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Buy vs build, how do you choose?

jccaclimber

Stainless
Joined
Nov 22, 2015
Location
San Francisco
Sometimes I’ll do or make something that would be cheaper elsewhere because I want or need to really understand it, and doing is the best way to learn.
The rest of the time it’s usually because I need something right now and efficiency be damned, or I’m getting in some practice because I have a suspicion that’s about to happen.
 

hanermo

Titanium
Joined
Sep 28, 2009
Location
barcelona, spain
Yes !
The OP point was about when to buy or make.
I tried to illustrate why how and because it is commercially a bad idea to make stuff unless it´s what You make aka You are really good at it.

We agree.
I ALSO enjoy being inefficient and foolish - and it can often be profitable as well.

E:
I scratch built a big VMC.
Because I wanted to, because I knew I could change and modify anything, because I could scale up to anything.
It took more than 50x longer and more than 50x more money and more than 100x more work hours realistically expected.

But I became a real expert, made money in the industry, got great training ..


Hi Hanermo:
Good points all, but I believe there is a really fundamental point missing, and that is the quaint notion that not every human activity can or should be measured by its efficiency alone.

You contend the following:
"It usually makes sense to build only when You are about best-in-class at whatever You want to build.
Otherwise, buy it."


Yes, if your governing criteria are efficiency first and foremost.
You'll get no argument from me if that is so.

But I LIKE my wife...I get lots of great stuff from my relationship with her that I don't get if she's not there.
Those things are valuable to me...more valuable than their cost.
I LIKE my wife as well.
Similarly, my co-tenant LOVES fishing.
He just bought a boat, for squillions of dollars.
It costs a bloody fortune to own the boat service the boat and gas the boat.

It's WAY cheaper to just buy the damned salmon from the store.
...
Yes !
I hire sailboats that I captain.
I love doing so.
It´s great fun - but a total waste of money.
So what ?

And vastly cheaper than owning a 11-12-13-15 m sailboat.
(8000-14.000€ / yr, plus depreciation).

I contend that there is no reason you cannot justify enjoying what you do for a living too...I certainly do.
So I don't care that much that I'm being both inefficient and foolish...I bring in enough that I can keep my Lovely Wife happy, doing something I really love to do.
...
Yes !
.

 

hanermo

Titanium
Joined
Sep 28, 2009
Location
barcelona, spain
Absolutely.

My newest project is a high-end expensive luxury sauna, from Finland, I assembled/built here as a show-and-tell, demo for new clients.
I am extremely happy and proud about the approx 100 details it takes to make a really good sauna.

Just like making great lapped parts in steel, making great parts in wood, is a big satisfaction.
It´s not a hobby, it´s an industrial-level premium product.

Weather it ever sells or not is almost immaterial, at this time.
"Damn I'm GOOD!" - is more important.

Within some reasonable time I hope to share pics, maybe a few weeks, no promises.


Hi mhajicek:
Yeah, you're right.
But hobbies are fun, hobbies are good.
Hobbies can coexist with businesses, even under the same roof, and even on "company time"
It would be truly sad if you did what you do every single day and got good at what you do only to satisfy the business imperative, and got no pleasure at all from pulling off a difficult job or even revelling in the soothing sound of a CM-1 purring away, nibbling out cool bits.

I still get the "warm and fuzzies" when I can take a really spectacular part off the machine, even after 40 years of doing it.

Sometimes I'll just turn it over under the microscope for 15 minutes or so, and go "Damn I'm GOOD!"

Cheers

Marcus
www.implant-mechanix.com
www.vancouverwireedm.com
 

implmex

Diamond
Joined
Jun 23, 2002
Location
Vancouver BC Canada
Hi again Hanermo:
We are in agreement.
IMO, it feels good to make the thing you do for a living a pleasure rather than a penance.
I like the idea of turning my career into as much fun as possible, so I've tried to do that and I've been as successful as I need to be with almost no angst along the way.
I have a whole shop full of good stuff that I own, and at 67 with almost 50 years in the trade, I still look forward to making things and enjoy my time in the shop (except when I've FUBAR'ed something important or expensive...but that comes with the territory)

Others gauge their success by the efficiency they can build into their enterprise and are fully gratified by doing so...I endorse their choices 100%.
If that is their goal, you are of course completely correct in your post #17, and it's just as legitimate a goal for them as mine is for me.

However, in the rush to make the best business they can, often times there is a tendency to get so ruthless in stripping inefficiencies away that they forget how much fun it can be just to make something that not everyone else can do and savour the experience without regard to whether it passes the bean counter test or not.
As you point out, it can still be profitable, and it can still be good for the enterprise, even if it took too long to build and cost too much as well.
If you got pleasure out of it...great.
If you got a useful thing for the shop out of it too...bonus!
So if you really really want to build that fixture, or that machine or that whatever...do so with great joy and don't spoil it by counting the cost too hard.

A bit of that attitude in the mix from time to time can really lighten the stress of it all, and put smiles on faces.
I like that thought!

Cheers

Marcus
www.implant-mechanix.com
www.vancouverwireedm.com
 

BoxcarPete

Stainless
Joined
Nov 30, 2018
Location
Michigan, USA
Coin flip has been pretty reliable too.

Problem with the coin is that half of the time it's wrong and I know it and I'm forced to ignore its dubious wisdom. At least I become immediately sure of what I actually wanted :D

A Nickel is real good at making interesting March Madness brackets though. I actually nearly won the pool one year, much to the sports fanatics' collective chagrin.
 

turnworks

Cast Iron
Joined
Dec 12, 2018
Thank you for all the replies. I wasn't expecting so much information on things I had not even considered.

I guess I figured it would be more of a cut and dry answer. Seems it all depends where you are at in the business and where you decide your time is most valued.

Again thank you all.
 

The Dude

Hot Rolled
Joined
Oct 19, 2010
Location
Portland, OR
I've seen it "all over" (i.e. both good and bad) to make stuff that you don't have too (there's outside options). I will say this (as not a complete answer but something that can help you decide): factor in "opportunity cost", what else you could do with the time. If making stuff (that you're not selling) keeps you from doing what your business is supposed to be doing or other things (like sales, marketing, etc.) then it may be costing you more than it's saving. I agree it can be hard to calculate and there's other factors (can you make it much better than anyone else, etc.). Ideally, take one time to make kind of a formula so that you can quickly decide on each item. Here's an example: you can order fairly cheap & quick laser-cut parts from Send-Cut-Send (I can design and order in less than 5 minutes). If I was an engineer in a job shop, it might take me more time to try and schedule it into our production than it was worth (and for production to give it to me, maybe they don't do the material enough, etc.). I might only do it if we were low on production, there's a lot of parts and it's a common material for us. On the other end, sometimes faster and easier to DYI because too much time for documentation to send it out. Just try not to do too much "evaluation" for each item, make it quick and easy to decide.

Hope it goes well!
The Dude
 

DouglasJRizzo

Titanium
Joined
Jun 7, 2011
Location
Ramsey, NJ.
Was hoping to get a more specific answer. I have seen this come up but seems to get the "depends how valuable your time is" response. Trying to calculate value of your time or the businesses time doesn't seem very clear cut.

Anyone want to take a stab at number? Example shop slow then figure 1 times the hourly rate you charge to find the answer? Shop backlogged 2 times hourly rate? Low cash flow 0 times hourly rate?

Not talking full on machines just average stuff around the shop like tooling, sharpening bits, fixtures, tool holding fixture, assembly tables ect.
With me, as a one man shop (my son is part time with me) I "buy" when it's something I can't easily do. Cutting tools, machinery, etc. I "build" when it's something like shelving, fixtures, etc. I go where my strengths are.
 

Doug

Aluminum
Joined
Dec 16, 2002
Location
Pacific NW
For me... there are no hard and fast rules about build or buy.

Almost totally retired now...

With machines my philosophy was buy new (or good used) and make parts tomorrow or retrofit an old one and "maybe" make parts in 6 months. I did hire a pro to do a retrofit on one machine.

Tooling and fixtures, make them inhouse if we had the equipment to do it (not common items like vises of course). I'd usually do it myself in the evening or weekend when nobody was around to distract me. Being the boss I didn't have to justify to anyone which way was the most cost effective. And that's why I liked being the boss.
 

ratbldr427

Stainless
Joined
Mar 21, 2006
Location
jacksonville,fl.
Being in a maintenance shop, I don't depend on selling anything for profit to make a living. I am an expense the company would eliminate if they could and still make the same profit. My job is to keep the machines running as much as possible. However the question to buy or build comes up daily. The rule I use is based on the assumed net profit of 5%. I don't know for sure what it actually is. So that makes it easy to calculate at 20 to 1. Every $1 I save represents $20 in sales.
Since the equipment isn't always broke , we have some down time for make work.
I usually don't mess with anything less than $100, just depends.
The die room asked me if I could make 4 different kinds of small brackets." Sure,how much do they cost?" A little over $100 ea. "Why not just buy them?" Well we need 10 each and not in a big hurry.
So I gathered up a lot of 1018 scrap cut off's and about 12 hrs off an on saved them over $11,000. $220,000 in sales to buy from the mfg.
This happens quite often, to the point I basically work for free! These kinds of jobs are done of my own initiative. Unlike some of my compatriots I would get bored shitless waiting for something to break.
One of the largest projects was rebuilding 30 gripper shafts for one of our presses. Mfg cost at the time was $12,000 ea. I was able to rebuild to new standards for approximately $ 50-60,000 in tools and material a savings of $300,000. Or $6,000,000 in sales.
Any part that breaks on these machines and looks like a repeat offender if I can make it I usually make a drawing and make spares in my spare time.
 

???

Hot Rolled
Joined
Jun 23, 2017
Hi mhajicek:
Yeah, you're right.
But hobbies are fun, hobbies are good.
Hobbies can coexist with businesses, even under the same roof, and even on "company time"
It would be truly sad if you did what you do every single day and got good at what you do only to satisfy the business imperative, and got no pleasure at all from pulling off a difficult job or even revelling in the soothing sound of a CM-1 purring away, nibbling out cool bits.

I still get the "warm and fuzzies" when I can take a really spectacular part off the machine, even after 40 years of doing it.

Sometimes I'll just turn it over under the microscope for 15 minutes or so, and go "Damn I'm GOOD!"

Cheers

Marcus
www.implant-mechanix.com
www.vancouverwireedm.com
I get the feeling that like me you really enjoy what you do.

I'm always being told I should work for someone as a designer, but I get to have all the fun of making it as well as designing it. I agree with Marcus about the feeling of a spectacular part. The thing that always amazed me about toolmaking was feeding material into a injection molding machine or press and seeing it spit out a perfect part using a die that you had designed and built from scratch.

I will also readily admit to having spent $10 000 of my own time and materials to upgrade a $5000 machine because I didn't want to buy a $10 000 machine. And guess what I ended up with something that cost $15 000 and wasn't as good as the $10 000 machine, but I had a great time doing it.

And that's why I work for myself, I answer only too myself and if I feel like having fun doing something that makes no economic sense but makes me happy then I do it.
 

ratbldr427

Stainless
Joined
Mar 21, 2006
Location
jacksonville,fl.
Now that's some extreme accounting there!
Not really accounting so much as being able to show workers how their savings relate sales.What is extreme about that? Since every business I have ever been associated with the metric they always tout as to how sucsessfull they are is sales. The largest number to impress but net is all that really matters.
So if you want to buy a new piece of equipment you don't project how much in sales you have to have to pay for it?Pay cash for it, that comes form the net.
The last business I sold the buyer had all big ideas on how to boost sales. I checked in a few months later and sure enough he had managed to double the sales. Six months later he was on cod at all the warehouses. I suppose he was a lot better than me at giving away merchandise.
 

mhajicek

Titanium
Joined
May 11, 2017
Location
Minneapolis, MN, USA
The die room asked me if I could make 4 different kinds of small brackets." Sure,how much do they cost?" A little over $100 ea. "Why not just buy them?" Well we need 10 each and not in a big hurry.
So I gathered up a lot of 1018 scrap cut off's and about 12 hrs off an on saved them over $11,000. $220,000 in sales to buy from the mfg.
Four types of brackets, ten of each, at $100 each, is $4,000. That's not a bad return on 12 hours of labor, but it's not $11,000, and it's certainly not $220,000.
 

ratbldr427

Stainless
Joined
Mar 21, 2006
Location
jacksonville,fl.
Four types of brackets, ten of each, at $100 each, is $4,000. That's not a bad return on 12 hours of labor, but it's not $11,000, and it's certainly not $220,000.
Been a few years ago so I got something mixed up . Regardless to come up with $4,000 you would have to sell $80,000 worth of product @ %5 net. Whats so hard to understand about that? Unless of course your business is the only one whose gross sales = 100% net or maybe you just find money ,I guess that would be 100% net.
 

john.k

Diamond
Joined
Dec 21, 2012
Location
Brisbane Qld Australia
The 20 somethings living next door seem to have profit margins like that,judging by the cars parked there .......just BMWs and Benz s at the moment ,not yet the Maseratis favoured in the industry.
 








 
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