Set Up Pricing

[wjohn13]

I went to the search feature, but didn't see anything specific to my question. I'm curious what and how other shops charge for set ups. We currently have just been using a low $160.00 flat feet for set ups, no matter the complexity or how long it may take. I feel we are already a low hourly rate shop, and we are trying to find ways to increase profits. I have been trying to push the envelope on what we can charge for and how much per hour we are trying to get. I have come up with four pricing tiers, depending on how much work we get from a customer plus how difficult their work is. Do others on here charge for programming? First Articles/AQL? Certs and cert retention? Tooling needed soley for this part? We are in Southern California, so I would like to see how we compare with other shops in the area and also other states. I wish we could share excel files on here. I woudl share our quote form to see what other people think and possibly see what others are using to come up with their pricing. I look forward to seeing any responses.

 

[Houdini16]

We charge our regular hourly rate for setups.
we do re-occurring production, so I charge for programming only for the first run(I only programmed it once, why charge every time)
special tooling, charge
One thing we do that I think is different, We charge a straight hourly rate for making something the first time, after that we know the setup times, and run times,
then we charge them exactly what the times are for making the parts in the future.
All our customer like this because no one is getting ripped off, not them, not us,
they pay only for exactly the time it takes to make their parts.
This is why we also don't do quotes, RFQ's, we do "estimates" that are just a rough guess and have nothing to do with what they will actually be charged, and this guess is done by number of days to create the parts.

 

[mhajicek]

I look at the prints and quantities and say "This one's a half-day job. That one's a two-day job." Then I multiply by my shop rate, add material cost, and a WAG on cutter consumption. No point in getting fancier unless it's a repeat job with significant quantities, but then I'll have collected the data on setup and cycle times and can sharpen my pencil a bit.

 

[wjohn13]

We charge our regular hourly rate for setups.
we do re-occurring production, so I charge for programming only for the first run(I only programmed it once, why charge every time)
special tooling, charge
One thing we do that I think is different, We charge a straight hourly rate for making something the first time, after that we know the setup times, and run times,
then we charge them exactly what the times are for making the parts in the future.
All our customers like this because no one is getting ripped off, not them, not us,
they pay only for exactly the time it takes to make their parts.
This is why we also don't do quotes, or RFQs, we do "estimates" that are just a rough guess and have nothing to do with what they will actually be charged, and this guess is done by a number of days to create the parts.

Do you mind if I ask? We are similar in the fact that almost everything we do is reoccurring production runs. Some of our machines have been running the same part for the last 10 years+. At our shop, depending on the level of machine complexity we charge a different rate. Meaning we charge probably $20.00 less per hour for a standard Haas ST-20 than we do for a much more expensive and complex Doosan TT-1800SY. If the Doosan is 3-4x the cost, logic would state you would need to charge more for it over the Haas. So I guess my question is, do you have different rates for different machines in your shop, and do you charge different rates (or profit margins) for different customers, depending on who they are?

 

[BT Fabrication]

I charge what it takes to complete the job, some don't like the hourly answer unless you can give them a rough idea on estimated hrs etc. most is a guess. so id say instead of exactly $814.53 id say it would be about the $800-850 range roughly and give them an answer why i think that if they ask. like material costs this, and labor is $/hr and i think it might take this but if anything else major happens then i will contact if it changes a significant amount.

as to the other question above, charge accordingly. machines cost $ to be there. and a $50K machine needs more input cost per hr then a 500K machine.
as a business its hard to not shoot yourself in the foot with being too cheap but not too expensive.

 

[latheman78]

As far as set-ups I see time and that is all priced by a set shop rate, no variables for me. If the machine or part is on the difficult side more hours are charged.

 

[Houdini16]

Do you mind if I ask? We are similar in the fact that almost everything we do is reoccurring production runs. Some of our machines have been running the same part for the last 10 years+. At our shop, depending on the level of machine complexity we charge a different rate. Meaning we charge probably $20.00 less per hour for a standard Haas ST-20 than we do for a much more expensive and complex Doosan TT-1800SY. If the Doosan is 3-4x the cost, logic would state you would need to charge more for it over the Haas. So I guess my question is, do you have different rates for different machines in your shop, and do you charge different rates (or profit margins) for different customers, depending on who they are?

I could see doing this, all our machines are similar, we don't have drastically different machines, but yes I would do this, I dont know about $20.00 per hr difference that is steep. But also you have to figure something else.
Some times as you increase in machine capability, complexity, and cost, you also increase in production efficiency. for instance if you bought a VMC that could make 3 of a part in a run in 30min. (10min. each)
compared to buying a VMC that was larger, faster, or had better more expensive, high density style work holding, and you could make this same part at 20 at a time at (5min. each) You now make far more money for your time.
if you charge the same rate, let alone if you increase the rate because the machine costs more.
But the truth is you can now afford to lower the price some and make more money in your time with the standard rate, and give the customer a price brake, increasing customers with your lower prices.
you are increasing your parts/time ratio, allowing you to do more work in a day. not increasing you pricing due to more expensive machines.
In truth some of the larger places that do outsource contracts on a long term bases insist on a price decrease over time, why? because they expect you to grow and buy more efficient machines, and with all technology, as the technology increases the cost of equivalent products reduces. So over time machines become more capable and cheaper at the same time, and they want to see this price reduction. yes they arent accounting for inflation, but you should account for more than that with the growth in your business.

 

[Job Shopper TN]

Especially for job shop work, I look at it similarly. I don’t stress about whether it would take 1 or 1.25 hours to set up and 30 or 35 minutes to run. Call it two hours. For one offs or low qty runs I think that’s best. Work off of one hour increments. 2, 3, 8… whatever.

Unfortunately we don’t get to do time+material a lot, everyone wants an exact price. We’ll do that for rush repair type jobs or walk-ins (pro tip, don’t take walk-in work… lol)

With volume is where things do get tricky. So much to set up the job and get going, then so much per part to run. Especially when you have to quote ranges, 10, 50, 100, 500… those kinds of quotes suck!

Another thing. Unless you’re doing the work, don’t quote like you’re doing the work. Somebody invested in the business is going to bust it harder than someone who just gets a paycheck. So even if in your mind a job may take 2 hours to get going, consider the employee actually doing the work - between his skills and understandably lesser motivation, he may take 3 hours.

We do charge the same per hour whether it be setup or machining. At the end of the day it all adds up to counteract your expenses. Then again we have machines that cost from $70k to $150k new, not very much all things considered. Might be different if we had a $500k machine, but then, that machine may make 100 parts per day at $120/hr vs 50 parts per day at $75/hr… and still be cheaper per part!

 

[Plane Parts]

4 hours is my minimum for most anything unless it is a friend or something that is really "just drill a hole." I figured 1 hour to look at it. 1 hour to setup. 1 hour to do the work. 1 hour to clean. It works out quite well for my customers and myself. As for charging more or less depending on the machine. Sometimes. But regardless what machine it is they still need to pay me to be there. I am the same drilling a hole on my table top craftsman drill press or setting up a cnc.

 

[Kadlec10]

Set up is charged at 30mins of time per tool. This is the easiest way I found of integrating jaw/vise changes, tool changing and offsetting, programming, set-up sheets and production sheets, etc.
I tried for a while to do differing costs per machine, but it was a pain. Now I just run with 2 shop rates. Rate A for parts that run on automatic- bar feed, robot, or dense pallet, and Rate B for hand loading where an operator has to be present non-stop or has to be there to monitor tenths tolerances. Rate B is higher, because that operator is generally stuck on that one spindle, whereas with Rate A a single operator can easily handle 3 or 4 spindles.

 

[Haggismaximus]

My brother-in-law has a shop up in Northern CA for quoting purposes his setup is $300 and his hourly is $150-180 then material/tooling +15% and then a gut check to make sure it's not too high or low.