Charging for your time

The Breakroom > The Water Cooler

<< < (2/5) > >>

krv3000:
yep if i was working my prises wood go up as im in reset of state benifit i must dekler all ernings i think im not a lawd to mack more than £15 a week

Dean W:
Chris, how much do you suppose each part is worth? When you're in a home shop situation where much of your work
is centered around doing one operation, then moving onto another operation with tool changes and setup changes
in between, your time is is not worth so much to your market. It is worth the same to you, but your customer doesn't
care how much work you put into something as long as they get it at a price they consider good value for money, what-
ever that price may be.

If each part is worth $15 to your customer, then you are going to end up earning $15 per hour considering each part
takes one hour to produce. If you can live with that, start making parts. If you don't like the amount the customer
is willing to pay, you will be better off putting in for a few hours of overtime at your regular job to earn your mad money.

If you just want to do the job because you would like to help someone out, and they can only pay $5 per part, you
will have to be satisfied with $150 for 30 hours work, and in knowing you made some useful items for someone.

For what it's worth, in my own shop I often do work "by the job". I.E., 30 of these things for $200 no matter how long
it takes me to make them. I do not depend on my shop income for my living. It is just pocket money, as I have a
retirement income. If I were in business, my shop rate would be $60-$80 per hour, but I would also have my shop
tooled up to make money at that rate while putting out substantial production.
The place I worked 10 years ago was a welding/machine shop. I worked in both sides of the shop. There were about a
dozen guys working there and the shop rate was about $120 per hour. We put out an enormous amount of product,
and the shop was tooled up for most any job. Just put a couple men on the lathes and one on a mill and parts flowed
out of the shop like water. That only works in a production environment. One guy alone can up his production by
using form cutters, numerous drill chucks for the tail stock, or a turret, and quick chucking setups, along with making
good use of various depth stops and jigs. If you are going to try to make a run of parts and be economical with your
time, you need to make use of those kind of things.

andyf:
Chris,

If (without spending much time on jigs and stops) you can make a prototype and time yourself doing it, that will be better than taking on an order for 30 items with a price based on guessing 45-60 minutes per component, then finding you are spending 75 mins on each one.

Also, you can show him the prototype to check he's happy with it. No point making 30 off and then finding he's dissatisfied with some aspect, leading to him asking for a reduction or refusing to pay anything at all.

Andy.

Lew_Merrick_PE:
Chris -- Welcome to life on the cutting edge of capitalism. There are no easy answers. One of the things that few small shop owners know how to calculate is the cost of having their equipment sitting on the floor of their shop. My observation is that close to 70% of all small shops that fail do so because they do not understand what their overhead costs are.

The question I get all the time is, Why are your rates so high? The answer is, Skill, understanding of the problems, and professionalism. I am watching one company getting set to lose a rather large contract because they think that hourly-cost is all that matters. I bill drafting and documentation time at $50/hour. I have done work for nearly 400 different companies and government agencies across three continents and the number of people who are faster than I am at developing a concept, fleshing it out, doing the analysis, and reducing it to formal engineering drawings and specifications can be counted on fingers. There is no savings in getting a $15/hour draftsman who is going to take 5X as long to complete the task -- but try selling that point of view to some bean-counter.

The other thing to remember is that you can always come down on your price, but once you have named a figure, you can rarely (never, in my experience) raise it.

gmac:
"The other thing to remember is that you can always come down on your price, but once you have named a figure, you can rarely (never, in my experience) raise it."

Bingo!!! +1 on this fact. If you're happy to work for cheap, you'll have lots of customers - but you won't make any money.

Cheers Garry

Navigation

 Message Index

Go to full version