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How much does it cost to run a shop?

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  • How much does it cost to run a shop?

    Out of curiosity spured on by the thread about the $25 part I began to wonder how much does it cost to run a machine shop

    For a hypothetical business shop (not a home shop) with say a 18"lathe maybe a bridgeport or two, blocking mill, surface griders, maybe a small welder, saw and about a 60gallon compressor, with maybe 2-3 guys working it full time (40hrs a week each) what would it cost to run roughly? I mean like electricity, heat, water. (consumables like cutting tools, material, maintenance and rent are too variable to ask) just the basics..

    thanks, ive just always wondered

  • #2
    My two man (?) shop in BC was equipped close to that...but it was out in the country were I had a free wood source for heat. That prolly worked out to $50 a month.
    Had no water in the shop.
    Was more heavy into welding than your proposed shop. Power bill was about $300 a month.
    I have tools I don't even know I own...


    • #3
      Originally posted by TDmaker01
      I began to wonder how much does it cost to run a machine shop
      How long is a piece of string? What's my pickup worth?

      There are a *lot* of factors driving the cost of a shop - employee pay, utility costs, rent (machine and building), taxes, insurance, licenses, materials (other than job specific), etc. So you can have the incremental cost of someone in their home shop at $0/month (really more but don't let the wife know) to your hypothetical situation: the numbers are going to be all over the map but I'd ballpark rent to be $2K, pay about $5K and the rest about $3K, call it $10K/month before unusual expenses. That's likely a lowball estimate and you're still not paying yourself. If you've got guys running around picking up and delivering stuff you'll have additional vehicle and liability expenses. If you figure that half of your shop time is billable you'll have to charge $60/hr just to break even - before paying yourself (unless you're one of the $15/hr guys, and I'm just guessing on that rate).

      That's a job shop. A CNC shop would be different - equipment costs go up but (in theory) labor costs go down. Setting up shop in Los Angeles would be very different (aka 'pricier') from setting up shop in Adamsville, OH.

      So, really, it's a "how much is my pickup worth" type of question.


      • #4
        It costs me about $1 per day. My shop is at home. I burn wood for heat in the winter and open the garage door in the summer.


        • #5
          Take all your costs for the month. Heat, electric, water, waste, rent, etc. and what you pay yourself. Divide it by how many working hours in a month. Not how many hours you work, but working hours. 40 a week x 4 weeks or whatever. The dividend is your rate per hour.
          That rate plus tooling, material, shipping , etc. is the amount you quote per job.


          • #6
            I agree with rkepler- in my area, ten grand a month would be a starting point for a 2-3 man shop.


            • #7
              Shop I worked in for over 20 years .They showed us what it cost to just open the doors and turn the lights on every day. at the time we had about 14 people working on the floor . One secretary and two bosses. $5400.00 a day . That was electrify, Taxes, water,workers comp insurance and insurance. It cost that if we did nothing.
              Every Mans Work Is A Portrait of Him Self


              • #8
                As a starting point, hourly rate +150%. Wages of $20 per hour > shop cost of $50 per hour which is why you see charge out rates of $75 to $80 per hour. YMMV considerably.


                • #9
                  My work is a 3-4 man shop,plus tool and industrial sales.Occupies 1/2 of a city block in a small town.
                  $18,000/year in property taxes whether we do anything or not.$450/month power bill whether we do anything or not.
                  I'm on commission so I float my own boat the other guys are on the clock and average $1000-1200/week.
                  Then there is materials inventory,fasteners,tools etc.I'm pretty conservative on the tooling I buy in for the shop,but last month ran $350 and was typical.

                  So $3500/month is the bare minimum for us.That's before all the little things that add up quick(for instance you wouldn't think a roll of plastic parts bags costs $65,but they do).Sadly few customers and even fewer employees realise just what it costs to keep the lights on.
                  I just need one more tool,just one!


                  • #10
                    I'd say about $20,000 a month on the low end. That's with mediocre wages and you not buying a new car and living in a modest house. The payroll alone for three people @$20/hr would be about $14,000 a month with minimal benefits. Add shop expenses and your profit is getting squeezed pretty tight.

                    Not all hours at work are productive so you can figure that your charge rate to break-even would be about $53.33/hr. To add anything to the shop, rainy day fund, bonuses or owner returns, you'd have to add to that rate.