Job shops and quotes...

Within' the last 2 years the business i work for has just exploded. Thanks to our weak dollar our overseas market just exploded. over half of what we are doing is going overseas. 5 years ago we were lucky if we sent %10 out of country. I work in the machine shop, we're a production shop. the past year we've been farming more and more parts out to job shops around our town. Currently have 3 of them which do certain parts for us. 2 of them treat us right. The other is a bit on the high side but he does good work and always has our stuff done when we need it. Our shop cannot handle the volume that we need to do. Our boss refuses to start a night shift and to be honest we could really use one right now. Thats a whole other story...

Just recently we got a quote for a part that we run and are currently running. Its just one of those things that takes about 30 min for 1 finished part. 10 hr day you get 20-22 parts a day. And this is running 2 ops on a 40 taper Vertical mill. Just recently built a fixture and tooled up our HCN6000 to run 1st op 2 parts at a time in it. Which knocked off 5 min a part just on the first op. What would most of you charge for a part that takes 30 min to run? We're not talking anything complex... its an Aluminum casting, some face milling drilling and tapping. 2 circed out holes that have a +.003 tolerance, the smallest being 3.000". With that loose of a tolerance i won't even mess with a boring bar. I know most shops around here are $60-80 an hour shop rate. The quote we received back from one place was $88 a part. I about died laughing. This isn't the first time either... Another part was this little 5" x1.25" piece of 1045 round stock. Our run time on our lathes for a finished part was 4-6 min depending on which part it was. This is just turning time. This shop wanted $18 - $22 a part and this was with us supply supplying the already cut material. we're talking 10-15 parts an hour... Thats a $220 an hour shop rate. This round stock isn't a complex part. It shouldn't take more than 15 min to turn down a set of soft jaws and another 30 tops to write a program for these parts. Setup couldn't take more than an hour and that is being generous.

The way we see it if places are wanting to charge this much we might as well just get use to working 60 hours a week because its cheaper for them to just pay us the overtime. which quit frankly i'm tired of... after 2 years of at least 50 hours a week and here lately 60 hours i'm ready to go back to my 4 - 10's and enjoy my 3 day weekends. My thoughts are with the economy as bad as it is that some of these smaller places would want the work. Not crank their prices up so high that people don't bother. thats just me and i could be wrong. I do realize we're a production shop. I'm running 3-4 insert indexable endmills, 12 insert face mills, coolant through drills. We flat lay the coals to the parts we run to get them out as fast as possible. I know a lot of job shops aren't going to have the machines and tooling we have so higher cost is expected. just not double or triple of what we can do it for in house.

What quantity of parts were they quoting for? One off, 10 off or what? Or was it a contract for a long run of parts? It makes quite a difference.

As a small job shop we will sometimes have to buy in tooling and/or make fixtures for a particular job especially if there is a prospect of getting more of the same work; unfortunately most promises of more work never materialise.

You have to try to play the buyers at their own game; they will squeeze you down while making you think they will be putting more work your way. Often all they want is a small batch at the minimum price. Next time they will get quotes again and probably give the work to the next gullible victim who will do it for free.

Call me cynical but we have learnt this the hard way; if there is no contract then you have to assume the worst and charge accordingly. Buyers are the lowest form of life IMO.

We have also learnt that it is best to turn away work that will not make any money.

Try running a job shop and dealing with the s**t that will come your way. That will make you change your outlook.

Regards,

Mike.

Whats wrong with a shop quoting high?

Maybe you don't pay fast enough,

Maybe you(your company) is a giant pain in the ass to deal with.

Maybe they have more than enough work, and if they get it great, if they don't even better.

Maybe they specialize in stuff that is far trickier than what you need done, and it gets quoted out at that rate.

Maybe they don't want to get the reputation as the "cheap whores" in town.

Maybe your work just isn't interesting enough for them, if its boring the only thing that can make it interesting is watching the $$$$ rack up real quick.

Maybe they see a guy with a $200 set of Craftsman wrenches that can barely read doing brake jobs in his driveway for $95 an hour.

85Vdub, you would hate my guts, those are my reasons that I quote high. I'm not in this business to go broke.

So you can run a part in 30 minutes on a high dollar horizontal, and you already have the fixtures and programs. Do you really think its only worth $65 an hour??? That's 3800 hours of run time, almost two years of 40 hour work weeks to make back 250k not including interest(guessing on the price of your machine). If that was your own machine, in your own shop, being paid for with your own money, would you let it run for $65 an hour? That machine needs to be pulling in $200 an hour to make it worth it. If it can't pay for itself in 3 months max(machine price not including interest or tooling), I really don't want anything to do with it, my personal rule.

Therefore, your laughable quote of $88 per part, I think its low.

You did say the guy does good work and gets it to you on time. In the long run, he may end up being your goto guy, while the other two shops get swamped with underquoted work, and screw your schedule right into the ground.

There's really not enough information here to go off of.

These castings, is it an ongoing job, where you're ordering 200pcs per month? Or is it a one time deal where you're ordering 40pcs? Stuff that's going to repeat gets a much better price than one time deals.

Send me a print and I'll tell you what I'd do it for on a high speed HMC. Our second largest customer is a large machine shop that doesn't have the people or equipment to get complex parts finished in a timely, cost effective fashion. It's so much cheaper for them to have us do the complex stuff, that anything with work on more than two sides automatically comes this way.

Our shop rate is $150/hr. We'll lower it for quantity jobs.

Like Mike said, one-offs and two-offs can cripple a small shop that buys into the promise of future repeats. If the guy wants a quote for two pcs, we give him quotes for 2, 10, and 100. If he scoffs at the qty 2 price, maybe he should put his money where his mouth is and buy 10 or 100.

Was there a question posed - or was this just a rant?


Only question mark I could find was

What would most of you charge for a part that takes 30 min to run?

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And like others, volume, complexity, how it fits with other work, delivery schedule, etc...

W/o all the fine print - the only real answer is "All you [think that you] can git and not a penny less!"


Think Snow Eh!
Ox

Ox said:

W/o all the fine print - the only real answer is "All you [think that you] can git and not a penny less!"


Think Snow Eh!
Ox

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If the customer cringes as he reaches for his wallet, the price was just right

Cringes with no reach...bitches then reaches...either tooo high, or just a cheap ol' codger y'didn't want to deal with anyways.

Smiles with the reach, goes back and hands the operator a 20 buck tip...way too low!!! Next time that customer comes in, it's gonna be 40 bucks more

vdub,
I have learned the hard way too. If work is going to repeat, and I know it will repeat, sometimes I'll quote the qty 10 they are asking as if I am going to set up and crank out 10...crank out 30, and stock the other 20!! Next month, and the month after, I get to sell 10, and not do anything other than put them on a pallet. This just-in-time manufacturing that folks are going to these days is causing them to dish out more green to the guy with the machine. O.K. by me...I can get away with that with the customers I know, and can count on, but a new client you can not judge in that way.

Truthfully, I try to maintain a shop rate of 200/hr. as well. Sometimes it's not possible, but with expensive machines, you have to pay for them somehow. You have to bank some money for the days they are sitting idle. You can't pay for a hundred thousand dollar machine with a 60 dollar an hour shop rate.

You are complaining about their prices, but how much are you getting paid for the parts when you resale them??? I bet it ain't no measley 60 bucks an hour.

On edit:
You might offer a blanket p.o.....where you order so many per month for 12 months or whatever. I know I have recieved some rfqs for p.o's like that. They were always on parts that I was making 20 or so every other month or something, then the manufacturer comes across with an rfq that sounds like I better get my price down for the next twelve months, or risk losing the work as he is willing to guarantee quantities to someone!!!. I knock 5% off, quote it like that, then crank out all 300 parts in a week, and sit on them. Heck yeah, $60,000 just sitting there waiting to be picked up....see works well for both parties, assuming the shop has room to "warehouse" their clients parts.

My 2 cents

Running a production shop with a limited known product line is a completely different business propasition to running a job shop, or apples and oranges.

You haven't stated your shop rate or costs, ..... how do they compare with the figures you're quoting?

Hard economic facts are, if you can do them at the low price, then tool up and do them in house, BOTOH niether can you impose your costs and pricings on another shop who are used as and when you feel like it / the need arises.

"Just recently built a fixture and tooled up our HCN6000 to run 1st op 2 parts at a time in it. Which knocked off 5 min a part just on the first op."


Have another shop run enough of these parts and on a regular schedule, and they will be able to fixture and tool up like you have and probably get the cost down some. Have them quote a few parts here and there every so often when you are busy, and it isn't worth the effort for them to speed things up.

This would be an on going thing... 150 parts a month for who knows how long. The next year guaranteed. If i remember correctly their quote was $88 for gty of 100 or less and $80 for 100 or more.

This casting for obvious reasons i cannot send anyone a print. Its a special bellhousing for a Ford V10. If anyone knows anything about car transmissions you'll know what i'm talking about.

I have no clue what they bill our machines out at. we make the parts for the equipment that we build. I have no part in any of the office stuff nor do i wish to. I don't work in a job shop have never worked in a job shop. That is a whole aspect of machining i'm not familiar with. I was merely looking to learn some info on how they quote prices, shop rates etc etc. My boss is 63 years old. He's worked at this company for over 25 years. Believe me when i say that i completely realize he is stuck in the mid 80's on all aspects of pricing when it comes to just about everything. We all bang heads with him when it comes to purchasing tooling. I normally just order it and deal with the wrathe when it shows up. After the first set of parts comes off and i show him how much time it just saved and that in 3-4 hours it already paid for itself its a whole other story.

Sorry if i seem like a cheap ass and you can think as such but in the end... its not money out of my pocket so i could really care less. Seeing as what most of you charge it seems like its about on par which i was not aware of. Thats a whole other world to me. My job is to crank out X numbers of each part a week. Right now i cannot do that unless i work 60 hrs a week. We're all tired of working 60 hr weeks. Mainly we're tired of listening to management bitch about all the overtime we've been working. Its a damned if you do and damned if you don't situation. We're trying to unload a few of the things that we could trust another shop to do correctly.

The past 2 years we've spent about 1 million on 3 new machines. Spent oodles of cash on tooling to cut machine time down as low as possible. Going from a M5 to a QTN400 is a hell of a jump as is an H15 to the HCN6000. Added 1 HMC its a Haas so it was almost like taking a step back. Next year we're thinking about replacing the last old mill we have that just does odds and ends stuff right now.

This shop that I thought quoted us high is not one we currently use. Its close to the foundry that makes the castings which is half a state away from. They would be shipped directly from the foundry to them and we would arrange for the shipping to us once they are machined.

''This would be an on going thing... 150 parts a month for who knows how long. The next year guaranteed.''

I'm not questioning your sincerity vdub, but too many jobshops have gone to the wall / got in to big trouble swallowing that line,....... no matter what's written on a piece of paper.

Experience goes a long way to explaining why statements like that are likely greeted with at best skepticism or worse, cynicism, and both those cost $$.

vdub- You also have to remember to account for a lot more than just machine time. Someone at the "other" shop has to quote your work, and talk to your people. Someone there has to unload the pallets of castings that come in and get them to the machines. Someone may build fixtures or order tooling. Someone has to make up invoices and send them. Someone cleans the machines and sweeps the floor when your job is done running. The list goes on and on and on. I'm not surprised your "30 minutes to machine" part ends up getting quoted at $80. I'll bet if you realistically added up the costs at your company, those castings cost that much or more to do in house.

Limy Sami said:

''This would be an on going thing... 150 parts a month for who knows how long. The next year guaranteed.''

I'm not questioning your sincerity vdub, but too many jobshops have gone to the wall / got in to big trouble swallowing that line,....... no matter what's written on a piece of paper.

Experience goes a long way to explaining why statements like that are likely greeted with at best skepticism or worse, cynicism, and both those cost $$.

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I completely understand where your coming from.

I knew this thread would probably open up a can of worms. Some of the responses i've read i've really appreciated. They were informative to me. Some responses it seemed like my original post was taken to heart. I expected it. People are different. I was looking to be enlightened and i have. As i've already stated i don't work in a job shop its foreign to me. I know things are going to be ran different.

85vdub said:

I completely understand where your coming from.

I knew this thread would probably open up a can of worms.

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Vdub, I didn't realize your situation, I thought you were just cheap, and whining about others trying to make a buck. Quite the education. Since I have nothing to do, and the ballgame isn't on for a bit, I'll outline my process for quoting a job and running it. I ran a job shop for an idiot, literally ran, soup to nuts except for payroll, up to 14 employees at one time, now its me and a partner, and NO employees, for a good reason, because they suck.

1) get quote. Put a bit of time into it, sometimes its a 2 second task, sometimes it can be an hour plus, you owe me at least $10 on average for this. If you are stupid, and send me a quote with no prints, and I have to call or fax you, you owe me $20. If you fax the print in low res, and I have to talk to you again to get a high res copy, you owe me $30. If you lose the fax with my quote and I have to fax it back to you, you owe me $40. If you send the same quote to me again in a week hoping I forgot and can now get a lower price, you owe me $50.

2) get PO, and there is always something wrong with it, so I have to call you and you owe me another $10. I quoted 60 days, and your due date is in a week, I have to call you again, I won't move until I see a line item on the PO for next day or second day shipping on the material and an expidite fee. Now you owe me $30 for this step. You sit on it for 3 days, now you need your parts in 4 days. So the expidite fee just went up and I have to deal with you again, now I'm getting pissed so now you owe me $50. BTW you also owe me $20 for getting the PO into my system and ordering the material. Price for this step $70.

3)Start figuring the job, say its a casting like you are talking about, or some of the nasty stuff I do. I may have two hours into anaylzing it and I'll go cheap at $65 an hour for that, so you owe $130. Figure the tools I need and the cost of what I need that I have on hand. Another $400 plus $30 for the time to order it. So, you now owe me $560 for this step. Oh, and somebody has to enter all that crap into quickbooks and write a check, so thats another $10 for $570. 2 hours of quality time to design the fixturing, quality time is billed at $120 an hour bring the total for this step to $810. Now I need to build the fixture(s), I'll even do it out of scrap and drops, so no charge there, but it takes 4 hours of quality time, now you owe me $1290 for this step. Maybe 3 hours of programming and 1 hour of setup, so now we are at $1770 for this step. Get the first piece on the machine and realize your casting house sucks and that the part isn't going to clean up on several surfaces if done to print (cast to machine dimensions). Now I have to call you again, and ask you what you want me to do, I make a suggestion and it takes you 4 hours to talk it over. I can do other stuff, but my money maker isn't running and you are paying for it, another $480 for $2250, now I need to do some reprogramming for another $120, up to $2370.

so here we are, haven't made a chip yet and up to $2490.

4) run 150 parts at a half hour a pop with a promise of "repeat work", at a rate of $120 an hour for total on this step of $9000.

5) then comes the billing, quality control logs, certs, packing and dealing with the UPS guy, or driving them there, another couple hours at a discount rate of $65 for another $130. Now your QC department calls because they can't figure out how to read a depth mic, another $65 worth of BS.

6) getting paid, your accountant is an asshole on a power trip and tries to extend terms out to 120 days. $10 more dollars, plus a 30 pack, so up to $30 here. Unpack some more of your castings, take one to the bandsaw, cut it in half, and e-mail the picture to the accountant and owner, asking for payment as agreed upon, another $30 for wasting my time. Wait an hour for a phone call that says the check is cut doing work for paying customers. Cut another casting in half and e-mail picture, another $30, up to $90 here. Pull one of your jobs off a machine due to non-payment and that is another $400 for breakdown and setup fee. For $490. Finally get a check.

So, for that half hour part, we are up to a total of $12045, or $80.30 a part, oh yeah, and since I'm liable for scrapping your castings, I'm going to inflate everything 20% to cover my ass, giving. $96.36 per part.

I'm not saying your company is like that, I'm just pointing out some of the stuff us small guys have to deal with, and how costs are far above and beyond run time.

Disclaimer: I've never cut a casting in half, but I have wanted to SO bad. The break down and reset up fee has never been used for non-payment, only for crap castings that had to be remade (steel chips in an aluminum casting, AND it was wrong), though it has been used as a threat.

And I still hate accountants, because they are stupid when it comes to the real world. I'm not too keen on the ties the idiots wear either, but it sure does make it easy to grab them by the neck.

Bobw pretty much nailed it. What he wrote is learned by real world actual shop owner experience, and can't be found in a classroom book or training manual anywhere. If it was, no one would ever become a small business owner! Or at least not of a machine shop.

What gets you to that point is first being an employee somewhere, working on the shop floor. After awhile, you figure the shop owner is an idiot (may or may not be true), and that he is getting rich off the $80/hr. shop rate. After all, YOU are doing all the real work, and he is only driving the dump truck that hauls the money to the bank every day. So you decide to quit and start your own shop. You even figure you can undercut his rate some, steal all his work, and still be rich! Things are looking up! So you quit your job and start buying machines and tooling. This step lasts your whole life, but after about the first 5 years of gutting your wallet every time a job comes in the door, the constant spending does actually slow down some. It only slows down because you now own one of everything made. (most of which you will never have a use for again)

Reality sets in the first day that you bust your ass for 16 hours, and at the end of the day while sucking a warm beer for lunch, you realize that you never had time to turn on a machine because you were too busy doing the 1001 other things that needed doing. As you finish your can of lunch, (might as well call it supper, it's dark out by now) you figure you might as well fire up a machine for a while and actually get some work done. This is the moment when it hits you that your stupid ex-boss was working too cheap at $80/hr., and you don't know how he made a living at that. You start thinking that $100/hr. would be better and makes the multiplication easier when quoting. This is the usual cycle of thinking when going from being an employee to being self-employed.

Generally I hate the drama, but even the sequal wasn't half bad. LOL!


And that is in spite of new actors playing the same charactors!


-----------------

Cooper/Elvira in '08!
A troubled team for troubled times!
Ox

Bob sounds like you've experienced castings from Lethbridge Ironworks in Canada... lol

Not all work gets quoted by people who know how to make parts or how long anything truly takes. Sometimes quoting is done by people who think " well it looks like something else we make at such price, we got the other thing, so we'll charge the same for this and maybe get it "


If its the first time trying to use that shop they can also try to sense how much you're willing to pay by upping their rate, it also covers the possibility of bad new customers. Not always a good approach, but some can afford it.

You guys need to come to the southwest Virginia/east Tennessee area. It's hyper-competitive around here. Especially for production quantities.

In my area, for typical production work to be done on turning centers and/or vmcs, quoting above $60 per hour is putting you on the high end of the bids the buyer's gonna be looking at.

Yeah, I know, new fangled horizontals and multi-tasking machines can do the parts faster, sometimes. But, when you charge a higher shop rate for these type machines, the part will usually cost out where a guy (like me) with a herd of paid-for cnc lathes and vmc's, prices the job.

I am more than glad to get production quantities in the $60 per hour range.

Often, production quanities have to be done for less than that...if you want the job.

It's great having $100 to $200 per hour machine work. But, if it's standard turning and vmc work, someday you're gonna be challenged on it.

85vdub said:

This would be an on going thing... 150 parts a month for who knows how long. The next year guaranteed. If i remember correctly their quote was $88 for gty of 100 or less and $80 for 100 or more.

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At 150 a month for a year, that's a good volume to see serious cost savings.

The way we make our money, is by making the parts significantly faster, and charging more per hour. We make some high volume electronics enclosures, and people just laugh when they see the complex finished part with 90% of the material removed and I say, "That's $15 dollars worth of machining right there." What they don't realize, (or believe), is that the part only takes 7 minutes to machine. I actually use that part as one of my examples when giving new customers a tour, to show them what kind of savings they can realize if they are willing to commit to production quantities and future orders.

So to answer your question, $88 for a 30 minute part isn't too nuts, but taking 30 minutes on a part that could be done in 15 or less is the wacky part. We'd put two of them on a 500mm HMC, face 'em at 18,000rpm/900ipm with a Sandvik Century, drill 'em at 15,000rpm/190ipm with a Hanita TCM with 1000psi coolant thru, tap 'em at 3000rpm, then endmill the bores at 18,000rpm and 240ipm, holding .0006 roundness.

Now all the sudden I'm getting 4 finished parts per hour, charging 40 bucks a pop, for a shop rate of $160/hr, but at a unit price that's less than half of the other guy. Now you go and tell the other guy that you're getting the parts for 40 bucks, and he looks at his fleet of Haas's, and says, "Damn, the other shop must be working for peanuts!"