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How much time are you actually billing out?

Jay Fleming

Hot Rolled
Joined
Aug 7, 2014
Location
Noble, OK
Out of the roughly 2000 hours in the year, are you billing out 2000 hours, 1500 hours, 1000 hours, etc. Not looking at multiple spindles running at one time. I'm trying to produce some quotes and I feel like there is a lot of lost time i.e. time spent looking for material, tools, research, working up the quote, invoicing, etc. Are you all billing for all of this time or does it just get rolled over into overhead? It's difficult to make projections without knowing what percentage of time is spent making parts versus information gathering, especially if there is a desired annual revenue you're being judged against.
 
Me or people hired to run machines?
For employees it's about 75-80% of "working" payroll time. Vacations and holidays make this number worse if you give such.
For me it's much less, but I do work a heck of a lot more than the 2000 "paid" hours in year.
Bob
 
Me or people hired to run machines?
For employees it's about 75-80% of payroll time.
For me it's much less, but I do work a heck of a lot more than the 2000 "paid" hours in year.
Bob
I guess I should have clarified. Basically thinking about a one man shop or the owner of a shop with employees but not considering employee time. If you or the owner work hundreds of hours more than 2000, I'm not considering it either. Unless you can give a rough percentage of your total hours that can be billed.

I'm technically an employee and I'm running the shop like it's my own but with financial oversight from the owner. I just want to have a basic metric to compare the billed shop hours to in relation to the total potential hours in a year.

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Honestly the best thing i did was give up selling time and sell product, focus on selling - making product, weather that's hot dogs or parts for nuke reactor control rod drives. The parts are what makes the money and its the amount of them and value of them that makes that money.

Theirs a lot of non billable hours work a week that needs to be done to get the billable bits. Honestly if you have staff or even your self, you need to factor in the time your having a piss a week. Or you simply stop counting time and focus on achieving as much you can a week in the time your prepared to work. Like it or not so many seconds of every hours going to be pissed away on something or something else.

Most performance measures other than incoming funds - outgoing funds are largely chasing numbers that at best give you a warm fuzzy feeling. Billing another hour a week gets you no were if it costs you more to do that than you make doing that hour.

Make parts better, faster and cheaper than the competition is the way to get ahead. Its that simple, don't take your eye of the ball chasing the latest productivity fad. Start micro managing time to increase productivity and you piss staff off and get less out, set clear goals and give them the freedom to focus on getting those goals met generally works best. Truly great management does not stear the ship, they merely instruct the direction of travel and smooth the bumps.
 
I don't pay attention to hours at all. Strictly look at gross profit per day, or per week, depending on the type of work.

After a year or two, it's pretty easy to figure your annual overhead, and divide it by 50 weeks, and 5 days a week to get your overhead per workday. Add your desired wage per day, and that's the minimum gross profit you need to achieve, per day. Gross profit's pretty easy - take your finished sale price, subtract COGS, subtract shipping cost etc, and there you are.

There are some days where I might complete 4 or 5 orders, start to finish, because they are little items. For those days, you can usually compare your gross profit to your daily gross profit minimum, to see how you are doing. In reality, lots of orders will carry over into multiple days, or you'll have a day where you are pretty much chasing around a billion little things, and can barely get your hands on the tools. If all goes to plan, those days are followed by a day or two of completely knocking it out of the park, because everything is setup and ready. For that reason, I usually look at the week as a whole.

The nice thing about that is if I work a day on the weekend, or stay real late, (or better yet, take a day off), I don't have to reevaluate what the overhead should be - just take completed work that week, subtract 5 days worth of overhead, and that's all she wrote.
 
I lose a lot less time now that I mainly do repeat production work, income more than doubled too, almost triple last year vs the years of proto/small qty stuff, man looking back those years were sh*t, probably billed 50% of the time actually spent sorting that stuff, and I definitely wasn't charging nearly enough for it. Now all my tooling/material ordering is pretty much copy/paste of the previous order. I don't waste time chasing unicorns anymore and I sure hope I never will have to again.
 
adama nailed it if you ask me.
I always like to say: "don't step over dollars, to pick up dimes".

If your not sitting around twiddling your thumbs? Put the pencil down, and git after it.
So many reasons not to chase the numbers.
And, if you have work, so many more reasons not to chase the numbers.

I had my best year yet last year. And, if somebody asked me how many hours I billed to get there?
You can bet your ass the only answer I would have for them is "all of them". Because I have no freaking clue!

2019 is starting out a terrible year. I damn sure better not sit around worrying about numbers.
I need to get my ass out there and find work. Then get it done. Ironically, in as few hours as possible.
 
the "ONLY" number I care about is my bank account ... if you try and track money your just going to make your self go more nuts . work thru lunch make a extra 50 bucks ... eat to many taco`s for lunch .. waste 50 bucks on the crapper ..

Bottom line is I don`t think there is a way to compute how much you make per hour ,, its about how much more I have in the bank at the end of the month that I look at ...
 
Honestly 2019 has started out with the most work i have ever had going into a year. Theoretically i have work well into February. Problem is right now im behind income wise, loads of the jobs i have right now are all multiple days - weeks from finished. I know i will get them done by the end of this month, hence it will turn out good, but on a hour by hour basis i should have stayed in bed so far. Also its tax bill month here, so im not going to make anything unless this months really good!

Don't get me wrong its great to have a target number a day, just realize outside of simple stuff your not going to hit that most days and your equally probably able to triple it others.

I try and have a daily target but i don't so much look at that number as to looking at it on a month basis, ie at 4 days in am i past or on target for over 4/30 ths of a target months income. breaking it down to hours or minutes or seconds does not work, it does not reflect work flow in this industry. It just ends up putting effort into numbers that you chase that dont help. Right now i think im about 1/3rd of this months work done, just its all stuff started and not finished hence nothing to show.

The notion that you need to make $333 a day if you want to clear 10K a month is great, but honestly if you can work for nothing for 29 days then make 10k of product in one day on that super duper tooling its going to make you way more money next month than you would chasing that solid $333 a day and not getting that productivity enhancement you often can get with a better jig, larger easier fixture etc. Good management does not look at that as 29 wasted days, good management focuses on the potential big gains next month from haveing 30 days at the 10K a day rate not the $333 a day rate.

Chasing the $333 a day rate, sure it keeps it stable, but it also means your not improving, your not advancing and if your staying constant, you can be certain your competition is then gaining on you. Business have to grow, if there not growing there shrinking, there kinda really is no stationary in the long term outlook.
 
I lose a lot less time now that I mainly do repeat production work, income more than doubled too, almost triple last year vs the years of proto/small qty stuff, man looking back those years were sh*t, probably billed 50% of the time actually spent sorting that stuff, and I definitely wasn't charging nearly enough for it. Now all my tooling/material ordering is pretty much copy/paste of the previous order. I don't waste time chasing unicorns anymore and I sure hope I never will have to again.

Im primarily doing unicorn work right now.
I enjoy it, its challenging. But chasing specialty tooling and materials is a clusterfuck, especially when still working a day job.
Hopefully it pans out, and the the unicorns return to be ridden again.
Definitely underquoted my latest one, but its a resume piece to say the least.

The thing about any sort of production stuff (at least around here) is that there are tons of shops slitting their own throats to "get their foot in the door".
Never been a fan of that business model.
Much prefer the work that everyone else says "oh hell no!" to. I just need to be charging WAY more to do it.

Cheers to a PROSPEROUS 2019 to all, no matter the work you do!
 
personally figure about 60% of my time is billable thats an 8 hour day if I work 12 i can usually bill about 8 so quite a bit better percentage
 
Who has time to keep track of that shit?
Besides, it doesn't pay.............

Prob true for us one man shops, most of the time.

But... about ten years in to machining, I was working a lot of hours and not making much money. It really helped to look at the numbers (hrs, billed hrs, "profit") and realize where my time was best spent. The conclusion: production runs, repeat orders was best. Onesies, twosies, repair and prototype, sales, not so much.

So I raised rates for the less profitable, looked for more production work instead of advertising and spreading the word. I'm glad I did.

All this may be obvious to the rest of you, but it wasn't for me at the time. It did pay.
 
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Too many variables to even answer that question and I have been down to a one man band the last 5 years. I am sure it also varies greatly from month to month. Machine cycle times and whether I am running lathe parts from bar stock or slugs dictate what impact duties like playing office boy will impact the number of billable hours in the day. I have run jobs that have 15 second operations from slugs to .040 wide little spacers with 20 second cycle times out of 12 foot bars that need tending every 10 hours.

Unfortunately the smaller a shop is the more likely a huge percentage of the man hours can go to non billable hours. On some things it takes just as long in a one man shop as a 100 man shop.
 
I lose a lot less time now that I mainly do repeat production work, income more than doubled too, almost triple last year vs the years of proto/small qty stuff, man looking back those years were sh*t, probably billed 50% of the time actually spent sorting that stuff, and I definitely wasn't charging nearly enough for it. Now all my tooling/material ordering is pretty much copy/paste of the previous order. I don't waste time chasing unicorns anymore and I sure hope I never will have to again.

Agreed. Repeat work where the thinking has already been done compensates for a lot of non-machining hours. That is the name of the game. There isn't much you can do to force this to happen. You have to put in the time and await the right mix of customers.
 
This is a hard thing to answer and I think most of the industry doesn't know what's acceptable. It's more what is reasonable.

From talking to people who have products and retail stores. They use margins to base good returns on. But if an item gets 150% margins but needs an hour to setup or whatever it's a waste. Then there are items that have 25% margins that leave the floor by the bucket load.

Then there are machining jobs that make huge profits, but the customer wants 10,000 items that you end up losing 50 cents per item. After all said and done, at 1 year, the good and bad still average out at +$10,000 more then the average customer... is this acceptable? But if you dont make the 10,000 washers, the customer will leave...

I believe that its 35% gut feeling and 65% keeping results in whether a 50% billable hour rate is good or 75% is good.

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I would agree with the above 60% billabe hours. I don't keep rough track, but for the first time I have a machine payment that MUST be paid every month. And it is a solid chunk of change (for me anyway) so that means I have to do more planning!

I do job shop work, as well as make my own products. Thursday this previous week is a good example, I never made a chip. All day was spent shipping, accounting, calling for pricing and ordering, tooling, materials, etc. Today I am in the shop trying to get things organized, planning the week. How much do I need by the end of the month, what jobs are the quickest, which jobs net the most, which jobs pay on completion, which jobs do I have tooling for, etc.

Billable hours was one of the reasons I took the big leap and bought a new machine. Even if I am "breaking even" on a job with the machine running, then I am still making SOMETHING, while I take care of the rest of the non-billable. If the job on the machine is profitable, plus I am working on another job in the shop, then I am finally making some money.
 
Right?! I think I brought home about $10/hr last year!


I don't understand how you guys do it. :eek:

I realize working "for the man" has alot of negatives, but to own my own place, for the sake of working for myself, to pay myself shit, eh... :cryin:
I guess the hope is one day you'll hit it big?

Also, not to be down, and I know times have changed, but the last guy I worked for that ran his own shop (small, 10 or so people) seemed to be raking it in! (again, bout 10+ yearfs ago..) Several nice vehicles (dodge viper, hummer, plymouth prowler, harley, delorian (?) (YES!, back to the future car :cloud9:)
ANywho, not knocking anyone, you guys are far braver than me!!!! :bowdown:
 








 
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