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Going rate for a machine shop


Jul 31, 2012
youngstown, ohio
I am running my cnc machine shop at 60/h. i feel like i should increase to 80-100. i have a mori seiki horizontal, a mitek, akuma and howa, a tree, and a monarch vmc 75 along with an arsenol of manuals. your thoughts please.

how do i quote a job and still make money/keep the job (damn those chinese)
It all boils down to what kind of jobs you're quoting, not what machines you're running them on. If you want to charge more than your neighbor, you have to offer more.

If you see the print and the first thing that comes to your mind is the f-word, then you'll know that the job warrants a higher rate. The customer knows this too... if a shop bids too low, an experienced customer will think that the shop has no idea what it's doing.

Likewise, if the customer expects a completed part that includes heat treating, grinding, some type of mil-spec coating, etc, you can charge more.

If the part is a rectangular block of 6061 with two tapped holes, lowering your shop rate is more likely to happen.
Shop rate should be adjusted to each piece of equipment and their production rate and what not. If you had to buy a brand new $350-500K horizontal today, $60/hr for 40hr/week would not pay the term and tooling.

Either way, either way the part price is what matters in the end.
Our shop rates vary as well. 60/hour for manual machines and 90/hour for CNC's. I believe the Waterjet is 120/hour and the laser is 150/hour. We base a lot on what the machine is worth.
My rate is adjusted to meet the needs of the company I'm doing the work for...Some some companies I can charge a $100/hour...other companies I can only charge $50...

What I always do before quoting a job is to ask them "What is your target price"...This gives me an idea of what I can get away with billing...
If your shop is known for excellent work AND excellent customer service, any increase in rates shouldn't bother the customers looking for excellent work AND excellent customer service.

If you can raise the level of customer service, that's alway a good idea. I think free popcorn and coffee while waiting for the parts are goofy ideas, especially the popcorn machine. If you have a lot of "while you wait" situations, perhaps a spiffied-up waiting area is a good idea. That's your call.

There are always customers who don't care if you end up with tarps covering your roof and potholes in the parking lot, and they can take their work to parts of town where carrying a gun is a good idea.

Good riddance.
Not entirely an easy problem to solve in an entirely optimal way. There are a few approximations. I'm on the buying side quite often, and I do an internal estimate of the value of the work before I get quotes. I'm usually within $50 of what we end up paying, not matter who makes the buying decision (or if I reveal my internal estimate ahead of time.) I just use a flat rate. It's a pretty good approximation. Consider that more often it's the people that are the limiting factor, not the machines. The machines are tools people use, and it's the work of the people that ads value.

If you really wanted to model the thing out in fine granularity, you'd have to include opportunity costs. If you are running that easy, cheap part of the machine, you don't have the available time for the complicated expensive part it is capable of. This is a total rat hole. You'll spend too much time thinking about it. I just take volume of material removed, multiply it by an overall rate of removal based on material, and multiply that time by a constant hourly rate. Like I said, I get pretty close to what other people get. I also generate my numbers in less than 15 minutes. There's something to be said for quoting quickly.
Be careful of using machine prices to set charges. Long ago (1990s), when Silicon Graphics ruled the world of film, a high-end film editor used an SGI Onyx running a program called Inferno to edit film, composite effects into the scene, and generally make the picture look the way the director wanted. Shops charged from $1500 to $5000/hour. An Onyx went for $500K, the software went for $180K per seat, and all was well with the world because the charges were based on the price of the equipment and software. Time passed, graphics cards to do the equivalent of an Onyx Graphics Pipe ($125,000), cost $1,250, a PC with quad processors for $15,000 would out run the Onyx with 32 processors, so the customers, not being fools, demanded that the cost per hour drop. It did, and lots of businesses in Hollywood died. But to their horror, customers no longer could find the editors they used to depend on, and the quality dropped down the same slippery slope the pricing did. Now there are lots of cheap, low quality shops, but the big budget shows go to the quality shops.

The moral of the story, price based on the quality and experience of your employees, not on the cost of the machines they run. That way as machine costs drop, you can gently lower prices, or improve margins, your call. Know your value, make sure your customers know your value, and particularly, make sure you and your customer know the value of your employees.
I always look at supply and demand.I could write a book on this subject,but basic's for me is there has to be a demand for my services.If the demand works me 5-8 hrs a day I better leave the price alone!If I am working 12-16 hr days I'm being overwhelmed and need to increase prices too the point of being on the upper end of the rate for the service.Sure you loose some customers but profit margin increases.Then demand dictates whether you grow or not if you desire!If it wasn't for employee's I would probably be 10-15 years younger!:codger:
We are @ $50/hr building small fixtures of all kinds and machining small quantity parts 1-200pcs. Been in business for 20 yrs now. (Iowa) Where did the time go......
I charge what I think the part is worth. And when it is finished I look at it and hope I got $60/hr per machine. I'll happily take half that for easy gravy work that fits in here and there, and i don't feel bad about taking twice that on jobs I'm particularly good at.

In my opinion, basing quotes on a hard and fast hourly rate is foolish. Rates are good for reality checks.
Charge the amount that it takes to make you want to go in during the morning and get your ass to work. $75-$100 is what my dad and I came up with. Life is too short. We are pretty busy but because we offer a solution and not just machined parts shipped to an address
I usually quote so I think that I can get about $1/minute on a first run, if it is a new/bad customer I charge setup/programming, if it is a good one, i subsidize it. That way, if you repeat, and get some specialized tooling, you shoot up to $1/50-$2, and if not, you still didn't go broke! Can't give it away, but dont be too proud. If you tell the customer, It's gonna take me 2 hours to program this and setup, then around 30 minutes a piece, for these five parts, they usually understand... really depends on your customer, and the projects you are taking on. (quantity, size, material)
I charge what I think the part is worth.
And if you don't know what the part is or does, how do figure that out?:crazy:
If your in a small area and the only shop around this may work for you. If your quoting against several other shops that know their machines, cycle and setup times, you may be losing out.
If the machine runs for longer than 20 mins unattended, the price goes down slightly. If I have to babysit, the price jumps. If I dislike the parts and/or the customer, the price skyrockets.