    The job in question involved making 6 top-hat shaped collars for a machine, 1.75" dia at the widest part and 1" at the narrow bit, with a 6 mm grubscrew to lock it on the shaft. Metal used was about £8 cost and time was about 1hr 45mins. Tolerances were not important.

    What sort of value do i put on "shop time" per hour??

    I want to get it right as there is a possibility of more little jobs.

    Thanks in advance
    If it does'nt fit, hit it.

  • #2
    Its a very slippery slope - If I was you I would go somewhere between £16 and £25 each, after all if you had screwed up the loss is yours.
    I used to do some database programming for the Local Authority where I used to work and what with all the moaning about my prices I just gave up on it as it was not worth the hassle which I never understood the mentality of them as outside firms took them for a ride and over charged for just about everything.
    I always remember the classic story about IBM and the Councils mainframe computer in that they wanted to up the putput to the next level. So the usual arm and leg were duly exchanged and the engineer arrived to do the upgrade, casually opened up one of the cabinets and moved a switch and the upgrade was carried out, no wonder the desktop computers were a welcome relief to most.

    I have tools I don't know how to use!!


    • #3
      It is always a difficult job to price HSM work. Starting HSM's might not always have the skills or equipment available to accomplish a job in the same time frame a professional shop would, and cahrging professional rates for amateur work is not equitable.

      In your case, the time given does not seem excessive and charging a going shop rate would not be unreasonable. This discussion has been had before, not without many opinions being expressed, but a rate somewhere aound $60-$75/hour would be a starting point. Materials are billed on a cost plus basis.
      Jim H.


      • #4
        Originally posted by JCHannum
        a rate somewhere aound $60-$75/hour would be a starting point. Materials are billed on a cost plus basis.
        I'm really interested in doing some one-off jobs so I can write-off some machinery. What's the typical "plus" on the cost plus? Is that including the cutoffs?
        "Twenty years from now you will be more disappointed by the things that you didn't do than by the ones you did."


        • #5
          my midwestern usa pricing would be:

          material cost times 2 (i assume you had to drive to pick it up, and sweep up the swarf) that is not a unfair price for product markup for small quanity.

          the labor cost should be at least 3 times your normal wage at where you work. ( if you ask your employer how they base their prices, they would most likely tell you they must cover the overhead of costs to run a shop, which is not abnormal to be three times the price paid to the actual working employee, and that may be a bit conservative now days)

          in my past life 25 years ago, the average producing worker earned $14 / hour plus benefits and needed to produce at least $65 worth of product to keep the doors open. that was a bit top heavy, it would have worked better for the company if that $65 would have been closer to $45. many business are too top heavy.

          im not a large business owner or employee anymore, just a small business owner AND employee, but as most of us are, we want to make a living, not necessarily eating steak every night or taking hi-priced vacations. pay the lights and heat and maybe take the missus out for a dinner and a movie now and again. . . . . .

          does anyone agree or disagree ? ? ? maybe im not charging enuf.


          • #6
            Work at it backwards, this is how I would do it here....

            Say I feel $25 an hour in my pocket is fair, ad sales tax (7%), that brings us to $26.75 add 20% for shop overhead, electric bill etc. brings us to $32.10, add state income tax of 5% gets us to $33.70 and federal of 28% to get to 43.13 and dont forget 16.5% for both halves of ss and now we are at 50.26.

            Thats for labor alone, YMMV. And everyone wonders why we can't compete with the low cost labor of China? Seems clear to me.
            James Kilroy


            • #7
              From my expeience.....

              Buyers come to home shops for work for many reasons. Most expect low price. Another is quick turnaround and convenience.

              Formulas to determine price are good starting points and definitely something to be aware of as Kilroy has shown The only real determination will be to try a certain hourly rate for a period of time and see how it feels. Do some jobs, keep track of time and costs, then look at the pay check. Does it feel right? Or do you feel you worked for nothing?

              A big factor in pricing should be determined by your equipment. How does it compare to production shop equipment? For instance, a job with a few shafts with a tolerance of +/-.001". Can you set the dial on your lathe and do every one to that tolerance without having to file the part to size? If you do have to file to size, is it reasonable to charge for that time? A production grade machine could do all parts to size with no filing.
              Last edited by DR; 10-12-2008, 11:16 AM.


              • #8
                What to charge ?

                I don't mean to hijack this thread but I would suggest thinking about this in another way. Having run my own small business for 35 years made me aware of how the actual costs add up as cited in a previous post. I was allways getting requests from "friends" to make something that they could walk into another small shop in town and pay the going rate to have it made. You aquire a lot of extry friends if they think they can get you to do something cheap. Living and working in a small rural environment, I struggled with this decision. I came to define a friend as one that I would do it and give it to them at no charge. Otherwise I would simply not do it, this was my hobby not my day job. You sure find out who your real friends are. The first job that I did as a gift for a friend who Is unfortunately very frugal, was a set of personalized Inital andirons. This guy has hauled those things from house to house all over the continent and counts them among his prized possessions. Don't see him very often but he brings them up and thanks me nearly everytime that I see him. His wife has been driving a Marcedes for years now so I guess that frugality paid off. This concept has worked for me. To get to your real question I would not mix relationships from my day job. Keep that on a strickly professional basis even if it hurts a little to miss jobs that you would like to do. Don't try to mix business and pleasure. As one old rancher told me Don't breed the working stock.
                Byron Boucher
                Burnet, TX


                • #9
                  Well, why not use the double rule? Double your costs, and the wages your employer currently pays? If you used L8 in material, that would be L16. If your current wage is, say, L12, then L24 x 1.75 = L42. 42 plus 16 would be L58.

                  I don't know what your tax situation is, you might need to add some for that. I've not kept up with where the pound is compared to the dollar, so it's hard for me to do a comparison, BUT

                  In my shop, a couple hours machine work and $16.00 materials would be: $32.00 material, $96.00 labor, total $128.00, or $21.33 each.

                  I try to avoid doing much work on the side. In fact almost always refuse cash jobs. I do do a few things for my employer, like remove 4 busted off SS studs from a cast iron exhaust manifold. For that I got a couple new endmills and a metric tap charged to his account at the local tool supply, and left work a few hours early one friday. So, it's materials and tooling, plus comp time. It works for me.

                  I cut it off twice; it's still too short
                  Oregon, USA


                  • #10
                    Some where between the "gasp of astonishment at the price" and the "sigh of relief it was so cheap"


                    • #11
                      Make a run of four or five parts and average out the time. Determine what you want per hour and go talk to them. I mean talk, don't just give a price. See how they feel and react to your price. Ask what they are giving for them now.

                      My problem is I have a hard time figuring how long it will really take to make something. I consistantly under bid the time. I may have to start doubling my estimate to get the real time to make a part. What scares me is when I give a price and they say do it without a hesitation. I think, oh oh, I just bid to low and it turns out I did when I finish the parts.
                      It's only ink and paper


                      • #12
                        Originally posted by JoeFin
                        Some where between the "gasp of astonishment at the price" and the "sigh of relief it was so cheap"
                        THATS the magic formula

                        Thanks for all the info so far. There's no problem with me doing the work as i said its family run, they won't mind being billed a fair rate and i have no worries about helping out. The most important thing is not to appear greedy.

                        Using the double rule seems ok but i feel a 1.5 rule works out a bit better. This gives me a total cost of £64.50 or £10.75ea.

                        Seems reasonable for a low tolerance item that was easy to make.

                        I'll give it a go.

                        BTW, the shop is fully manual, all older style equipment so i tend to pick jobs that i know i can make well.

                        If it does'nt fit, hit it.


                        • #13
                          My advice would be find out what the going shop rate is in your area and charge the same.If you charge less that's your prerogative,but then you will be subsidizing what is a presumably money making concern.

                          Even if you end up costing the same dollar amount as the local machine shop the company is still getting a break since the local shops may have a much greater lead time to get those parts made.
                          I just need one more tool,just one!


                          • #14
                            Originally posted by wierdscience
                            My advice would be find out what the going shop rate is in your area and charge the same.

                            That won't keep you in the game for long.

                            The local, well run shop in almost all cases can beat the time of a home shop guy by orders of magnitude because they have more efficient machinery. Using their shop rate as a basis will mean pricing above their cost.

                            Some history, I started a full time machining business 30+ years ago. It became apparent real soon that the only way I was going to make good money was with automation. CNC was expensive, way out of my budget. I went to hydraulic automatic lathes. That worked well while I was accumulating cash for CNC.

                            Once I got CNC I encountered a stumbling block. Customers mistakenly thought short runs of CNC made parts would cost more than those done on manual machines. They were totally wrong, but it took a few years before they understood.

                            These days with modern CNC machines even simple parts can be done less expensively than on a manual machine. This is why I emphasize your pricing has to account for your machinery. If you don't have the equivalent machinery of the local shops don't expect the same rate.


                            • #15
                              Not sure how things are on your side of the pond, but on this side, if you are doing commercial work out of your shop that is insured on a homeowners policy, you could be in for the surprise of your life after a fire.