Thread: Hourly Rate to charge for 4-Axis Machining

**AMCTony** · 10-01-2005, 02:54 AM

How much is a fair amount to charge a customer for 4 axis machining of aluminum parts. The cycle time is 5 minutes per part and they are made of 6061 aluminum. The parts are ordered in batches of 1000 to 2500 pieces. Material is supplied for the job. We currently do 3-axis work for customers in several different materials from tool steels to plastic but never any 4-axis yet. Any help in this would be greatly apreciated.

**mxtras** · 10-01-2005, 04:11 AM

What is your overhead?

How busy is the 4 axis machine?

Scott

**AMCTony** · 10-01-2005, 04:42 AM

We are considering buying a 4th axis for the 3-axis mill. The machine is a Haas TM-1 and the cost for tooling, electricity, ect. should be about the same as for the 3 axis parts. Our Rent is $1350 per month and other utilities total around another $500 to $600. The 4th axis drive wiring, indexer/table, tailstock and fixture to do the parts is going to cost around $15,000. they run about 5000 pcs. per year. We can use the 4th axis for other things but I really dont want to shoot myself in the foot.

**miljnor** · 10-01-2005, 04:53 AM

whenever I look at a part that someone wants to make with a 4th axis you have to ask yourself "could this be made without the 4th axis? and if so how hard would it be?"

If the answer is no it cant be made without the 4th axis then your customer is going to have to pay more. Most shops don't have a 4th and the ones that do probably only can do programing as an indexer. So If you can program for full 4th and the part realy needs it I usually double the price I would for my time if the part was =<3 axis.

All that being said. It actually comes down to what mstras said if your dead slow or the 4th isn't getting any work then the price can and should go down. But hey thats only if you actually want the work.

**AMCTony** · 10-01-2005, 05:04 AM

Actually, I am looking for a good excuse to buy the 4th axis. As far as having enough work, our machine is fully loaded up and we usually bid at around $100/hr. give or take depending on the type of work. Having a 4th axis would allow me to do some of our parts in less setups and speed up the operation. The parts that this customer wants done need full 4th axis and that is not the problem. I think this guy is trying to low ball me and is claiming that he is getting them for $5.00 each with no setup charge. I think he is full of it but this is certainly not the first time that I have heard this from a customer or potential customer. I usually just bid the job at my rate even if it was 10 times higher and found out weather or not they are full of it.

**mxtras** · 10-01-2005, 05:09 AM

Yup - make it worth it for yourself. If you feel generous, mark up your normal fee by 25% and tell the guy that you reserve the right to adjust the price after the first xxx number of parts. If its a PITA, then bump it up a bit more.

You may want to propose that he pay programming separate - a one time fee in the front of the project - to keep the part cost down. May not be a popular option, but it does build trust with the customer. And it kind of keeps them on the hook for future runs, or at least it makes them feel like they should go back to you since you have "their" program.

I am sure others in the Zone can speak on this topic with greater accuracy and expertice. I am just offering my first thoughts.

Scott

**miljnor** · 10-01-2005, 05:12 AM

I don't know what your material cost is but excluding that, I use to get about a 1.00 a minute for parts plus material and I was making realy good money and was swamped all the time. I was considered low priced for the work. Now I make my own product and don't realy have to worry about the piece price just the product price (whole different ballgame

)

You could give the part to some customers for free and they would still say that they are getting it cheaper somewhere else. I don't know how many times I've heard that BS. Just quote the price and Ignore the comments from the penut gallery. If they don't like it they will go elsewhere and your busy anyway!

I've found that most customers that use this tact are just trying to chew on you abit.

**AMCTony** · 10-01-2005, 05:18 AM

These certainly are PITA Parts. Looks at first glance like one of those deals where you curse and swear at the first 20 or so and then they go smooth from there. Also, Aparrently, this customer wants to own the fixture itself so he can shop around from time to time so I was considering making him sign an annual contract for the full 5000 part usage at a set price instead of 1000 at a time. This way he dont pull a stunt like having me make a fixture and 1000 parts and then buying his own machine. Then you know what happens next.

**mxtras** · 10-01-2005, 05:20 AM

Unless you are starving, I would strongly suggest not playing too many games with your price on the spot. It is what it is and lowering your price on the spot leaves a bad impression with the customer - he probably won't truley trust you in the future. - - Kind of like the furniture stores that advertise 75% off regular prices - you mean they make at least 85% regularly? I'll buy my crap somewhere else.

Scott

**AMCTony** · 10-01-2005, 05:21 AM

miljnor, What Product do you make? Just Curious.

Tony

**miljnor** · 10-01-2005, 05:23 AM

http://www.american-suspension.com/

TRY to ignore the girl!

**AMCTony** · 10-01-2005, 05:26 AM

In the past, when I was just starting, I lost jobs by bidding to low and never knew why. Years later I have found that running at a Higher rate makes most customers feel confident in your companies abilities and more likely to send an order. They also expect much more quality in the end, especially the corporate guys, but we have never had any problems in that aera.

**AMCTony** · 10-01-2005, 05:29 AM

Hot Girl, I mean Forks.

**mxtras** · 10-01-2005, 05:31 AM

Oh, yeah - the fixture ownership thing. Hey - if he pays for it, and pays for the programming and the first 1000 pieces, then that's fine - give it all to him. If he wants to buy it all - sell it to him and let him shop around. He'll be back.

What would you say to the guy that walks into your shop with a CD and a fixture and says he wants you to quote his parts using his fixture and his program and it better be cheaper than the last guy 'cuz he has already done the hard part? You would charge him normal machine rate plus a PITA fee, right - because you know he's going to be a PITA! It's not going to be cheaper for him, so you might as well profit from it while you can at this point - sell him the program and the fixture along with the first 1000 parts and then see what happens. Make your money and call his bluff - just cover your costs on the fixture and the programming plus the PITA fee now so you can afford to let it walk.

Scott

**miljnor** · 10-01-2005, 05:33 AM

In the past, when I was just starting, I lost jobs by bidding to low and never knew why. Years later I have found that running at a Higher rate makes most customers feel confident in your companies abilities and more likely to send an order. They also expect much more quality in the end, especially the corporate guys, but we have never had any problems in that aera.

Ive never run into that problem... ITs a good problem to have though..... I guess youll just have to quote higher!

And yes the girl, is quite nice!

**mxtras** · 10-01-2005, 05:36 AM

Nics soft tail! :banana: <- this thing cracks me up!

Someone said something about forks? I didn't see any forks.....

I will be talking to you at a later time about forks and my product, miljnor. Don't want to hijack the fun here. :nono:

Ok - enough distractions - back to the topic!!!

Scott

**AMCTony** · 10-01-2005, 05:36 AM

Thanks for all of the info guys. I really appreciate it and we will see what happens in the future with this joker.

Tony D.

**mxtras** · 10-01-2005, 05:40 AM

As a process Engineer, I issue Purchase Orders (sometimes large $$ POs) from Mitsubishi for machining services almost daily, so from this perspective I can say that I know how pricing affects customer confidence. The lowest bidder is rarely the most favorable, so I agree with your rational.

Scott

**mxtras** · 10-01-2005, 05:42 AM

Keep us informed - this has quickly turned into a mini soap-opera now!! I am hooked! I guess it's more like a reality show, huh....?

Scott

**Kool Parts** · 10-01-2005, 02:36 PM

AMCTony,
First, try to charge for the job. Never think of how busy you are, or how many of something they might order in the future. Today's elcheapo customers always tell you they are going to order a lot more in the future. If its not on today's PO then it is irrelevant.
When they tell you they are going to supply the material, what they really mean is they don't want you to make any profit on the material (unless it is a exotic or unatainum). Or they are trying to skip the sales tax.
Ahh the "I own the fixture and programing" line. Go for it! I love this one, what they are really saying is "now I have the power" Charge full boat for both. And get the parts. I cant imagine somebody using a different shops setup much less the programing.

Real customers that need real parts don't play these games. They need good parts at a reasonable price on time. Sound simple? Its not, and they know it. What a real customer wants is a manufacturing partner, that he can rely on today and next week.
But that doesn't mean you cant take the rest's money. Just don't bet the farm on them.
Gary

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