I think the type of work you are doing strongly changes the multiplier there.
If you are a manufacturing industry who buys raw materials, and sells a completed product, that might be true... although that is a pretty weak way to estimate costs, as the type of product you are building and man-hours involved can make that sharply vary.
If you are a value added retailer, who buys from a wholesaler, warehouses the product, and ships to the end user, than I would say that thumb rule is not applicable. It might have been true before Walmart, Costco, and Amazon cut profit margins to the bone, but now I would bet it is more like 1.3X (or even 0.95X if Walmart sees you as a competitor to put out of business).
If you are an importer with a small engineering staff to design new products, with a warehouse to house completed products and parts? I am pretty sure that Tormach is not getting anywhere close to 3X on their mills and lathes, but they are definitely making it in upgrades, accessories and spare parts. Of course, that is no different than the business model that has supported the automotive industry for years. It is amazing to me that you can order a mill or part from Tormach on Monday and get it on Friday, based upon how small of a business Tormach is. Compare to Precision Matthews, who gets a shipment to him every 3 months. You want a mill, you might have to wait.... a long while. Look at Grizzly, they also have had long restocking periods. Tormach is doing well because they are focusing on a very small line, most of which is mature and in the product sustainment phase.
That is why I bought a PCNC1100, after comparing it to the competition. I am pretty sure that Tormach will be around in 5 years, still supporting their products. Look at all the poor saps who bought from Syil and were unable to even get a machine that worked, or get any support other than poorly translated forum responses.
The point is, if you are making it for yourself, you can save money over the Tormach offering, as the time spent on it is in the nature of a hobby.
But if you are thinking of going into business, that is a whole different story, especially when you start adding up taxes and overhead. For every hour in the shop, you have to figure that you are doing at least two hours of non shop time: admin, ordering parts, shipping and receiving, phone support. The $434 "profit" that Tormach is making on a 6" rotary table would quickly disappear under those circumstances. In the case of the rotary table, the actually machining and assembly time is probably less than the time spent shipping and receiving (since it is such a simple conversion). I don't see myself as a warehouse clerk, so I don't think I will set up shop to compete against Tormach....
To really compete, you need to import it yourself. OW you are already paying someone else's 1.5X-2X margin on your "raw materials", sharply cutting into your top line on a business that isn't known for high margins to begin with. Speak Chinese? Have a business associate in China already? no, than forget it.
The other fly in the ointment is that Tormach has a great QC reputation. When you are buying cut-rate parts from a Chinese importer, your quality is going to vary wildly. ACannall might have lucked out with the table he bought. But I bet if he bought a pallet of 10 of these, that he would get at least 2 rejects. Hmm, prices are mounting. Prices are mounting even more if you don't discover the defect, and ship to a customer, and now have to pay shipping both ways to correct the problem (and shipping a 50-120# table isn't cheap). Now that $$$$ profit starts disappearing.
The other thing is that there are an infinite array of Chinese machinery that are built to a certain price point. The machine looks the same (as the casting was possibly done at the same foundry), but the devil is in the details. Bearings or bushings? You want pre-greased or pre-chip filled bearings with no grease? Rough off, center drilling or precise boring of where critical shafts are located. I suspect the price difference is not noticeable in the external appearance; and the difference will be seen eventually. Well cut, hardened gears? Adjustable backlash? Reasonable backlash? Leaks oil (ok, even the phase II and tormach tables do that). Buying no-name Chinese machinery on ebay is definitely a risk; I personally wouldn't buy a "cheap" rotary table that wasn't a Phase II, as they have establish a decent reputation. Maybe Grizzly's new "SouthBend" rotaries, they look like a decent offering as well.
Would I do it myself to save $424? Yes, in a heartbeat, since shop time is hobby time to me. Would I make conversions to sell. No way. Would I manufacture a motor mount adaptor to allow people to do phase II rotary table conversions? Well, you can already buy solid aluminum NEMA 23 motor mounts on ebay for $20 (look at sclark0617 storefront). They don't fit the shaft of the rotary table, but I bet if you made one that did and put in on ebay, you would immediately see copies. $20 isn't a lot of money for the amount of time and raw materials.
Attachment 253048
Here is a good webpage from someone who used to sell those conversion kits for the 4" table. Nice, step by step directions:
https://sites.google.com/site/geekba...conversion-kit