Best way to sell our excess machine capacity?
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  1. #1
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    Question Best way to sell our excess machine capacity?

    Hi all,

    This is my first post, and I am excited to be a part of this community!
    I work for a shop that has around 22 employees, and the company is trying to find the best way to earn a little bit of money using our machines when our main job-shop line of business is not using them at all. Do any of you have ideas of what we could make and sell easily at a discounted price? Currently we are looking into machining swords, knives, titanium wedding bands, and engraved metal pens. Essentially, we would make the swords, knives, and other products, put them on Ebay (or some other platform), and sell them at a reasonable price that only covers the variable cost of making them plus a little profit. The company will not count overhead and fixed costs not incurred directly due to making the items. Essentially, we are liquidating our excess capacity by putting it on "clearance" like any department store does with their excess inventory.

    The majority of the work our company does is through our fabrication shop, but we have quite a few CNC mills and lathes.

    Here is a list of the machines we have to work with in the shop:
    - Atrump Mill 3 axis mill outfitted with CNC controls
    - Cincinnati 20V Mill
    - DeVlieg Horizontal Boring Mill
    - Haas SL-20-T
    - Haas EC1600
    - Haas ST 20 SS
    - Haas ST40L Turning Center
    - Haas VF4
    - TOS Trenchin Engine Lathe
    - Lion Engine Lathe


    I look forward to your input!
    Last edited by ProblemSolver; 03-16-2018 at 05:04 PM. Reason: Clarification

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    My gut tells me it's going to be hard to compete with China, India, etc. on any of those products at commodity grade, even enough to cover your tooling and materials. IMO you have to find something that you can make at a higher quality or a better quality to price ratio than what's readily available; that's where the money is.

    Research your markets, familiarize yourself with your potential competitors and their product lines.

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  4. #3
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    Wow....

    Sent from my 2PS64 using Tapatalk

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    So you want to target low paying work instead of finding more good paying work in your wheelhouse?

    Fab up some hotdog carts...

    It's tempting to think you can just bang out some widgets without adding overhead but it's absolutely not. You're looking at dealing with retail customers, billing, shipping and handling customer support. You're also going to find that knives and swords take a lot of know how to get a good product. Certainly not something you'll just fall into.

    You missed the fidget spinner fad by about 2 years.

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    One problem with asking that question here is as follows: Anyone on this forum who has a fantastic idea for a product would probably make it themselves.

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    As someone that makes knives professionally using CNC I can say that you're likely vastly underestimating the work involved. At the very simplest level just think a little about the workholding involved in allowing you to machine every surface of a knife blade... This problem still keeps me up at night despite a lot of time invested. My current solution looks like this:



    There's an awful lot of time and thought in that fixture and I'm sure I could still do much better... That one aspect doesn't even take into account material sourcing, heat-treat, design, marketing, etc.

    I would suggest that you would be much better off finding some problem in your shop that could be solved with a device that you could fabricate yourselves, then work out if others have the problem and would pay to solve it!

    Making something that you have little personal stake in is not the way to start making a product. Making something that solves a problem for your shop and then marketing it to other shops could actually become a real seller. "Eating your own dog food" is an important concept.

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    never actually sold consumer products have you...

    market research, product concept, website design and maintenance, product design, prototyping, stocking raw materials, packaging design and manufacturing, field testing, marketing, actual production, stocking, order fulfillment, customer relations, social media, SEO, warranty, liability insurance, taxes, 50 state regulatory compliance (especially regarding weapons), export/tariff issues, data security.......

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    Best way to sell excess machine capacity?

    Tell the owners to get out of the office and get out and SELL.

    Virtually every machine shop in America worth it's salt has a "help wanted" sign hanging outside...which means they have more work than they can do.

    If you don't keep those 22 people busy, they won't have any problem leaving for greener pastures...when some of these other shops catch their attention.

    ToolCat

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    One thing I've found with widgets and stuff.. Cool Stuff, Fun stuff, Different stuff..

    If its priced LOW, nobody will touch it.. Price it "reasonable" and you'll sell a few..

    Jack the price into the stratosphere and then they sell.. I don't know the psychology behind
    it all, but I would guess, if its cheap, they thing its crap.. If its reasonable, then anybody
    can buy one, and some are OK with that... If its priced into the stratosphere, then they can
    brag about how much they spent for the widget, then they feel "special"...

    One widget I had.. Only got ONE bite at $100.. Sold a few at $225ish, but couldn't make 'em quick
    enough at $375... The other thing.. They would only sell fast if you put an end date on the E-bay
    auction..

    There is absolutely not a goddamn thing wrong with making a product and selling it..
    That's like the job shop's wet dream.

    Wanting to do it intentionally for "cost" is somewhere between F'n idiotic and down right F'n retarded.

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    Have you ever seen the tee shirt "Never argue with an idiot, they drag you down to there level and beat you with experience".

    That is what it is like to compete with China. They will drag your quality, self esteem, and pricing structure down to their level, and then beat you with volume.

    If you want to compete with somebody, compete with Germany or Japan.

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    Don´t take this personally.. but..

    You most likely have no idea of your costs, markets, needed resources, variable incremental margin, external critical path variables, etc.

    How much free time do you have in tooling, financing, materials financing, cleaning/finishing, packaging, labelling, marketing, sales ?

    At 22 people == 200k$ / month in overhead + 200 k in ppe.
    == 400k$ / month expenses.

    To make any reasonable effect you should aim for 20-30%++ == 120-150k$ / month in gross margin, marginal.
    At 30% distributor margin == 600-800k$ in gross wholesale sales from new widgets per month.

    1.
    There are almost certainly not enough buyers for your widgets for a 800k$ / month sustained sales level via distributors.
    2.
    Making 800k$ from 200$ widgets means 4000 widgets per month.
    Can you fund 800k$ x 90 days DSO or Days Sales Outstanding ?
    At what cost ?
    For 2.4M$ in cost float ?

    What You need is a business plan.
    What You *don´t need* is to start making widgets at a loss while hurting your companies profits over time.

    This is how one makes a business plan.

    You need a definition of what you will
    1. do, make
    2. at what cost
    3. to what market
    4. at what cost
    5. at what risks and stressors to existing business/es
    6. how, where, why
    7. how you will sell it
    8. at what cost and what time you will sell it
    9. finance it

    A 1 page dense powerpoint is fine.
    Fancy graphics are not needed. Facts is all.

    IF you have a plan you could sell to a venture capitalist, then go ahead.
    Venture capitalists are mostly smart and eager to hear from anyone with a plan 1-9.
    Almost no-one ever has such.

    7,8,9 are critical items.
    Everyone gets them very wrong.

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    Quote Originally Posted by hanermo View Post
    Don´t take this personally.. but..

    You most likely have no idea of your costs, markets, needed resources, variable incremental margin, external critical path variables, etc.

    How much free time do you have in tooling, financing, materials financing, cleaning/finishing, packaging, labelling, marketing, sales ?

    At 22 people == 200k$ / month in overhead + 200 k in ppe.
    == 400k$ / month expenses.

    To make any reasonable effect you should aim for 20-30%++ == 120-150k$ / month in gross margin, marginal.
    At 30% distributor margin == 600-800k$ in gross wholesale sales from new widgets per month.

    1.
    There are almost certainly not enough buyers for your widgets for a 800k$ / month sustained sales level via distributors.
    2.
    Making 800k$ from 200$ widgets means 4000 widgets per month.
    Can you fund 800k$ x 90 days DSO or Days Sales Outstanding ?
    At what cost ?
    For 2.4M$ in cost float ?

    What You need is a business plan.
    What You *don´t need* is to start making widgets at a loss while hurting your companies profits over time.

    This is how one makes a business plan.

    You need a definition of what you will
    1. do, make
    2. at what cost
    3. to what market
    4. at what cost
    5. at what risks and stressors to existing business/es
    6. how, where, why
    7. how you will sell it
    8. at what cost and what time you will sell it
    9. finance it

    A 1 page dense powerpoint is fine.
    Fancy graphics are not needed. Facts is all.

    IF you have a plan you could sell to a venture capitalist, then go ahead.
    Venture capitalists are mostly smart and eager to hear from anyone with a plan 1-9.
    Almost no-one ever has such.

    7,8,9 are critical items.
    Everyone gets them very wrong.
    That isn't how venture capital works in America. Vulture capital wants someone who can make big money. Potential must be very high, 50X is good. If VC gets 1 out of 10 that succeeds they are good. 1, maybe 2 out of 10 will become zombies and they will just get their money returned.

    If it isn't going to work, it better fail fast. One of the last things they want is a zombie, something that returns 20%. To good to kill it off, to bad to make the kind of returns VC demands.

    I doubt if anybody is going to stick venture capital into a machine shop. To capital intensive, to slow to return money.

    I agree with the premise of your post, thats just not where venture capital plays here.

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  17. #13
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    Quote Originally Posted by gbent View Post
    Have you ever seen the tee shirt "Never argue with an idiot, they drag you down to there level and beat you with experience".

    That is what it is like to compete with China. They will drag your quality, self esteem, and pricing structure down to their level, and then beat you with volume.

    If you want to compete with somebody, compete with Germany or Japan.
    There is no competition for the the companies that choose to build the best product. For these companies their products never go on sale, or are ever discounted.

    If you provide the best, you can "print" money.

    Case in point; Hermann Schmitt Corporation

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    Ok i will bite, i kinda did what your wanting but in my case it totaly changed the course of my business, in some ways i have gone from job shop to manufacturer. it makes me money, lots of it by my standards too, though admitidly thats nothing by lots of other peoples standards. No im not telling you what, that would be giving away my golden gose.

    I will tell you you have it all wrong, when you have a itch you scratch it. You don't go randomly scratching in case you have a itch do you? You have to find a itch and try scratching it, only at that point do you have any idea if theres a market for the item. Knives, pens and other consumer crap a lot and i mean lot of others are doing. Me i like not competeing with too many others of the 7 billion of us on this rock, im not a natural winner, but i have learnt the less people in a given race the less likely you are to lose as badly in the business world if you get your bit right.

    That means spending time with others, dealing with mad ass inventors and other dead beat customers till you manage to hook something good. To me good means something most other places can't do and don't want to do. Something your setup can do and idealy a typical shop can't. Think low qty complex multi operation assemblies in my case involving both machining and fabrication. Then you need the creativity to make them at the right price point and make money doing so.

    One thing i will say though, people always spend money on there hobbies, its a lot easier to sell to them than it is selling even the most profit generating items to the commercial - business world. Equally at least in my experience the hobby world is a lot less effected by economic cycles than the industrial customer base is.

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  21. #15
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    Quote Originally Posted by ProblemSolver View Post
    Hi all,

    This is my first post, and I am excited to be a part of this community!
    I work for a shop that has around 22 employees, and the company is trying to find the best way to earn a little bit of money using our machines when our main job-shop line of business is not using them at all. Do any of you have ideas of what we could make and sell easily at a discounted price? Currently we are looking into machining swords, knives, titanium wedding bands, and engraved metal pens. Essentially, we would make the swords, knives, and other products, put them on Ebay (or some other platform), and sell them at a reasonable price that only covers the variable cost of making them plus a little profit. The company will not count overhead and fixed costs not incurred directly due to making the items. Essentially, we are liquidating our excess capacity by putting it on "clearance" like any department store does with their excess inventory.

    The majority of the work our company does is through our fabrication shop, but we have quite a few CNC mills and lathes.

    Here is a list of the machines we have to work with in the shop:
    - Atrump Mill 3 axis mill outfitted with CNC controls
    - Cincinnati 20V Mill
    - DeVlieg Horizontal Boring Mill
    - Haas SL-20-T
    - Haas EC1600
    - Haas ST 20 SS
    - Haas ST40L Turning Center
    - Haas VF4
    - TOS Trenchin Engine Lathe
    - Lion Engine Lathe


    I look forward to your input!
    Get off your ass and start selling, call on all your customers, cold call a mess of potential new ones. Your plan is stupid, a sure way to end up broke. WTH would you want to run your machines if you are not earning enough to cover all expenses and make a profit. With that business plan you would not make it running a hot dog cart

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    Don't have any suggestions for the OP but without knowing their business you guys may be being a LITTLE hard on him. I often have excess machine time. Making patterns our bottlenecks at this point are primarily modeling and toolpathing. At times it is finishing or other bench work. Sometimes it is Machine time but there are lots of days while we are busy our CNC is sitting idle. I would love to have some jobs that keeps the machine busy and turns scrap material into money. As long as it is only either filler work for the machine and the lower skilled employee or it has a high return.

    I do agree selling low priced items through EBay is likely a losing proposition. There is a reason retail markup is often 100% or more. Dealing with retail customers takes a lot of time as does packaging and shipping.

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    Setup ebay right and its no more effort than a few clicks, a printed label with prepaid postage on a padded postage bag and dropping the part in, should be under 180 secounds a sale for padded enveloped items unless your doing it wrong! Stick them in a post box or take them to the post office if your a glutten to punishment.

    Me i gave up with prof of postage, items that get lost i just resend at my cost its cheaper generally, yeah resends get tracked at my cost. To me ebay is a bit of a gambling process, stack enough cards in your favour and you win, but on cheap items its less effort - cheaper IME to accept a percentage of loss than get anal about perfect packaging and proof of postage, just keep the sales flowing, the profit margin high enough and the feed back score up. A percentage of customers are assholes, anouther percentage of packages get lost. hence you have to have enough margin to cover thoes losses.

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    Quote Originally Posted by Bobw View Post
    One thing I've found with widgets and stuff.. Cool Stuff, Fun stuff, Different stuff..

    If its priced LOW, nobody will touch it.. Price it "reasonable" and you'll sell a few..

    Jack the price into the stratosphere and then they sell.. I don't know the psychology behind
    it all, but I would guess, if its cheap, they thing its crap.. If its reasonable, then anybody
    can buy one, and some are OK with that... If its priced into the stratosphere, then they can
    brag about how much they spent for the widget, then they feel "special"...

    One widget I had.. Only got ONE bite at $100.. Sold a few at $225ish, but couldn't make 'em quick
    enough at $375... The other thing.. They would only sell fast if you put an end date on the E-bay
    auction..
    People are strange beings. I have noticed that if I price something + actual cost of shipping (ex. $300 for product and $150 for shipping) people bitch about the cost of shipping. But if include shipping in the price and say free shipping, people are all over it.

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    Yeah and the exact same people will still bitch about shipping costing £10 then spend the same or more going into town on fuel + parking.

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  29. #20
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    Charge admission, and set it up like "Tech Shop"......:


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