Why Am I Losing All My Quotes?! | Machine Shop Talk Ep. 114

[@paulwatson6013]

So glad I have very little competition in my space around here. A lot have retired in my area and no one seems to be replacing them. Not saying I can simply charge what I want. I keep it competitive, which I feel will make it harder for someone to come in. As it currently stands cust will have to go minimum of 150km to the coast to find others who do the same kind of work. Not having big overheads is definitely a bonus.

[@Islandwaterjet]

Back when I first started this shop in 2012 had dozens of big value jobs pass by worth $50K+ each. This is a lot for me as a one man independent. But I never got any of those jobs. This was hard to deal with. Over the years got the word on these that the bid will go to those quoting for less than what was my material and machine cost. No way !! So now I do not waste my time on worrying about losing the big jobs I laugh at the big shops deliberately losing money. Bidding under cost does not earn loyalty. The customer will not hesitate to go elsewhere if he can save a dime. I will continue to offer fair pricing and top quality and outstanding service. This being my own business with zero debt everything paid for with almost zero overhead and working out of my own shop on my own land I can afford to just take the day off if it is going to be a slow day, go do something else.

[@richardross7219]

I was a consulting engineer. I would give a quote but it was always too high. Later, there were problems and the customer(not mine) wanted me to fix it. On several occasions the customer owed their engineer money. I refused to touch anything like that because the engineer approached it wrong to begin with.

[@iansandusky417]

This is excellent, and I couldn’t agree more!

[@ryandussault6478]

the problem as a small shop / one man band is good size shops sometimes can have material pricing 50% lower than you we learned the hard lesson in our early days you are starting out of the gates at a big disadvantage. gotta learn to stay in your lane where your quote win rates are much better. you think the winning bidder is breaking even or losing money when in reality they are NOT playing the same game as you. i always say i don't like fighting fair when quoting and what i mean by this is using your head and your buying leverage to have an advantage over new guys coming to the table...

[@bdp-racing]

Those big shops usually get material at 30% to 50% less than what small shops get it for.

[@WesleyHarcourtSTEAMandMORE]

Similar but different circumstance. I used to do tree work and would be out bidding jobs every day after the actual work got done. There was a local guy known locally as 'Two Buck Tim' who would always significantly underbid everyone else's bid. Usually simple jobs with minimal cleanup. At the time I charged $100/hr/person on the job site. He usually worked alone, or with one groundsman who was a buddy or he picked up off the street. Whereas I had at minimum one, but usually two or more groundsmen who were legit employees with all the work comp and tax ball and chain in tow. Point is, with minimal or no employees one can slam out work with minimal overhead. The trade off being more work for the individual, but some thrive in that and love for the work.

[@pvtimberfaller]

When times are hard shops will bid just enough to keep their doors open, and ruin the business for everybody.

[@iansandusky417]

Most definitely - the race to the bottom hurts everyone equally.

[@2SMPerformance]

Extremely well thought out advice and explanations. Thank you, Ian.

[@iansandusky417]

Thank you very much for checking it out!

[@skwerlz]

There's never really a bad time for a little introspection, so the poster should definitely look at their machines and processes regardless. In my area though we have a lot of very large manufacturers and work coming from them has been drying up with the economy so all of the shops that usually handle their stuff are trying to fill the gaps and everyone's hurting.

[@iansandusky417]

It’s certainly rough out there at the moment, we’re seeing it north of the border as well

[@Vankel83]

I'm in NC. I get work from higher cost states. A lot of West coast companies call me. Shop rates out there are 150 - 200 per hour. If I'm undercutting them, I don't see the problem.

[@Reptilianoverlord-jc8mt]

Take away shops make more money than machine shops. Spend hundreds of thousands on CNC machines and yet the customers want you to make a part cheaper than the Chinese. What a joke.

[@bdp-racing]

I stumbled across a couple machine shops a couple years ago that were getting parts made in China then turning around and selling them as if they made it themselves. That might be the reason…

[@iansandusky417]

Yep, I've heard of a few. I had a good bit of business for a little while fixing the parts for these shops when they came back out of spec. I charged them likely double what they paid for the whole part. If you're going to take money out of the local economy, I'm going to do my best to get it back where it belongs!

[@vathavale]

Nicely explained. But you need to retrospect your estimation too. My supply chain experience says the difference between the L1 and L2 vendor is never above 7% If its one or two of incidents you can ignore but its happening more often then you need to evaluate your estimation process as not all of your competitors will be fools.

[@iansandusky417]

This is a very important thing to pay attention to - thank you for mentioning it!

[@vathavale]

@@iansandusky417 I think every job shop should keep data for analysis to find how the response of their offer results are. By doing this they can atleast find out the jobs they win very often and the jobs they lost this will give them the jobs they should work more on.

[@motivemachineworks6890]

Why am I losing all of my quotes? In Short: The economy is currently in the shitter...

[@iansandusky417]

This is definitely a factor for sure!

[@phillhuddleston9445]

Bidenomics!

[@maximiliankrug1011]

😂on point

[@travisestus191]

What do smaller shops use as a MRP system for tracking profitability, direct labor associated to a specific job, year end indirect labor, overhead, etc, and estimated vs actual margins broken down into material, labor, OSVs, etc?

[@iansandusky417]

We do it all in Quickbooks which takes a little bit of work but the reports are all in one spot - I haven’t found a system that isn’t just going to create more work for marginally better data at a price that isn’t ridiculous.

[@dmbworks8094]

more likely #5 in the case where its a simple job and the person losing the job has to much machine and talent invested for the job.

[@iansandusky417]

This is a very good point!

[@wyatt5391]

overhead will be the biggest reason

[@funwitharobot]

If you aren't offering the "Amazon experience" the Millennial and Gen Z folks don't wanna talk to or deal with you. Xometry, sendcutsend, oshcut, and others who are using paperless parts type software are gonna win. If your manually quoting run of the mill parts, you've already lost.

[@iansandusky417]

Yep, you really do want to streamline it as much as possible. I don’t work with vendors that I have to chase to get a quote.

[@timstevens3361]

we are too in brantford ont

[@iansandusky417]

We’re surprisingly slammed here at the moment - but it was a very slow start to the year, and I don’t trust it’s going to continue.

[@dimsum5567]

Ordering cnc parts in China is cheaper than buying material in the US. And Chinese work 6 days per week, very hardworking people.

[@Vankel83]

You sounded like this cheap ass company that came to my shop one day after I quoted a few jobs. They visited me, and asked me if my machines were paid off? They wanted a discount on parts I quoted if they were. I answered, not all of them. Could you machine are parts on the ones that are? I chuckled inside and told them they need a 40" table and that one is on a lease still.

[@justinsturgeon1]

Two you didnt mention but may hurt some feelings. Your internal labor and overhead labor costs are too high. What is your percentage of labor costs that are actually making chips. You may have great machines but people are not being productive. You SGA labor is too high. What is the cost of your sales, marketing and accounting. Its 2024 there are way more efficient ways of sales and marketing than 10 years ago. Lastly, your margins are too fat. Greed catches up. Make sure you are quoting a fair price!

[@iansandusky417]

This is fantastic advice!

[@jd3497]

Maybe it's the backwards ball cap? 🤔

[@iansandusky417]

Cute. I didn’t realize you were a men’s fashion commentator. Any other tips for Spring / Summer 2024, Mr. Vogue?