Advice on quoting

I'm curious how do you guys handle quotes? I'm fairly new to running my own business.

- I receive quite regularly quote requests where they ask to specify the cost for each part.
For example the customer has 15 different parts which needs to be machined. They want to know the cost of every single part.
So they can go shopping and let me make part x and make the rest of the parts somewhere cheaper.

- How do you handle customers that come straight up with "I always make my parts in China. But how much do you charge to make this? I need the parts yesterday already". And what about customer that are trying to negotiate about the quote?

Do your quotes honestly. Don’t cut yourself short. Sell them convenience and quality. If they want their parts from China, let them go.

When I started my business doing wrought iron work, which I loved the design work of it, it was going good. But after about a year, home depot starting stocking what they call wrought iron, it's just 1/8 x 1" flat bar twisted pockets with 1" x 14ga posts.

I would be doing a home or business quote, and after I was done doing my song and dance, people would say, what's the difference between your stuff and home depot. I learned quickly that meant, pack your shit up and get out as they have no clue what quality means they are strictly price shopping.

Did I lose a job that was legit, maybe. But I kept my head high, and now I do all alum and stainless fabrication for industrial facilities. So now, I can look back and say that my success is keeping my head high and not trying to please everyone. I want customers who want mutual relationships, not just relationships to the green stuff.


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This topic has been discussed numerous times so if you don't get enough replies try searching this site. As for quoting a package of 15 parts from the same customer I pretty much give them an all or nothing proposal. I tell them while the parts will be priced individually those prices are based on all 15 parts being ordered. Obviously if the parts have any similarities in material, size, tooling needed, etc,etc they can be run much more efficiently as a group and the price will reflect that. Also if they share a common material a bulk purchase discount can save a lot of money these days as many places flat out hose you on less than full bar lengths. Some places won't even sell less than 12-20 feet of something.

Thanks for the information everyone.
Obviously if the parts have any similarities in material, size, tooling needed, etc,etc they can be run much more efficiently as a group and the price will reflect that. Also if they share a common material a bulk purchase discount can save a lot of money these days as many places flat out hose you on less than full bar lengths. [/QUOTE]
good point

tcncj said:

I- I receive quite regularly quote requests where they ask to specify the cost for each part.
For example the customer has 15 different parts which needs to be machined. They want to know the cost of every single part.

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Have those types of customers ever ordered anything? Unless they are very expensive items then they are just wasting your time.

If you give individual prices you're just letting them shop around to buy at several places.

I won't go into full detail but one thing to be careful of is how you quote quantity discounts. Some buyers will want the "1000 piece price" to apply if they order 1000 and then have you ship 50 at a time (NOT a good deal if they draw that out over a year). Also, watch out for terms. If you pay net 30 on material and they want net 90 then, guess what? You are borrowing money so you can play with machinery (or you're giving them an interest free loan)! Not a great way to make money.

The absolute best way to run a business is to make good parts at a fair price and fast delivery and tell anyone that doesn't want to "abide" (says The Dude) to "take a hike!".

Good luck,
The Dude

tcncj said:

- How do you handle customers that come straight up with "I always make my parts in China. But how much do you charge to make this? I need the parts yesterday already". And what about customer that are trying to negotiate about the quote?

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Ignore the email. It really is that simple.

tcncj said:

- How do you handle customers that come straight up with "I always make my parts in China.

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Quote charge; $150, to be paid in full before quote is released.

The Dude said:

I won't go into full detail but one thing to be careful of is how you quote quantity discounts. Some buyers will want the "1000 piece price" to apply if they order 1000 and then have you ship 50 at a time (NOT a good deal if they draw that out over a year). Also, watch out for terms. If you pay net 30 on material and they want net 90 then, guess what? You are borrowing money so you can play with machinery (or you're giving them an interest free loan)! Not a great way to make money.

The absolute best way to run a business is to make good parts at a fair price and fast delivery and tell anyone that doesn't want to "abide" (says The Dude) to "take a hike!".

Good luck,
The Dude

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I’m no finance guy, but we’re steering towards contract finance review with all departments, which is a very good thing.

We did several months worth of development on a job, and the customer was being ridiculously picky with the work instruction review. We blew NREC out of the water in the second week, but we’re thinking we’d get lots of parts for the trouble. Turns out they only want 10 a month, and they’re not worth much.

Better luck next time.

tcncj said:

I'm curious how do you guys handle quotes? I'm fairly new to running my own business.

- I receive quite regularly quote requests where they ask to specify the cost for each part.
For example the customer has 15 different parts which needs to be machined. They want to know the cost of every single part.
So they can go shopping and let me make part x and make the rest of the parts somewhere cheaper.

- How do you handle customers that come straight up with "I always make my parts in China. But how much do you charge to make this? I need the parts yesterday already". And what about customer that are trying to negotiate about the quote?

Click to expand...

All the above replies are right and apply in general. But there are so many different customers and situations.

1. If a potential customer shops in the china shop, he will always do so and trying to educate him as to the benefits of American made parts is a waste. For the same reason that the device you are reading this on is made in china or thereabouts.

2. Larger customers generally have people with time to shotgun out rfq's to every Tom, Dick, and Harry. And more people with more time to review those quotes and basically lie/cheat/steal from you.

3. If you have plenty of money in the bank, you can afford to stick to your guns on pricing and terms. But naturally, as your cash reserve drops, so will your standards.

4. A little research on the potential customer helps. Some need good parts now, some want cheap parts months from now and damn the defect rate. This knowledge tells you where you can fatten or where you should trim a quote.

5. Squirrels and paper shops abound. I prefer to seek out and do business with those who actually use the parts I make. Helps greatly to know what's important and what's not. And being able to speak with the man who drew the print is invaluable.

welder2022 said:

1. If a potential customer shops in the china shop, he will always do so and trying to educate him as to the benefits of American made parts is a waste. For the same reason that the device you are reading this on is made in china or thereabouts.

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In this case, the benefit of the American made part is that it can be done quickly. That's a big advantage, so charge appropriately for a rush job.

Quick clarification for most of the replies. TCNCJ is in Germany, so telling his customers of the benefits of American made parts might not get him a lot of business!

For my perspective, I will say I am usually the guy on the other side of the fence than most here. We have an internal machine shop, but often have parts quoted when we are already booked or don't have the right machines for the parts.

I know our purchasing folks have had whole assemblies quoted with individual prices from multiple vendors. For the job I can remember, we ordered parts from all three vendors based on the prices and our past experience with them. It can be a good way to see breakdown who is more suited to work based on their experience and machine capabilities. This isn't exactly apples to apples for you though, since we have long standing relationship with all of the shops in my example.

For you, i would just quote the ones you have the time and capability for and then give a no quote for the rest. If you want, explain that you have quoted the ones that fit you and your shop, while the others are better suited for other vendors.

Based on reading a lot of threads on here over the years, new owners can get caught trying to take on every job to make connections with customers. The problem with this is making money while doing it and if you are successful they will expect that you can do anything for reasonable prices. The best example I have is a quote attached to a picture of a super "unique" setup on a bridgeport. "Our problem is the engineers upstairs keep asking us to do the impossible and we keep getting it done."

thunderskunk said:

I’m no finance guy, but we’re steering towards contract finance review with all departments, which is a very good thing.

We did several months worth of development on a job, and the customer was being ridiculously picky with the work instruction review. We blew NREC out of the water in the second week, but we’re thinking we’d get lots of parts for the trouble. Turns out they only want 10 a month, and they’re not worth much.

Better luck next time.

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I cant tell you how big of a pain in the ass NREC is to deal with. never again

DanielG said:

In this case, the benefit of the American made part is that it can be done quickly. That's a big advantage, so charge appropriately for a rush job.

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Don't bet on it. For things that I have both domestic and overseas suppliers, the overseas suppliers are routinely faster, even on rush prototypes. Especially things coming out of Taiwan. Even including shipping time.

Everything I deal with is somewhere between "small" and "tiny" though, so YMMV.