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What would you have charged ?

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What would you have charged ?

Postby beefy » Tue Dec 29, 2015 4:08 pm

Just completed my first big job, pure service cutting. Customer dropped off the metal and will be picking up the cuts.

23 sheets of 2.5 mm stainless 2300 x 1220 (90.5" x 48")

The image shows the job, total cut length per sheet 17,900 mm (705"), cutting at 3000 mm/min (118 in/min).

This job really taught me that this game can be a bit physically demanding and hard on a bad back. I may want to leap at someone if they say all you have to do is press a button :lol: The material handling takes a lot longer than the cutting.

It was a bit nerve wracking having several thousand dollars worth of customers steel and hoping there's no problems with the cut, but after all was said and done it all turned out pretty good. Even had about 5 flame outs during the cut due to bits of slag buildup on the nozzle but managed to restart every time and keep the cut looking good.

I think I under charged on this one. Tell me what you guys would have charged and I'll reveal my stuff up :cry:

Keith

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Re: What would you have charged ?

Postby SeanP » Tue Dec 29, 2015 4:41 pm

Out of curiosity do you have a fork lift?
I'm debating thinking about one, my back is the same :)
Although for that thickness the sack truck method I use is pretty good.
I'm usually under with quoting as well, I would guess at a days work and be looking for €300, that's not including any cleanup though.
Who gets the scrap :)
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Re: What would you have charged ?

Postby Shane Warnick » Tue Dec 29, 2015 7:47 pm

I need to know what a sheet of that steel would cost you before I can tell you what I would charge in your market.

Shane

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Re: What would you have charged ?

Postby beefy » Tue Dec 29, 2015 11:36 pm

SeanP wrote:Out of curiosity do you have a fork lift?
I'm debating thinking about one, my back is the same :)
Although for that thickness the sack truck method I use is pretty good.
I'm usually under with quoting as well, I would guess at a days work and be looking for €300, that's not including any cleanup though.
Who gets the scrap :)


I am the fork lift Sean :cry: I rely on whatever technique I can conjure up to get the steel on the table. The 23 sheet turned up on a flat bed truck, not the crane truck I specified, so I had to drag every sheet off and onto my trailer (used ramps from the truck to the trailer). Then I used my little digger to spin the trailer around (tandems don't spin easy with all that weight). Then I did the opposite and loaded the sheets from the trailer to the table (end on).

The stainless also came with the adhesive backed plastic covering which is very sticky indeed and pulling that crap off was quite hard on the back too.

Still to be found out about the scrap. There's quite a lot as far as weight goes but each peice is not a large area so can only really be used for small or tiny jobs. I'll let them load the cut peices first when they come to collect then they may not be as interested in the scrap :lol:

I'm wondering how much stainless is worth as scrap value too.

Wow, 350 Euros is about AU$450. That's not much for a business doing a full days work. Do you run a commercial shop or are you a backyarder like me.

Even though I'm a backyarder, I work on the principle that if I'm ever to get into a commercial premises I must charge commercial rates NOW while I establish a customer base, otherwise I'll probably lose most of the customers when I get a proper workshop and MUST charger higher rates to cover operating costs.

Keith.
Last edited by beefy on Tue Dec 29, 2015 11:46 pm, edited 1 time in total.
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Re: What would you have charged ?

Postby beefy » Tue Dec 29, 2015 11:40 pm

Shane Warnick wrote:I need to know what a sheet of that steel would cost you before I can tell you what I would charge in your market.

Shane


This job was cutting only Shane. The customer dropped off the steel at my place and they will be picking up the cut parts.

I initially got a price on the steel and the first quote was $7200. I didn't look any further and told the customer I'll price for cutting only, they deliver and pickup.

No cleanup on this job, just cut and stack ready for collection (that makes it sound so easy :shock: ).

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Re: What would you have charged ?

Postby Shane Warnick » Wed Dec 30, 2015 2:02 am

beefy wrote:
Shane Warnick wrote:I need to know what a sheet of that steel would cost you before I can tell you what I would charge in your market.

Shane


This job was cutting only Shane. The customer dropped off the steel at my place and they will be picking up the cut parts.

I initially got a price on the steel and the first quote was $7200. I didn't look any further and told the customer I'll price for cutting only, they deliver and pickup.

No cleanup on this job, just cut and stack ready for collection (that makes it sound so easy :shock: ).

Keith.


EDIT-- I did not convert from AUD to USD when I did these figures, I will make another post below with the new numbers. Same principal, just less money in USD.

I needed to know material cost to figure cutting cost, as I use that to figure risk exposure and build that into the charge, so if I have to eat some material (that I screwed up) I don't get hosed on the whole deal.

I would be at $106.80 PER SHEET just for the cutting, then I would be at shop labor rates ($60 / hr) for unloading the steel off the delivery truck, loading it onto the table, unloading the skeleton, and reloading the scrap / skeleton / drops if they were taking that along with them. I would also charge the shop rate for removing the laser shield, as you found out it is quite a pain in the ass. FWIW, you can cut with the plastic on, but taking it off after cutting is 10x worse than before. However, depending on what they are using the parts for, they may not care.

I figure 15 minutes to unload with my tractor, 15 minutes per sheet for loading on the table / unloading (10 going on and 5 coming off), and 5 minutes per sheet for the laser guard removal (the plastic junk). So total shop labor would be in the neighborhood of $475, cutting would be $2456.40, so all in I would be around $2931.40. That's at $0.15 per cut inch, same price for each pierce, at 705" of cut per sheet. As I stated above, I would be at $60 / hr for all other operations, excluding grinding on stainless. If they wanted me to clean then, then that would be the same labor rate, plus abrasives marked up at 200% cost. If I was to supply the material, I would have marked it up 25-35% over cost, however all the other operations would be included in that price, so I would have marked it up 25% if no grinding required, prob 35% if they wanted clean parts. So, if I provided the material, it would have been $9000 for the material, then $2456.40 for cutting, so all in $11456.40.

I would say I could do this job in 10 hrs working straight through, maybe, MAYBE 12 hours if I was working slow, the phone was ringing, etc. If I used $50 worth of consumables, and $50 of electricity, I am still only in for $100 if they provide the material. Even at 12 hrs labor, I am still making over $200 / hr for profit. If I provide the material, I increase that about $110 / hr, if it takes 12 hrs.

Back to the risk exposure, I use the cost of material (and my subsequent risk exposure) to figure cutting cost. You will notice, that based just on the cutting charge alone, if I eat 30% of the material, I still don't lose money. I may work for next to nothing / free, but sometimes that's the price you pay for experience. Better to not make money, than to lose money. Long as your customer gets their parts, and you came out smooth, if you learned something, you are still ahead.

One last thing, the laser guard / plastic peels off easier if it's hot. Either leave it in the sun, of hit it with a propane weed burner or handheld torch (on the side opposite the plastic) just enough to bring it up to 125-130 degrees, and the plastic will just peel right off. Below about 95 degrees, it gets harder to peel, below 65 degrees, it sucks, and ends up tearing apart more than peeling off. That is frustrating as hell, ask me how I know.

Shane
Last edited by Shane Warnick on Thu Dec 31, 2015 12:48 am, edited 1 time in total.

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Re: What would you have charged ?

Postby beefy » Wed Dec 30, 2015 3:59 am

Shane,

you're an absolute champion, thanks so much for that.

And Sean thanks for your reply too. Are you feeling like me at the moment (we work for peanuts :lol: ).

I'm going to print out your reply and put it on the wall Shane. I want to get that stuck in my head.

I charged a "whopping" $1000 LOL.

I wasn't that far into the job when I realised I'd really under priced the job. But still, it was my first big job and I didn't want to lose the opportunity. Next time I'll have the knowledge and confidence to increase the bid.

Cheers,

Keith
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Re: What would you have charged ?

Postby SeanP » Wed Dec 30, 2015 5:22 am

Ok,,,,,yet again I got it wrong :)
I still think you did ok there though Keith, I can see taking off the plastic would add a good bit of time there, even at that I really still would be thinking I was doing ok at €500 over here.
I would be looking at €30 worth of electric and consumables really there.

Don't feel to bad I just finished these, 12mm material supplied by customer (4 x 1.25m x 2.5m)
272 plates 4 days cutting on my machine at 500mm/min €2-60 a plate, I definitely goofed there!

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4_2.JPG
Last edited by SeanP on Wed Dec 30, 2015 5:20 pm, edited 1 time in total.
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Re: What would you have charged ?

Postby beefy » Wed Dec 30, 2015 3:41 pm

[quote="SeanP"]Ok,,,,,yet again I got it wrong :)
I still think you did ok there though Keith, I can see taking off the plastic would add a good bit of time there, even at that I really still would be thinking I was doing ok at €500 over here.
I would be looking at €30 worth of electric and consumables really there.

Don't feel to bad I just finished these, 12mm material supplied by customer (4 x 1.25m x 2.5m)
272 plates 4 days cutting on my machine at 500mm/min €2-60 a plate, I definitely goofed there!


Cheers Sean,

I can't actually see the images though. There's a "no entry" kind of sign where they should be like this:

Keith

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Re: What would you have charged ?

Postby SeanP » Wed Dec 30, 2015 5:20 pm

Sorry about that.

beefy wrote:
I can't actually see the images though. There's a "no entry" kind of sign where they should be like this:

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Re: What would you have charged ?

Postby Shane Warnick » Thu Dec 31, 2015 1:12 am

Guys, I am sorry but I realized earlier that I did not convert from AUD to USD when I did the numbers above. I converted, and here they are.

USD

Cutting-- $78.32 per sheet. Total for cutting $1801.36
Labor -- $475
Total if customer supplied material-- $2276.36

Cost per cut inch dropped from $0.15 per inch to $0.11 per inch.

If I supplied material, at the quoted price (after conversion to usd)
Material $6575.06
Cutting $1801.36
Total if I supplied material, no grinding-- $8376.42


If in AUD

Cutting-- $107.20 per sheet. Total for cutting $2465.60 (I know it's off by $0.40 per sheet from what i posted above, I can only split the hairs so fine....)
Labor -- $650.18

If I supplied material, at the quoted price
Material $9000
Cutting $2465.60
Total if I supplied material, no grinding-- $11465.60 AUD

Sorry for any confusion. At the above numbers, if the customer supplied the material, and it took me 12 hours, I would still make $181.36 USD per hour, or $248.18 AUD. I would still be ok with those numbers, as that's PROFIT.

As far as the second guessing yourself goes, think about a few things when you get done with a quote, and see what your gut tells you. First, how would they get the parts made otherwise?? Waterjet? I mean, with stainless, it's not like they are going to fire up the old gas ax and let some shop hand torch them out. Second, it's not so much about how much it COSTS YOU to actually do the job, but more about how much IT COST YOU to be ABLE to do the job. I bid a lot of smaller jobs, then end up rounding up another 10-20% because I flat am not going to cut some things that cheap. On smaller jobs, my material markup is 200%, plus cutting. Now when they buy material from me, that price covers smooth clean parts, no extra's unless it's stainless, and I expect to eat up some ceramic flap discs etc. Stainless can eat up some abrasives, and in a hurry. I also charge CAD time at the shop rate unless it takes less than 10 minutes to draw (machine parts), the 10 min or less are in the cost of the job. I usually draw those while I eat a sammich for lunch or am listening to some lady drone on and on about some dribble on the phone. My kids this, son goes to college here blah blah blah. They all wanna be my friend (which is cool) but my time is $ when I am in the shop.

Anyways, sorry if there was any confusion, regardless, I would say you both left a ton of money on the table. I once had a friend that ran a shop (died on me about 6 years ago) and his philosophy was basically, if you tell them a price and they instantly say ok, way too cheap. If they curse you and leave, too high. If they bitch and gnash their teeth a little, but still order the parts, juuust right. Personally, I just price it what i think is fair, and remember that I don't need any practice. I need to be paid. Hang in there you will get it figured out.

Shane

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Re: What would you have charged ?

Postby SeanP » Thu Dec 31, 2015 4:56 am

Thanks Shane, some good advice there, I like your fiends philosophy! yep I do get to many customers agreeing to the price straight away :)
He definitely did for those plates.
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Re: What would you have charged ?

Postby beefy » Thu Dec 31, 2015 4:41 pm

Shane Warnick wrote:Anyways, sorry if there was any confusion, regardless, I would say you both left a ton of money on the table. I once had a friend that ran a shop (died on me about 6 years ago) and his philosophy was basically, if you tell them a price and they instantly say ok, way too cheap. If they curse you and leave, too high. If they bitch and gnash their teeth a little, but still order the parts, juuust right.

Shane


Once again Shane, thank a bunch.

Your friend has it right. My customer INSTANTLY said OK and even said it was a pretty good price.

I've been told where I live is the laser cutting capital of Australia and they cut parts for nothing. However my neighbour runs a 1.5 million dollar fully automated laser (they leave it running UNMANNED at night and it auto loads plate) and their pricing based on their meterage rate would have been A$3700 for cutting alone.

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Re: What would you have charged ?

Postby vmax549 » Thu Dec 31, 2015 5:26 pm

HIYA Keith what do yo think the overhead is on that 1.5 million dollar laser and the business itself (;-) Now what is your overhead on your shop ??

(;-) TP

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Re: What would you have charged ?

Postby beefy » Thu Dec 31, 2015 6:35 pm

vmax549 wrote:HIYA Keith what do yo think the overhead is on that 1.5 million dollar laser and the business itself (;-) Now what is your overhead on your shop ??

(;-) TP


I was waiting for someone to say that Terry :D

Point I'm making is that is the ONLY comparison I have at this point in time, and my customer is not interested in anyones overheads, only what price it costs them to get the plates cut. So I'm just comparing prices of the competition.

I also don't use my relatively low overhead in the price consideration because if I do that I'm setting myself up to lose many of my customers once (IF) I get into a commercial space, and am forced to charge higher from that point onwards. I need to charge now what I would charge then so that there's no price change once I leave my backyard.

I stipulated the price of that laser to indicate that lower priced lasers will most likely have lower cutting costs, just don't know how much less. Although that laser is more expensive than other ones, it pretty much is push a button and leave it running (once programmed), so they don't have the overheads of a machine operator being at the helm all the time. It auto loads the plate and auto unloads and stores the cut sheets. The parts are held in place with very thin tabs. So I'm "theorising" that a lesser priced laser may not be a great deal cheaper because they have more operator costs with loading sheets and removing cut parts. And of course they can't leave them running unmanned at night making profit.

I read on a cnc machining forum that in the cnc game, businesses pay higher capital machinery costs to bring parts to the customer cheaper.

Keith.
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Re: What would you have charged ?

Postby beefy » Thu Dec 31, 2015 6:50 pm

SeanP wrote:Sorry about that.

beefy wrote:
I can't actually see the images though. There's a "no entry" kind of sign where they should be like this:



The pictures came through Sean.

Crikey, the customer just about got them cut for free, my heart goes out to you on that one. I hope your future jobs make up for that one.

I guess now he may come back expecting the same cheap price and will "hate" you when you give him the "revised" price LOL. I did some seed planting with this customer of mine and told him right at the beginning this is my first big job and I have no idea if I'm charging correctly. After the cutting was done he asked how everything went and I told him it took me more than twice as long due to all the material handling. So hopefully they are expecting my price won't be so cheap next time, and based on the way they immediately accepted the price, they were expecting a higher price in the first place.

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Re: What would you have charged ?

Postby SeanP » Thu Dec 31, 2015 7:33 pm

I got in there first Keith and pre warned him the that next time they will be a good bit more!
It could have been worse, he said 500 off originally- phew :D
All the best everyone, hopefully we'll get it right this year.
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Re: What would you have charged ?

Postby vmax549 » Fri Jan 01, 2016 7:58 pm

HIYA Keith Yes but teh prices that were others were just quotes THEY DID NOT get the job now did they (;-). I ran the job through the system here and you were actually spot on the money. You actually got about $50 more than what I would have quoted just for cutting.

In the end I would bet you ended up with more money in your pocket than your million dollar Laser buddy would have IF HE even got the job at his price and have far less exposure.

Some of teh prices I saw here are a bit much and more than likey would not have ended up with the job. At least not around here anyway.

Yes it is NOT wise to whore your work out but there is wisdom in using your low overhead to your advantage in a busy market.

The real trick is to NOT get in over your head or your profit margin. ON industrial cutting IF I cannot make the shops profit margin on a job I simply don't except it hoping for better returns later from that person as it rarely ever happens. NOW on Artsy parts Buyer beware art can be a very subjective market and pricing scheme. Artsy parts are worth what the buyer is willing to pay (;-) But even then it HAS to make teh shop shop PM or I will not cut it.

(;-) TP

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Re: What would you have charged ?

Postby vmax549 » Fri Jan 01, 2016 8:11 pm

"" I read on a cnc machining forum that in the cnc game, businesses pay higher capital machinery costs to bring parts to the customer cheaper.""

I have seen many job shop owners that started out with a million dollars in the bank chase that College degree dream only to end up in the soup line after 10 or so years. Working effeciently is the key and having a LOT of expensive machines on hand does not garranty effiecency. Rarely does it mean that.

Just a thought, (;-) TP

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Re: What would you have charged ?

Postby hsolve » Fri Jan 01, 2016 9:59 pm

Good morning to all and all the best for the new year.
I wrote a post yesterday but somehow did not submit it, so here I go again. I have worked out my pricing slightly differently. I have worked out my costs in Au$/hr, this includes labour, power, average consumables, repairs and maintenance and finally depreciation and cost recovery on the machine. Cost recovery (paying for the machine over time)along with repairs and maintenance is very important as with out it, these is no real cost of owning the equipment being taken into account. So for my setup I estimated about $220/hr+ GST. This is only costed out as run time. In sheet cam there is the 'sumilation' which gives you the cut or process duration. Using the $/hr it is then very easy to price the jobs. If it is a small run or one off I also add setup and drawing time.
The problems I have had is that I have quoted several jobs only to loose them the Sydney companies (in Australia). The customer would say you are similar to one other company but the company we went to did it for 1/2 or 2/3 the cost. In some cases the major cost is the material, as to how can they do that for that cost is unknown. Some companies here are buying jobs to keep their operations going. They need product through the door to keep employees paid. For me if it is not worth doing I just do something else. This does have a detremental effect on the industry. Customers play the field and try and get a bidding war for the best price. I have been told, by one customer that they get the job laser cut and bent for just my cutting cost.

Exposure is one of the most difficult things to achieve, for the surrounding buisnisses to know that you exist and can provide the services they require. I have found that most places will not try some one new unless they are very unhappy with their existing supplier or desperate time wise. You have to be there at the right time and place. Where I have benefitted is in leed times, the larger companies have a 2-3 week leed time, whilst I can depending on other work, provide the parts in 2-3 days if not earlier, and charge accordingly. At times remember ' the sweet taste of low price is soured by poor quality and or poor service'.

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Re: What would you have charged ?

Postby Shane Warnick » Fri Jan 01, 2016 11:32 pm

vmax549 wrote:HIYA Keith Yes but teh prices that were others were just quotes THEY DID NOT get the job now did they (;-). I ran the job through the system here and you were actually spot on the money. You actually got about $50 more than what I would have quoted just for cutting.

In the end I would bet you ended up with more money in your pocket than your million dollar Laser buddy would have IF HE even got the job at his price and have far less exposure.

Some of teh prices I saw here are a bit much and more than likey would not have ended up with the job. At least not around here anyway.

Yes it is NOT wise to whore your work out but there is wisdom in using your low overhead to your advantage in a busy market.

The real trick is to NOT get in over your head or your profit margin. ON industrial cutting IF I cannot make the shops profit margin on a job I simply don't except it hoping for better returns later from that person as it rarely ever happens. NOW on Artsy parts Buyer beware art can be a very subjective market and pricing scheme. Artsy parts are worth what the buyer is willing to pay (;-) But even then it HAS to make teh shop shop PM or I will not cut it.

(;-) TP


I don't know where you are, or whom you work for, but if you are saying you would cut 23 sheets of 12 g stainless for $41 aud each, or after conversion $30 usd, then I am doing it wrong. I would say I will just have you cut all my jobs and ship the parts back to me and the customers can come pick them up here, but if that's the actual profit margin your shop works on I'm not sure how long you could stay in business. Unless, of course, you work for something like $2/hr, if that's the case hell, I may be hiring.

I'm kinda curious now, where are you located, and where do you work, and what machine are you running? I am curious to know where you can get stainless cut, and with what, where it can or would be done for $0.04 per cut inch, including loading and unloading material, AND the shop isn't losing money at that price.

I'm not hollering BS, but I am a one man shop, I own my machine, my shop, the land, etc. No way in hell I would cut it that cheap. Not if I wanted to make money. Now if my best friend came over on a Sunday and it was his job, he loaded / unloaded steel and parts, and all I did was run the machine, then it would be for cost. However, he is a damn good friend and would be the only one.

Shane

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Re: What would you have charged ?

Postby motoguy » Sat Jan 02, 2016 2:02 am

I'm just getting my machine going, and I'm trying to learn about pricing before I need it. Threads like this are very interesting. My current plan is to use Jim Colt's pricing method, which I believe is what "the spreadsheet" figures. Everything based on material cost per inch, cut inches, and pierces. I like repeatable formulas. I hate throwing WAG pricing out there.
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Re: What would you have charged ?

Postby SeanP » Sat Jan 02, 2016 7:46 am

hsolve wrote: In sheet cam there is the 'simulation' which gives you the cut or process duration.


Just going over my method of calculations again and notice the sheetcam job report doesn't take into account slowdowns on holes created by cut rules, not sure how to get around this yet other than counting holes, working circ out and adding a percentage on.
Last edited by SeanP on Sat Jan 02, 2016 10:01 am, edited 1 time in total.
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Thor
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Re: What would you have charged ?

Postby Thor » Sat Jan 02, 2016 9:52 am

From what I have seen in sheetcam so far, the job report time is way low, but the simulation time is close.

hsolve wrote:So for my setup I estimated about $220/hr+ GST. This is only costed out as run time.

Really, $220 per hour AUD, thats what like $160. USD per hour. Guess my commercial precision machining shop rate of $70/hr plus material should be raised then as that stuff has a lot higher operating expense....I know shops with big expensive 5 axis machining centers and multitask machines that still dont charge that much per hour.

vmax549
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Re: What would you have charged ?

Postby vmax549 » Sat Jan 02, 2016 2:07 pm

Well I had a long 2 page novel written and the website ate it so to summerize. This company has been in business for over 36 years now and still going strong, The air plasma table is simply the AXE of the business it only does low end plasma work and has a fixed operating cost that will always make money for the company . The rate is $100 per hour for cutting. IF teh job requires a lower cutting cost(quote) than the fixed rate is then it does NOT cut . SIMPLE as that. For industrial cutting that same fixed rate applies. IF you start ynking teh cost rate around to suite your fancy or profit margin you will not be in busimess lon as teh customer TRACKS teh cutting cost and has a firm grip on what you charged him last time. Ripp him off a few times and he is GONE never to return. Treat him exactly the same very time with consistant cutting costs that HE can depend on and you have a customer for life. Even at $100 that puts the machine cutting cost MORE than an average shop can get for high end machine work on very complex milling machines.

Yall act like cutting stainless is rocket science (;-) it is not with an air plasma at teh level the job required. Each sheet was a simple 6 interior cuts and 1 exterior cut job.

Each sheet was about 13 minutes cut time and unattended at that. Load ,cut ,unload , reload, repeat 23 times. While it cuts you stack the parts and the scrap ready for the Customer to pick up. There was ZERO part cleanup required. So it was cut and go

That machine is always a one man process. It uses every advantage of work process that we have been able to make work with it. Things such as roll around material racks. When a truck arrives the material is loaded onto the racks. When a material is needed you simple roll the rack over to the table and slide it off onto the table. Each rack can hold several type of materials if needed. There is also a parts rack and a scrap rack to use so there is NO bending required for the most part While it cuts teh operator separates parts and scrap ready for teh customer to pick up.

NOW could the customer have cut his own parts with a hand plasma cutter absolutely. Those were NOT a complex part to hand cut by any means.

DID Keith make GOOD money for the job absolutely in my book and experience. DID keith learn how to be more efficient next time ? I bet he did (;-)

Yall keep an eye out for Keith he is a very clever fellow (;-) He is working on some new designs for a THC controller along with other things. He may in a few short years become a major player in the OEM DIY plasma cutter market especially in AU. The more you can support his efforts the more he can support you in your efforts.

(;-) TP

(;-) TP


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