Should You Charge The Same for CAD, CAM, & Machining? | Machine Shop Talk Ep.120

[@Vankel83]

Small shop that does small / medium run production: When I get the RFQ in. First off how many parts, material type, how much material needed. Cost of material / per part. Then I look at the part and imagine machining it. How many different tools, what type of tools. Then I look at operations in detail. How much time in minutes per each operation. Aluminum, Steel and Stainless all have different rate per minute. Flat rate on programming time per hr. Break down anodize or black oxide per part cost if needed. You got washing, packing cost. Last but not least margin target %. Normally get quotes back to customer within 1-hour or 2-hours tops. Unless they send end of day. They'll have it first thing when they get in. Many big shops take a full day to two days to get a quote in. I don't do design work or reengineering a part. Have your ducks in a row or find another shop. PDF or Solid / IGES and where good to go. Time is money and I can work on one or two jobs and make it. Then doing your homework for you.

[@ScottMoyse]

Awesome video Ian! Thanks for getting the conversation going on KZbin! I'll check out the PM forum thread as well.

[@iansandusky417]

Thank you very much for checking it out!

[@pvtimberfaller]

We started by trying to break a job down by each individual segment but at the end of the day it was wages+shop time+materials+special tooling+profit. Ok for a one man small run job/repair shop but I ran into problems and just wasn’t competitive to try and bid into larger runs, those guys have that down to a science. I do think it is useful to keep very accurate records of everything so you can get a better idea of what you need and what you cost. I think the key is consistent pricing whether you stay a one man shop or expand, customers don’t like surprises.

[@zakanderson6196]

As a one man shop with CNC and manual, my highest rate I charge is when my attention is 100% consumed by one task. Say a large shaft in a manual lathe, or making fixtures and jigs, programming etc. running the CNC's I can make it a bit more competitive as I'm usually running 2/3 at a time plus a manual machine. $100 an hour is cheap where I am in Australia so do that x 3 machines and you're doing pretty decently. But if I'm stopping all CNC's to focus on a manual machining job, it's full shop rate

[@iansandusky417]

That sounds like a good system - I feel it’s much in the same for a lot of successful one-man shows!

[@skwerlz]

Small shop perspective, it makes sense to quote your cad/cam time differently than your setup/machining because of the different overhead considerations. As I've gone along I've gotten a good idea of what to charge for each individual step and if the customer requests it they can have a spreadsheet of every cost broken down to how many seconds at the saw and board feet to crate, but the default breakdown I give is still CAD/CAM, setup, fixturing, crating, and a per-part cost that covers materials, prep, machining, and inspection.

[@iansandusky417]

This definitely makes a lot of sense!

[@pvtimberfaller]

So I think you got a bit confused in your category breakdown, Computer time, machine time, fixturing etc. Engineering/design is a whole different ball game and after a certain fixturing/tooling design would fall into this category. To me the only real difference between a large and small run is how much time and effort goes into fixturing (which can reduce set up time drastically) but you still need to bill custom fixturing to the customer but like programming I think it is wise to emphasize the fact that those are (usually, barring wearing out fixtures/tools or programming changes ( if you can tweak a tool path to speed things up and be more profitable or run multiples is probably something the company should absorb) one time costs paid for on the first run and each additional run is simply setup/clean and machine time. I am not a fan of showing the customer a cost breakdown for a part or job, usually because it makes it easier for your competition to under bid you. I have found it can also cause upset if they think you are charging then too much because you are running too many parts at once or have a guy tending more than one machine etc etc. Not having customers walking around the shop is a very good idea. At the end of the day EVERY JOB MUST MAKE A PROFIT!!!

[@justinsturgeon1]

One man shop here. Time is time don't care what it is. Only time I would add additional to shop rate and materials is when special tooling is needed. Most of the time, I am doing cad and cam while the machine is running. I quote in minutes not hours. Alot of times i will ger rfq, quote, and get PO all in same day. Maybe a day or 2 if it is a large project. There is a huge correlation in time to quote and percentage of won quotes. Would all be different if I had employees.

[@iansandusky417]

This is very true - funny how it differs from shop to shop - I find these days I quote based on “days” not “minutes” - but other jobs I feel like I’m counting seconds. It never gets easy, I’ll tell you that much!

[@electrobill2]

In my own shop, I am partially breaking down each process. Cam programming is a rate and then setup and machining time are the same. I consider doing the setup in using the machine.

[@iansandusky417]

That’s a good way to put it, since the setup is essentially machine time - can’t exactly be running another job while you’re doing it I suppose!

[@TrPrecisionMachining]

good video Ian

[@adambergendorff2702]

I am so fortunate to do almost all custom stuff, so it usually gets lumped together. I also don't have to give a price just a guess. I just finished 4 hub cap/wheel covers for a custom 1950 DIVCO milk truck. I was lucky to design from beginning to end. After the 4th one I was ready to do something else.

[@patrickmcclintock7027]

Where I work at charges the same for everything whether it be cnc programming, cnc machining on any machine, manual machining, welding, waterjet etc.. I guess with the thought it all balances out at the end.

[@Sven_Daniel]

Hey Ian, awesome video and great topic! It’s really cool to see that you guys in Canada are thinking along the same lines as we are here in Europe. I’ve actually written a book on job shop pricing because it’s such a complex topic. That’s why I’m planning to launch a video series on my channel soon, where I’ll be sharing the European perspective. My focus will be more on how we can provide greater value to our customers, rather than just thinking about how to price our services. Looking forward to learning from each other!

[@iansandusky417]

Thank you very much sir! Unreal - I’ll definitely be looking forward to it! You’re a real resource to the industry.

[@Sven_Daniel]

@@iansandusky417 Now I've spontaneously grown 3cm. 😂😂 I'll get a video ready for you in the next few days.

[@ntutfitness]

My factory in Taiwan. Oftentimes, our customers really not understand and empathy how we charge on quotation, particularly for a few samples. The customers smart enough to fake on potential need on quantity, like 2000, 5000, 10,000 cps, strategically for them to know lure you into and measure your quotation. For that being said, what would you do when a customers like this kind?

[@niclasnordblad5962]

For the shop i work at each operator are doing their own programming (Low Qt/High mix), so for our boss it makes sense to charge the same for every step in the process since its such low volume for each part the spindles aren't really running while they make each program. Hell, im lucky if i get more than 5 of the same part. For those shops who have enough people and volumes to have dedicated programmers and such i could see it making sense to have different pricing depending on if its cad, programming, setup or actually making chips.

[@iansandusky417]

Quite true!

[@bluejayfabrications2216]

Small one man army fab shop an hour is a hour regardless my shop rate is simply 130hr + materials with 20% over cost + process i charge a $30 cnc plasma set up and $30 for welding alloy Just about anything else is under the shop rate I can understand why people will break everything down to get a better understanding an that's not a bad thing but dont lose dollars chasing cents i was told by one of my customers about how he had an accountant on staff who would spend days chasing $100 here $300 there to balance the books And would proudly walk in at the end of every month showing how much he saved or found And it was never more than his wage that week My customer calls it slippage its going to happen so you may as well make it work for you

[@LaxPal-j5t]

This is a just right topic I discuss as a one man show, with others in same situation. In any case, comparative price difference shouldn't be more than twice, other factors like, delivery, quality, consistency and reliability also need to be considered. I asume, Customer only looking at cost prospective means aiming for high profit margins aginst product quantity at the cost of vulnerability in the manufacturing field and appotrinistic. Thanks to China for creating this healthy competitiveness?

[@iansandusky417]

There are indeed a lot of factors at play!

[@juicedimpss]

Does the cad/cam guy get paid less than the guy running the job? It's the same guy in my shop.

[@phillyphil1513]

(because: MATH) if you have 3 different rates...? simple, AVERAGE out the 3 rates and then charge that ONE rate. numbers don't lie.

[@gopalradhakrishnan6451]

Not everyone understands the details of work.... Machining is over the supply sector in India... Lots of small units are in trouble due to raise in inflation after covit

[@raindeergames6104]

This one of my biggest unknowns. I don't know how to charge people. It's only a sideline gig/hobby for me.

[@iansandusky417]

It’s a difficult one - but if you’re a one man show I’d be inclined to charge the same rate and build it all into the pricing!

[@timstevens3361]

well does an operator a setup guy a programmer or a cnc machinist actually make the same $$$$ ??? prbly not i see programmer jobs on indeed in ont paying up to $40/hr n ma pa says there are top drawer guys makin more $$$ than the going rate bcuz they make their companies soooo mch $

[@iansandusky417]

Yeah you’re got a good point there!

[@timstevens3361]

makin chips is one thing, burning chrome ie brain burn, is another

[@iansandusky417]

Hear hear!

[@SiftainMahida]

Hey any one is interested to exchange ideas to discuss more about costing the parts I am a costing engineer from India and my daily work is quoting parts , sourcing raw material work on different segments of parts. And i love to know how people are working on costing across globally.

[@iansandusky417]

Practical Machinist forums at the website bro - already there and ready for ya!

[@SiftainMahida]

@@iansandusky417 can you navigate me or past a link i can't find...?

[@timstevens3361]

wat do you think about fusion 360 ? i kno blastercam myself my employer does not n i was telling him to get fusion 360 now im not so sure 1 i hear list of features changes and pricing changes over time 2 you must be online to use it so your customers info is at risk of being uploaded not liking subscription so much either

[@ScottMoyse]

Pricing for everything in life changes over time. Other than a few price changes due to repackaging, any increases have been in line with inflation. The features change mostly because new features get added. So the software has improved massively over the last 10 years. It's now one of the best CAM products on the market for CNC milling (3, 4 & 5). It's about to get really good for turn/mill as well. You don't HAVE to be online to use Fusion. But by default it does sync and backup all your work to the Autodesk Cloud. Most workshops don't have reliable local backups of their data, so they are at risk of losing their customers and their own data. Subscription is great for a low cost of entry. But sure, you HAVE to keep paying it. Any shops who stay at the cutting edge, pay maintenance every year for their perpetual licenses anyway. It's pretty easy to predict which shops don't pay to keep their software up to date each year... you only have to walk into the place, because the mentality shows throughout the shop.

[@timstevens3361]

@@ScottMoyse back in d day you would purchase a thing n you owned it ! now not so much. i have talked 2 companies i worked at into buying mastercam. they did, n cried, but only cried once, but really cried good ! one place was using gibbs, goofy af. its like somebodies high school software project. idk wat new features are, wat you are doing is not changing so does the software need to ? solidworks sits real low in d water now i noticed. so many features its a forest of features. wheres d core functionality, o idk i need a gps to find em anymore !