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  1. #1
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    Examples of what parts sell for.

    Hey there Zoners,

    I'm in the initial stages of developing a business plan and I was wondering if any of this group might be able to give me some advice as to what customers actually pay for specific parts? I realize that it wouldn't make sense for someone to tell me who their customer was and what they paid for something. I'm not trying to steal someone's customer. I'm simply looking to gauge what "parts" are worth based on complexity, size and batch size. Also, this doesn't have to come from specific members of this community, is there a listing of what winning quotes in the RFQ forums went for? How about winning quotes on mfg.com? Any insight would be greatly appreciated!

  2. #2
    Community Moderator Jim Dawson's Avatar
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    Re: Examples of what parts sell for.

    What you are asking is impossible to answer. Too many variables, every job is different. I try to get US$80/hour for machine time. Sometimes I do better, sometimes I don't quite make it. On a 1 off or very short run, you need to charge for setup time. On a longer run, maybe you can just bump the part price a bit to cover the setup. I normally charge fixtures as a separate charge, a one time set up charge.

    Sometimes you can only charge what the job is worth rather than by the hour. If you have a good customer and they need a quick project, then maybe you take a bit less / hr just to make them happy. Don't forget to add in tooling and shipping on the materials.

    I figure if I get only about one job out of three, then I'm right in the ball park on price. Many times someone is going to under bid you on a job, that's fine. If you can't make money on a job then you don't want it. Don't underbid, you will lose money.

  3. #3
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    Re: Examples of what parts sell for.

    You get paid what you are worth. I have 20 years as an experienced machinist under my belt. If I can make a part in 3 hours with all my machinery, experience, and tooling at $100 per hour, but it takes you 20 hours at 30 per hour who wins??? Sure, you may get the bid because you say you will work for $30 an hour, but can you accomplish the project?

    What you ask can not, and will not, be answered here. We all compete with each other in one way or another. If you don't have the experience to reliably judge what a part is worth or what your talents are worth while developing your business plan you need to build your skills rather than your business plan. Be honest with your plan and your abilities for what YOU can accomplish. I have an 11 axis live tooling Mitsui Seiki with a $30,000 Unigraphics package to run it. Do you? BUT. You can accomplish the same parts on a Taiwanese mill and a mini mill from Harbor Freight. I charge $200 and hour. Can you? BUT, you can find a customer that will pay you $20 an hour who will work with you 10 hours.

    In conclusion. Be honest with your capacity and capabilities. If you have manual mills and lathes you're worth $40 an hour. If you have a metal CNC and toolchange you're worth 50 an hour. If you have a CNC jig bore and a shop full of high end machinery you're worth 100 an hour.

    Quote Originally Posted by helpmedothis View Post
    Hey there Zoners,

    I'm in the initial stages of developing a business plan and I was wondering if any of this group might be able to give me some advice as to what customers actually pay for specific parts? I realize that it wouldn't make sense for someone to tell me who their customer was and what they paid for something. I'm not trying to steal someone's customer. I'm simply looking to gauge what "parts" are worth based on complexity, size and batch size. Also, this doesn't have to come from specific members of this community, is there a listing of what winning quotes in the RFQ forums went for? How about winning quotes on mfg.com? Any insight would be greatly appreciated!

  4. #4
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    Re: Examples of what parts sell for.

    Let's re-open this. How did you know that it was a good idea to start a business? Did you know of specific work that was available? Did you have work lined up? If so, how did you come to find this work?

  5. #5
    Community Moderator Jim Dawson's Avatar
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    Re: Examples of what parts sell for.

    I never intended to be a machinist, and am actually still not a machinist. But I can produce acceptable parts on both manual and CNC equipment to any tolerance required.

    Let's set the Wayback Machine for the early 70's. I was working as a millwright for a local company and was also working on personal R&D project. For the R&D project I needed some parts made at a local machine shop. I was a bit shocked when I got the bill and figured I can do this cheaper. So I bought a new 12x36 Craftsman Commercial bench lathe, then found an Atlas shaper and an Atlas bench mill, that and a drill press and a grinder gave me the basics to get started. Once the company I was working for found out I had some machine tools, they started giving me some jobs that my equipment would handle, I could do the work at about half the going rate and still make money on it. They had one high wear item that I made a lot of, just about wore out that Craftsman lathe in a year turning Inconel shafts. But I made enough money on them to buy a 14x40 lathe and a BP clone. Also allowed me to quit my day job and make chips full time. The larger equipment allowed me to expand my work.

    I lived in a small town with a lot of heavy industrial in the area.and pretty much knew everybody, so bringing in more work was not hard. Fast forward a couple of years, I have 3 BP clones, 2 lathes, and a V3 Cintimatic NC (paper tape) machine, and I paid cash for all of it. Also had 5 guys working for me, and more problems than I new how to handle. Fortunately a guy came along and wanted to buy the business. That giant sucking sound was me running out the door with his check in my pocket. By this time I'm 24 or 25 years old.

    That's how I got started. I'm not going to go through my whole CV here, but 7 years as a tool & die maker, more millwrighting, controls engineering & industrial software development. I bought more machine tools over the years to support my machine design and fabrication business. Today at 68 I'm semi-retired, but I still have a shop full of tools & equipment, both CNC and manual, and take on all kinds of jobs that I find here and there, mostly one off, repairs, and short run production. Most of this work comes from networking and customers that I have worked with for years. I also pick up about one job a month from Craigslist, normally small stuff that large shops don't want to touch, or in some cases can't (or don't want to) figure out how to do.

    But many times these little jobs lead to more work. Just this afternoon I finished a run of 216 plastic parts, about $1400 worth, customer supplied materials. About 24 hours of machine time, but 16 of those hours were run while I was asleep. Each run took 8 hours on the router, I would just turn it on at night and the run was done in the morning. (yes, I'm crazy enough to run dark) Then over to the mill for some secondary operations. Right now I'm also building a bumper for my neighbor's truck, $200 + materials, and all of the barbeque steak I can eat. Will work for food I won't make minimum wage on the bumper, but the steaks are really good!

    My son designed a device for the RV industry, so we are getting ready to crank up production on those parts. There is about an hour of machining time in them, but we can only charge that project about $40 to be able to hit the price point, on the other hand, the overhead is minimal. The property and machines are all paid for. Actual cost of operation is about $1.25/hr, figuring in power, maintenance, and tooling costs. The profits will be dumped back into the shop to buy more toys, 'er tools. We'll run those parts about 100 at a time.

    Would I go out and buy machines with the idea of opening a machine shop, hoping to make a living at it? Absolutely not! But if you love to make chips and have the resources to pay cash for the machines then go for it. Once you have the machines, then you can say to somebody ''Yeah, I can do that''. If you bring in enough work then you can quit your day job. Networking is the key to bringing the jobs in. Doing a good job and treating your customers right will keep the work coming in. When you are just starting out you have to go above and beyond sometimes to build your reputation. I did a lot of work at night and weekends without charging overtime just to keep the customers happy.

    I can sum up a business plan in one sentence: Sell stuff, Make money I mentioned paying cash for you machines a couple of times above. Don't borrow money to buy machines, if the work doesn't come in or things get slow, the payments don't stop and the bank wants their money. Gives you a lot more flexibility. If I don't have work for my machines they can sit and it doesn't cost me anything out of pocket. When starting out, buying good used equipment is your best bet, but be able to do repairs yourself. Wait for deals to come along, then jump on them. The only major machines that I bought new are my 13x40 jet lathe and Miller Syncrowave 250 welder, had them for about 25 years.

    I hope this is somewhat helpful.

    Best of luck!

  6. #6
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    Re: Examples of what parts sell for.

    Anyone have any more insight into this? Did you know of specific work that was available? Did you have work lined up? If so, how did you come to find this work? How did you know that it was a good idea to start a business?

  7. #7
    Community Moderator ger21's Avatar
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    Re: Examples of what parts sell for.

    You absolutely have to have work lined up in order to start a business.

    There are probably at least 100 threads here asking how to get work. And no answers..

    Most people start out working for someone else, learning the business, making contacts, and at some point, branching out on there own.

    If you currently work in a different field, don't quit your day job. Start a business in your spare time, and don't go full time until you can't keep up with demand.
    Gerry

    UCCNC 2017 Screenset
    http://www.thecncwoodworker.com/2017.html

    Mach3 2010 Screenset
    http://www.thecncwoodworker.com/2010.html

    JointCAM - CNC Dovetails & Box Joints
    http://www.g-forcecnc.com/jointcam.html

    (Note: The opinions expressed in this post are my own and are not necessarily those of CNCzone and its management)

  8. #8
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    Re: Examples of what parts sell for.

    Thanks Ger. I have worked for someone else in CNC Machining, now I'm in a consulting role in the industry and I've got that entrepreneurial itch... Did everyone else on here with businesses start out almost strictly working for local businesses? My dad has mentioned how it's a global market now and I can find work anywhere. Have others had luck with this kind of thing? Does anyone have any ideas as to how I might poll local companies to find out what needs/oppurtunities for a manufacturing firm might be out there locally? Do you think that's unnecessary because of the "global marketplace"?

  9. #9
    Community Moderator ger21's Avatar
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    Re: Examples of what parts sell for.

    As Warren said above, nobody is going to tell you how to get work. They are all in direct competition with you.
    Many might say that the "global marketplace" makes it harder to find work, because you're in competition with people who have much lower operating costs than you will.
    Gerry

    UCCNC 2017 Screenset
    http://www.thecncwoodworker.com/2017.html

    Mach3 2010 Screenset
    http://www.thecncwoodworker.com/2010.html

    JointCAM - CNC Dovetails & Box Joints
    http://www.g-forcecnc.com/jointcam.html

    (Note: The opinions expressed in this post are my own and are not necessarily those of CNCzone and its management)

  10. #10

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    Re: Examples of what parts sell for.

    Here, I will give the alternative view that a business plan is a waste of time, and instead you should concentrate on having a wide list of individuals who agree to pay you for your product or service.
    To do so, you do not need a business plan.
    That's just a diversion.
    I have never met a VC who cares about it. (They want a deck, not a strategy for the biz, btw).
    So maybe just get moving and stop procrastinating from asking for cash from the hard part. Simple, but very very challenging emotionally.

    So more of a "initiation" ceremony is the conventional business planning? "hey if you're willing to put up with THIS BS — then we know you'll put up with OUR BS"Hey, if you're willing to put up with THIS BS—then we know that you're going to put up with OUR BS.

    Even, in Smoketests, you're referring to health research, right? If so — could you explain what a business strategy would have to do with this? Curious just.

  11. #11

    Re: Examples of what parts sell for.

    No offense but I see a recipe for disaster . So many people say "hey I want to start a business" , they sink lots of money into it and fail miserably .

    I used to work for other people's shops , I came up with a product to make and it became a weekend gig . As it kept growing I got more and more machinery and eventually quit the day job . That took a few years and a lot of work . Shortly after I left the job - a guy that I worked with bought a shop which had a number of contracts , machines that were still being paid for , and he failed miserably . He's back working at the old job trying to pay off the second mortgage he pulled in order to buy the business , that only took 2 years . He had a great early retirement planned out before this and that is now gone .
    At the time I asked him what made him decide to buy a shop , he looked at me and said " I figured if you could do it I can do it " . Right then and there I knew he was finished before he started . For one he is a decent machinist but he has nowhere near the same amount of experience that I have , and two he did it blindly . He's only ever worked in one shop and that is a production shop
    Biggest red flag for me was why did the other guy want out . We have no lack of available machine work around these parts but if a guy doesn't know where and how to find it then he's not working

    Base your business plan around the work you will be doing and not the work you hope or plan to do . Your going to need to do a lot of foot work in order to line up a lot of potential future work .
    As far as pricing goes you'll need to find what is competitive in your area . Around here it's 200 to 500 cost plus per hour for any of the competitive shops

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