Quoting work for different types of machines but making same parts

Matt@RFR · May 17, 2017

Yeah, the title is truly FUBAR, but my feeble brain couldn't come up with anything better.

We have an '07 Haas VF-2ss, and will be taking delivery somewhat soon of a new Brother R650 pallet changer. Vastly different machines, but mostly the same work will be done on both. The Brother was tailor made for the parts we make.

Let's say I quote PN 001 on the Brother for $9/ea but would have quoted it at $15/ea on the Haas to end up at the same profit margin. If an order comes in for PN 001 with a due date in 3 weeks but the Brother is backed up for 5 weeks and the Haas is open, what do you do then? Do you quote the parts as "Might be $15, might be $9... depends on the weather that week."? Is the $9/ea price a bonus for not being in a hurry?

How would you handle a situation like this?

ewlsey · May 17, 2017

You quote the part at $9. Then when you tell them the machine is full and you need $15, they will either pay it, or they will take it to a shop that has the right machine and get it for $9. They may or may not come back.

broke · May 17, 2017

Quote $9 and count your blessings if the Brother is too busy to break into.

I would think If you do some JIT scheduling you could keep the Brother busy and all you customers happy.

I wouldn't even dream about quoting one number then saying "we need more to make the parts". It'll make you look like you don't know what you're doing.

charlie gary · May 17, 2017

How about quote it at 15, then if you can run it on the Brother count your blessings?

Mike1974 · May 17, 2017

I don't know, but I have a story (LoL don't we all!)... We ran a job years ago that was something like a full 8 hours or so (30ish parts, long rails) on the Hurco machine. Where he stacked the parts 3-4 at a time and drilled thru, then took them to the radial drill, something like that. Well anyways, job comes up again and the Hurco is booked for weeks so the boss tells me to have them made on the boring mill since it wasn't busy. MANUAL boring mill, ran by a stubborn old guys, very very old school type. Anyways, he takes something like double the time and the boss is pissed since we lost money.

Like what Matt is saying/asking, if you quote your best, assuming the best (or most appropriate) machine will do it, then you get stuck cranking them out on a bridgeport or whatever, I guess you have to just eat it?

HuFlungDung · May 17, 2017

Is this what they call the race to the bottom: buy new machinery so you can do it cheaper and not make any more money if one tiny thing goes awry? Machines don't literally wear out by the minutes going by on the clock, they wear out by revolutions turned and inches travelled. Is that new machine somehow going to move fewer inches and turn less turns? It could well be that the new machine has the power to do higher metal removal, then I say fine, reduce the price by minutes saved. But don't reduce the price unless you can improve the program productivity.

If the new machine runs 25% faster, then it's rate should be 25% higher than your other machine. That may level the playing field a little, although it doesn't create more hours to work in if the job has a rush deadline.

DavidScott · May 17, 2017

Quote what it takes to get the job, how fast you can do it is up to you.

ewlsey · May 17, 2017

DavidScott said:
Quote what it takes to get the job, how fast you can do it is up to you.

This. The customer doesn't care if you have the latest and greatest whiz bang machine that can punch parts out in seconds, or if you are carving them out of blocks of aluminum with a pocket knife. What they care about is price, quality, and delivery.

I run old tired machines that break frequently and require lots of nursing. They are slow. But, I don't charge that much per hour. A brand new machine might run a part 4 times as fast, but it costs 4 times as much per hour to keep it running.

Bobw · May 17, 2017

If you are getting the job at $15, get $15..

You just spent a whole bunch of money to make YOU, YOURSELF money, not to
make your customers more money...

Dropping your price by 40% (and putting that 40% in your customers pocket) because
YOU just dropped $100k.... That is whack job insanity.

If you feel its getting competetive, and your customer is feeling a bit of a
squeeze, be a nice guy and drop it down to $14.50 or something.

MAKE YOURSELF SOME MONEY.. I believe that is why you are in business, not to
make somebody else a bunch of money.

DavidScott · May 17, 2017

Edit you my first thread: WTF are you thinking! You invest in your shop not to charge less but to make more $$$ That Brother wasn't a cheap option so don't let how fast it can make parts cause you to charge any less, or are you charging too much now and need to lower your prices to keep the work?

broke · May 17, 2017

I wasn't advocating cutting your price if its something you have already been doing. That would be lunacy. I was just implying that you should quote to your capabilities, which is now heavily dependent on your new machine.

You should always be charging what the market can bare.

triumph406 · May 17, 2017

I thought the whole point of upgrading to a better machine was to make MORE per hour, not the same! Or get the job done sooner so you can go fishing, or ride a bike, enjoy the family etc.

When I upgraded I did stuff faster, I offered better leadtimes, but never lowered the price, and it did help if the customer would (rarely) say 'is that the best you can do? any wiggle room?' then maybe I offer a slightly better price

I thought this was all about making money.

I can imagine the bloodbath if I said to my (occasionally very angry german) wife "that new machine I invested $xxxxx in allows me to drop prices by 40%, wadya think eh?" It would be weeks before the bruising to my nuts would subside enough to get out of bed...

WILLEO6709 · May 17, 2017

Matt@RFR said:
How would you handle a situation like this?

don't lower your price until you have to, if you are obligated to reduce price, split the difference, charge $12, run 24/7 and hope you never turn on the haas again.

Matt@RFR · May 17, 2017

triumph406 said:
I can imagine the bloodbath if I said to my (occasionally very angry german) wife "that new machine I invested $xxxxx in allows me to drop prices by 40%, wadya think eh?"

What if that machine allowed you to cut prices by 40% while increasing the profit margin by 30%?

For the record, I'm not planning on lowering prices unless asked to. I bought this machine (and the new building it's going in) to increase throughput and reduce lead times through efficiency and technology. We lose most of our work due to lead times, not pricing. Sounds good on paper, ehh? :eek:

SND · May 17, 2017

New machine runs at higher shop rate... short lead time/panic = even more $.

I did the whole lowering prices thing a few years ago when it was slower, hoping to keep the work and what not, only to find out I was always the cheapest guy by a long ways and the savings don't get passed on anyhow and orders dried up regardless with a few products. Sure we all need our customers to make $ on their end too and stay in business, but anyway, live and learn. Balancing that stuff is a bit of a voodoo art trick.

Matt@RFR · May 17, 2017

Bobw said:
Dropping your price by 40% (and putting that 40% in your customers pocket) because
YOU just dropped $100k.... That is whack job insanity.

Agreed. BUT, if the customer drops their price by close to the same, they in turn make more money AND get a larger portion of their market through better end-user pricing AND they need larger quantities made which makes ME more money.

Long game.

I understand very few businesses think like this, but this customer actually does.

ewlsey · May 17, 2017

Matt@RFR said:
I understand very few businesses think like this, but this customer actually does.

You should get into the automotive world. If you make parts for the auto industry, they will just assume you are going to get more efficient the longer you make their parts, so they build in a price reduction of say 5% annually. I spent a lot of time in automotive and even with inflation, I never saw prices on established parts go up unless the order quantity went down. That includes parts that had been made for 30 years.

This is why quoting is absolutely life and death in the automotive production world. If you get the number too high, it goes somewhere else. Even worse, if you get the number too low, you may have to live with it for a long long time.

Bobw · May 17, 2017

Matt@RFR said:
Agreed. BUT, if the customer drops their price by close to the same, they in turn make more money AND get a larger portion of their market through better end-user pricing AND they need larger quantities made which makes ME more money.

Long game.

I understand very few businesses think like this, but this customer actually does.

Fair enough, I can understand that.. BUT before I started slashing my prices because I just spent
a bunch of money, I would first have to have a good relationship and trust that customer, and
we'd have a little sit down, so that neither of us gets fucked.

Maybe a pow wow about how "we" can cut costs without impacting quality or the final product?

Can you just pull them off the machine and toss them in a box? Let the customer wash and deburr them.
I do that with one customer on some of his stuff.

Can that bolt hole be opened up a bit so I don't even have to measure it? Stupid stuff..

Have them buy the material.. That's something that you don't have to mark up. Could save them
some, and less shit for you to do. Same with any outside processes.

Just tossing some ideas out there. But there is no way in hell I would dump my price
40% because I just spent a metric buttload of money.

triumph406 · May 17, 2017

Matt@RFR said:
What if that machine allowed you to cut prices by 40% while increasing the profit margin by 30%?

That would be reasonable, I could certainly live with that if that were my shop. I don't track hours well enough to know how well machine upgrades have benefitted me, probably a good time to start

JS · May 17, 2017

Buy another Brother.

Seriously, why aren't selling the stuff your smoking?

If you get $15, then keep getting $15....unless forced down on price, keep at it.

Quoting work for different types of machines but making same parts

Titanium

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