Rate discount for quantity? - Page 3
Close
Login to Your Account
Page 3 of 3 FirstFirst 123
Results 41 to 46 of 46
  1. #41
    Join Date
    Sep 2009
    Location
    barcelona, spain
    Posts
    2,199
    Post Thanks / Like
    Likes (Given)
    499
    Likes (Received)
    1330

    Default

    Somewhat right answer is that the price reduces 20% per doubling after 100 - 500 - 1000 parts.

    Depending on "fit" of your skills, material, machines, part value, materials value, work value in hours.

    E:
    An iPhone case for apple costs == 9$ to apple, from foxconn, with == 2$ of materials and 1$ of tooling.
    65 separate milling, laser, sandblasting etc etc ops are done, for 6$ each part, made to aerospace tolerances.
    Each op costs about 0.1 $, with about 20% net profit left over after amortisation.
    And 100-200 million minimum order qty.

    But it costs 200M$ to start.

    An optronics / telescope worm gear, 12", costs 30$ in material and 2000$ retail.
    1000 of these might cost 500$.
    20.000 of these might cost 100-200 each.

    A car gearbox bmw 3 series costs about 3500 $, qty 100.000+ per year.
    I know a guy making these, for similar numbers, for auto industry, production.

    A single bmw-3 gearbox would cost about 100-200.000$, if drawings available and liability / reliability was not an issue.

  2. Likes Laurentian liked this post
  3. #42
    Join Date
    Feb 2012
    Location
    California
    Posts
    1,281
    Post Thanks / Like
    Likes (Given)
    848
    Likes (Received)
    1360

    Default

    Quote Originally Posted by StirlingMachine View Post
    But here's the real crux of the question. Do you reduce your rate for run time in exchange for quantity, or just let the costs amortize out and let the price lands where it does?
    The latter.

    To determine your shop's true cost structure, you must decouple all expenses (machine, labor, overhead) as well as separate machine expenses into real costs and opportunity costs.

    A large quantity "gravy" job might utilize minimal labor and capture your machine's "garbage time", e.g. 3AM on a Sunday with little chance of a runaway failure. Unless you have two gravy jobs competing for the same machine, there is no opportunity cost, just some nominal additional overhead (power) and normal wear and tear on the machine.

  4. Likes StirlingMachine liked this post
  5. #43
    Join Date
    Dec 2014
    Country
    UNITED STATES
    State/Province
    Pennsylvania
    Posts
    160
    Post Thanks / Like
    Likes (Given)
    15
    Likes (Received)
    28

    Default

    Il keep it really short...

    Try to keep at 60-120/hr machine run time.

    If its a 10,000 part swiss job I will lower the shop rate to $30 per hour. I thought it was nuts too, but these are by far my best jobs.

  6. #44
    Join Date
    Sep 2016
    Country
    UNITED STATES
    State/Province
    Texas
    Posts
    6
    Post Thanks / Like
    Likes (Given)
    13
    Likes (Received)
    1

    Default

    You should see exactly where the point of diminishing returns is price/cost wise. It also depends on the opportunity cost of doing the next best thing.

  7. #45
    Join Date
    Apr 2019
    Country
    UNITED STATES
    State/Province
    Oregon
    Posts
    29
    Post Thanks / Like
    Likes (Given)
    0
    Likes (Received)
    17

    Default

    What I do.... My labor rates are always the same. Then I have a separate machine billing rate. For example if I have to drill 1000 holes and that takes 10 hours I will bill my full labor rate for the 10 hours but only $15 an hour for the drill press. If I have to drill those 1000 holes on the CNC and it takes less time I bill more for the CNC machine but my labor rate stays the same. When it comes to high quantities I will knock down machine rate time but always keep my labor rate the same. I will lower the price of high quantity orders by putting someone with less skill with a much lower labor cost who just needs to load parts and hit the start button. It's all a balancing act.

    And a word of advice. Don't fall for the "make me the first one at the 1000 quantity price then I'll order the rest of the 999" trick.

  8. Likes StirlingMachine liked this post
  9. #46
    Join Date
    Dec 2018
    Country
    AUSTRALIA
    Posts
    4
    Post Thanks / Like
    Likes (Given)
    2
    Likes (Received)
    0

    Default

    Quote Originally Posted by StirlingMachine View Post
    Hi folks.

    But here's the real crux of the question. Do you reduce your rate for run time in exchange for quantity, or just let the costs amortize out and let the price lands where it does?
    Maybe the question should be REVERSED

    Keep the same rate (normal)for quantity, raise your other pricing. This way your Discount Price then becomes a Satisfactory Price.

    Took me 3 years of bloody hard yakka, 12 hour days 8 day weeks, when I was 30 years old., to eventually go broke looking after arseholes who had convinced me it was all about price.

    As you said, it seems to hurt doing it for less, then please stop. Pain is not money, satisfaction and peace of mind.
    Mark Needham


Tags for this Thread

Bookmarks

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •