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Customer would like breakdown of process/quote

Jetrocket

Aluminum
Joined
Sep 11, 2017
First time I've received this question from a customer but they would like a breakdown of our quotes as well as a step by step of our process including time and labor costs? Anyone else ever deal with this? Is it typical? My experience is that the only thing we own as a shop is our process.
 
First time I've received this question from a customer but they would like a breakdown of our quotes as well as a step by step of our process including time and labor costs? Anyone else ever deal with this?
I'd say it depends on your business. If you're proprietary, it's nobody's business. I'm a job shop, and I have no problem providing costing detail to my customers. I find it helps for them to understand the cost drivers on their parts.

Step by step doesn't have to mean specifics- I'll tell them there is one lathe operation and two mill operations, or whatever. I'll tell them material costs, I'll tell them the shop rate that I use to estimate based on the time of each operation. If I quote a job and I roll the NRE's into the first run, I tell them, and I let them know the next run will be cheaper.

I want customers who want me. They have to permit me a fair shop rate, and I have to respect them enough to not gouge them on the price. Providing some detail to customers that don't understand the process gives them some confidence that they are doing business with someone who they can trust.
 
Break it all down so it adds up to 10 or 20% more than your "quote"...

I'm guessing its a new person in purchasing or accounting that is going to nitpick
your quote to save the company money and make a name for themselves..

I'd be inclined to ignore the request.. And they want you to do it on a QUOTE!!!
You don't get paid for that shit. They basically want you to tell them how to make
the part... FOR FREE..
 
I did this for a customer once. He told me it was so they could review the costs in modifying these parts, and come up with better (cheaper) ways of doing that. Later I found out he took my process sheets and costs to another shop to have them attempt to do the same work, cheaper. The "new" shop followed most of my procedures, omitted a couple of difficult steps, and charged more than I did. So, in the end, the work came back to me along with a history of what had transpired. Me, being the dickhead that I am, informed them that I no longer did that sort of work, and that they needed to find another vendor. So I lost the job. Hey, I never claimed to be a genius at business, but I do have some pride.
 
The danger in providing a cost breakdown is a customer who decides out of parts A,B,C,D,E decides to take parts A and C to another vendor because their 25% cheaper.

I've had that happen to me, and then was told that they'd expect B,D,E to remain the same, even though my fixed costs were the same for 3 or 5 part no's.

Needless to say I don't do any work for that customer any more.

The other danger is leaving out the cost on a particular line item, or getting the qty wrong. I quoted a set of rollers for $xxx, thinking there were 4 rollers, when there were in fact 6. My line item didn't itemize the qty, they asked for 2x the quantity, at 2x the cost. So I made 12 rollers for the price of 8, that was a $400 mistake. If I hadn't itemized each part no I could have given them a newer (increased) price and they wouldn't have caught my mistake (assuming i did)

Itemize at your peril
 
Break it all down so it adds up to 10 or 20% more than your "quote"...

I'm guessing its a new person in purchasing or accounting that is going to nitpick
your quote to save the company money and make a name for themselves..

I'd be inclined to ignore the request.. And they want you to do it on a QUOTE!!!
You don't get paid for that shit. They basically want you to tell them how to make
the part... FOR FREE..

This - Don't do it. No one else will and you shouldn't either. If there is a finishing op like powder coating or plating you can separate that out and if they want to sweat those problems themselves, welcome that. As far as detailing your internal ops on paper, tell them to fold your existing quote up until it has lots of sharp pointy corners and shove it.
 
The danger in providing a cost breakdown is a customer who decides out of parts A,B,C,D,E decides to take parts A and C to another vendor because their 25% cheaper.

I've had that happen to me, and then was told that they'd expect B,D,E to remain the same, even though my fixed costs were the same for 3 or 5 part no's.

Needless to say I don't do any work for that customer any more.

The other danger is leaving out the cost on a particular line item, or getting the qty wrong. I quoted a set of rollers for $xxx, thinking there were 4 rollers, when there were in fact 6. My line item didn't itemize the qty, they asked for 2x the quantity, at 2x the cost. So I made 12 rollers for the price of 8, that was a $400 mistake. If I hadn't itemized each part no I could have given them a newer (increased) price and they wouldn't have caught my mistake (assuming i did)

Itemize at your peril
I've dealt with both of those scenarios. In the first, I explain to the customer that the job is viewed in it's entirety, and if I have to give up two parts that have a better margin, it may increase the cost of the remaining parts. If they don't like that, I ask them to send all the parts in that family to the new vendor, and I will use the spindle time for something else.

If I misquote, I just tell them I misquoted or I quoted a different quantity. Here's the price for the quantity you want made.

Business is about relationships. Nothing I make can't be made by another shop, and my customers are not my adversaries. I have to earn their business, and both parties have to act in an ethical manner or it doesn't work.

The people who want shit for free can go down the street.
 
First time I've received this question from a customer but they would like a breakdown of our quotes as well as a step by step of our process including time and labor costs? Anyone else ever deal with this? Is it typical? My experience is that the only thing we own as a shop is our process.

The big question here is why do they want to know. I've asked similar questions of shops many times because the easiest place to save money on a part is before the design is finalized. I just sent a medium sized fab job out the other week. The quote came back higher than I thought it should be. Turns out it was an easy thing to fix, we just had to bug the steel supplier a little bit on available stock lengths and we and saved 10% or so on the job. Janco above has the right idea.
 
First time I've received this question from a customer but they would like a breakdown of our quotes as well as a step by step of our process including time and labor costs? Anyone else ever deal with this? Is it typical? My experience is that the only thing we own as a shop is our process.

That is the point where i tell them, "You have one of two choices: Time and material with material markup, or firm fixed price with break down to only option/component level". Take it or leave it...and i do software so my material cost is low.


dee
;-D
 
The danger in providing a cost breakdown is a customer who decides out of parts A,B,C,D,E decides to take parts A and C to another vendor because their 25% cheaper.

I've had that happen to me, and then was told that they'd expect B,D,E to remain the same, even though my fixed costs were the same for 3 or 5 part no's.

Needless to say I don't do any work for that customer any more.

The other danger is leaving out the cost on a particular line item, or getting the qty wrong. I quoted a set of rollers for $xxx, thinking there were 4 rollers, when there were in fact 6. My line item didn't itemize the qty, they asked for 2x the quantity, at 2x the cost. So I made 12 rollers for the price of 8, that was a $400 mistake. If I hadn't itemized each part no I could have given them a newer (increased) price and they wouldn't have caught my mistake (assuming i did)

Itemize at your peril

If the quote is all or nothing, say that in the quote. Lumping everything into one quote is very annoying for the purchaser. I really dislike it when shops do that on quotes to me.

If you had fully itemized, the quantity would be there for each line item, and the 4 vs 6 error would have been obvious.
 
We have had a few customers asked for a break down in price on the quote. After simply asking why and if they are looking for something specific they usually get an update quote with services broken down.

Original quote: Part XYZ = $100 each

Updated quote: Part XYZ Material = $10 each
Machining =$80 each
Painting = $10 each

Did have one larger oil field customer that wanted a break down of hours per machine operation. (2 hours of programming, 1 hour set up, 30 min facing, 30 min drilling...ect) After talking with them at length we ended up parting ways. Was not worth the time/effort.
 
sometimes you have the job, just have to splain it to them..... I always exagerated materials a little more.... made sure it was a reasonable not to exceed frieght number and took all the exageration off the labor/ management fees when it was a fairly tight margin to make it look slimmer. On stuff that was primarily labor I always made sure they knew that copy paper, printer paper, toilet paper, software maintenance, software purchases, the telephone, the fax machine, the delivery truck, health insurance, property insurance, property tax, income tax, sales tax, income tax on sales tax, inserts, drills, engineering, unengineering, floor sweeping, driveway plowing, grass mowing, weed spraying, and 3 extra farts were thrown in at no charge in their quote.
 
I never do this. Ever. I do not have time to do other peoples research (either market or procedure). I am sure that is not always the case, but it has always been every case I knew of.
 
We had a shop that did work for large companies in nuclear, they had in house machine shops. Because of trace ability and such all quotes required much detail, material sources, process, times and so on. One of the companies never came through with a PO. After three no feed backs we found that the machine shop supervisor and the sales department were using our quotes to do the work in house. We found this out from their more local suppliers, none of which replied to quotes anymore. Needless to say this company now went further afield. Lesson learned.
 
First time I've received this question from a customer but they would like a breakdown of our quotes as well as a step by step of our process including time and labor costs? Anyone else ever deal with this? Is it typical? My experience is that the only thing we own as a shop is our process.

If your parts are different then a quote for each type should be "usual procedure".
As far as "a step by step of our process including time and labor costs" then that is BS.

Depending on how much you want/need the work it's either a polite "Sorry but no" or, well let's say I wouldn't be polite. You're being conned.
 
We do this from time to time on more high dollar jobs.
But the breakdown is as follows : Material + markup, resell items + markup, Labor, outside processes + markup, freight. That's as detailed as we get and I think it is a reasonable request, we've nothing to hide.

But as far as breaking down what labor entails well that's proprietary info. You don't expect McDonald's to tell you the recipe for the secret sauce do you? If they did it wouldn't be a secret!
 
Yes we have, but all our quotations have a stamped statement of confidentiality on the email or cover sheet on them and each page of the document similar to this below in red:

THIS PROPOSAL CONTAINS PROPRIETARY AND CONFIDENTIAL INFORMATION OF XYZ, INC. AND SHALL NOT BE USED, DISCLOSED OR REPRODUCED, IN WHOLE OR IN PART, FOR ANY PURPOSE OTHER THAN TO EVALUATE THIS PROPOSAL, WITHOUT THE PRIOR WRITTEN CONSENT OF XYZ. TITLE IN AND TO THIS DOCUMENT AND ALL INFORMATION CONTAINED HEREIN REMAINS AT ALL TIMES IN XYZ.

Also these type of quote requiremens increase our "overhead and expense out time" built into our spreadsheet.
 
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I would call them and ask why you have to break it down. If the answer seems reasonable, consider it.. but then again. You are showing your cards in the process and I'd even be reluctant to do so after a logical to them never logical to me explanation.

If I had to respond with a breakdown, I'd respond with a quote on the price to break it down. They either accept price or tell you you are to high. one or the other. Anything else they pay for.
 
Break it all down so it adds up to 10 or 20% more than your "quote"...

I'm guessing its a new person in purchasing or accounting that is going to nitpick
your quote to save the company money and make a name for themselves..

I'd be inclined to ignore the request.. And they want you to do it on a QUOTE!!!
You don't get paid for that shit. They basically want you to tell them how to make
the part... FOR FREE..

Bob,
You may be correct, but on the other hand, the customer may just want to know that the end product will meet his expectations and does not want a pissing contest after the fact and as Jancollc says, it clarifies the cost estimate.
 








 
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