How do you handle design/computer charges?

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motoguy
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How do you handle design/computer charges?

Post by motoguy »

I filled my first order yesterday. It's from a very "friendly" customer (ie, relationship outside of business). He needed a couple of custom panels for some of his products. 2 small panels, 2 large panels (gauges/switches/ect mount in them). Invoicing him has brought up a question on how design time is handled.

How do you guys handle design time? I'm setting design/computer time at $60/hr. It seems to me a 1/2 hour minimum would be acceptable. The way I view it, by the time I leave the table, clean up, get to the computer, get programs open, import files, do work, export, get back out to shop, etc...1/2 hour has been used. The other option was .25 hr minimum charge. I feel a .25 minimum would probably benefit the customer, but end up shortchanging myself. What have you guys found? What would be your thought, for what is in effect a $15 difference?

I am planning on having an invoice field for design/computer time, and another field for individual parts count/pricing. This way they can see the split, and know this first order was $x more expensive for design time, but subsequent orders (for the exact same part) will just be part cost x order quantity. This way I get paid for my design time, but don't discourage future orders by rolling design time into part cost (which would give an inaccurate/artificially high per-part price).

"Stock item" stuff (Pinterst, Etsy, etc) would be part cost only, no design time. Same for any local sale of "stock items".

Just looking for input from those who have already "been there, done that". Thanks!
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motoguy
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Re: How do you handle design/computer charges?

Post by motoguy »

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Last edited by motoguy on Fri Apr 01, 2016 1:32 pm, edited 1 time in total.
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Shane Warnick
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Re: How do you handle design/computer charges?

Post by Shane Warnick »

I do basically what you are doing. $60 / hr for CAD time. I break it out on the invoice, and let the customer know it's a one time fee. Unless they make a bunch of changes. I also may just include it for free in the job, if the job is big enough and it was quick and easy to draw. If I am making base plates (a square, one hole in each corner, cut 200 of these all the same) of simple designs such as this, it is included unless they are only buying for example 2. Then I use that CAD money to offset the cost of loading and unloading a sheet for just a minor amount of cutting. I also try to stack jobs and cut 1/4" one day, 10g the next or that afternoon, etc. No need to wear out a chain hoist and a gantry moving steel from the rack to the table and back again. I will also include it if the customer is a really good customer, or if they are buying a large quantity of something. If someone sends me a blueprint of a motor base plate, with 13 holes all located precisely, and it's an odd shape, I may spend 30 minutes give or take a few drawing it. If they are buying 100 of them from 1/2 inch plate, well, I am not going to pop them for a $30 CAD fee. No need to piss off the customer / send a couple thousand in business down the road over $30. I WILL however let them know that I waived the CAD fee due to the size of the job, but that on smaller jobs they can expect to see it. As far as a minimum, I really don't on CAD time.

As far as the crickets, well, brace yourself. There are 10 pages of threads in the pricing forum, and I would just almost swear this has been cussed, discussed, and cussed some more previously. That, coupled with the fact that, after reading your post, it seems you have it figured out, may have led many to be a little lackadaisical in responding to your original post. Nothing personal, just saying.

I hope this answers the questions you had. If not, post them up or PM me and I will answer what I can, when I can. Not before I get some sleep though. Damn clock never stops........

Shane
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Re: How do you handle design/computer charges?

Post by motoguy »

Shane Warnick wrote:I do basically what you are doing. $60 / hr for CAD time. I break it out on the invoice, and let the customer know it's a one time fee. Unless they make a bunch of changes. I also may just include it for free in the job, if the job is big enough and it was quick and easy to draw. If I am making base plates (a square, one hole in each corner, cut 200 of these all the same) of simple designs such as this, it is included unless they are only buying for example 2. Then I use that CAD money to offset the cost of loading and unloading a sheet for just a minor amount of cutting. I also try to stack jobs and cut 1/4" one day, 10g the next or that afternoon, etc. No need to wear out a chain hoist and a gantry moving steel from the rack to the table and back again. I will also include it if the customer is a really good customer, or if they are buying a large quantity of something. If someone sends me a blueprint of a motor base plate, with 13 holes all located precisely, and it's an odd shape, I may spend 30 minutes give or take a few drawing it. If they are buying 100 of them from 1/2 inch plate, well, I am not going to pop them for a $30 CAD fee. No need to piss off the customer / send a couple thousand in business down the road over $30. I WILL however let them know that I waived the CAD fee due to the size of the job, but that on smaller jobs they can expect to see it. As far as a minimum, I really don't on CAD time.

As far as the crickets, well, brace yourself. There are 10 pages of threads in the pricing forum, and I would just almost swear this has been cussed, discussed, and cussed some more previously. That, coupled with the fact that, after reading your post, it seems you have it figured out, may have led many to be a little lackadaisical in responding to your original post. Nothing personal, just saying.

I hope this answers the questions you had. If not, post them up or PM me and I will answer what I can, when I can. Not before I get some sleep though. Damn clock never stops........

Shane
Shane,

Thanks for the response. I wanted to make sure I was of an appropriate "train of thought" before I invoiced the customer. I appreciate your input. It seems there are a lot of guys like me who are willy-nilly on their pricing, and very few like you who, based on your other posts, really have your pricing schedule nailed down. I'd like to move from where I am, more towards a direction where you are. That should happen with some time, experience, and paying attention.

Only other thing I think I'll implement is a machine setup fee, where the CAD fee doesn't apply (ie, re-cutting from a known good file). That will cover the table setup/moving plate, as you mentioned above. I agree with the computer/table fees being "at my discretion". Not going to risk a good, easy to deal with customer over $30. However, I wanted to make sure my thinking was appropriate on a more general level, for small volume stuff, etc.

Thank you for all of your help.
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Re: How do you handle design/computer charges?

Post by Shane Warnick »

I use the machine setup fee idea as well, but it's more of a shoot from the hip kind of thing. I price it out as normal, but lets say you are buying two of something, out of 1/4 inch, and the price I calculate comes to $36.00. I will bump this up to $40 just because it's only two of them, and that extra $4 helps cover abrasives etc. Then, I will ask your time frame, and explain that if you wait until I am cutting 1/4" and I can throw it on the sheet with everything else, then $40 is the number. If you need it tomorrow by close of business, then I will charge you an extra $15 for loading the sheet and changing consumables just to cut your job. I explain this, and most people understand. They either wait and get it for $40, or have enough money or don't wanna wait and get it for $55. If I end up cutting it so they can have it ASAP, then I will go ahead and cut everything else that I have that's 1/4" while I have the sheet on the table. Large jobs don't get this fee applied. As a matter of fact, on jobs with sheet level quantities (cut however many of these you can get out of one sheet) I will also drop my material mark up down a little, cost per cut inch stays the same, but I make a little less on resale on the material. Two reasons, first is no waste due to an odd shaped drop etc, second, I don't have to re-rack the drop, third, I don't have to keep up with the drop and try to fit stuff in there, and again, less wasted. This helps me stay one step ahead of the competition, they are already charging too much for shoddy work, and they don't really give breaks for sheet level quantities etc. Now, if it's small pieces, and the customer says they will wait, and 3-4 days goes by and I don't have any other 1/4" jobs coming up, I will either cut it from a drop if I have one, or load a full sheet and cut their material without the $15 fee. Better to have a happy customer and flow a little cash than sit around wishing. I get the number from the material size, and how long it takes me to load, index, and re-rack the material and change consumables. So, for 1/4" and below it's generally $15. Thicker than 1/4" depends on what material, what sizes I have etc. I can load and index, change consumables, and re-rack anything 1/4" and thinner in 15 minutes or less. Shop labor rates are $60 / hr, or a buck a minute. Same as CAD time.

Hang in there, you will get it handled. I sometimes question my pricing, then I remember, it's a business. I don't really need any practice, so if I'm not doing it to make money, then I'm not doing it.

Shane
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Re: How do you handle design/computer charges?

Post by gamble »

I don't charge a setup fee. It takes me seconds to toss a sheet on my table and line up the bottom corner
In some cases I charge a small design fee. For my customer base people are dirt cheap and bitch about a lot of things.
If I spend a lot of time I will charge a design. But for some things I do I charge $20-40. Nothing crazy. If it's something I can draw up in 5 minutes or trace it in Corel and export it to cad then made a quick adjustments no charge.
I do however put design on the invoice then a $0 charge so the customer feels they got a deal
I had a customer this week want a specific design onto one of my items. Took me 10 minutes. Then she wanted a few changes so another 10 min. Sure it was annoying but after shipping and material I make about $40. It's also 1 -2 minutes of cut time. And 5 min clean up and done. Don't want to charge then $20 for design because then that's past the price point of the product and nobody will buy it.
It all depends on products and customers.
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Re: How do you handle design/computer charges?

Post by Capstone »

I've found it's important to put some kind of value on the design time for every new job otherwise the customer will come back with changes and more changes. I'm always up front with industrial/motorsports products that my "prototyping" costs vary based on complexity and the rate adjusts accordingly. I'm making the vast majority of my sales from repeat customers that are creating products from the parts I am sending them as raw cut metal so I would never charge for minor changes and even offer to help with improvements and a way to add value since I'm not getting bogged down with a lot of back breaking finish work.

My rates start at $50hr basic personalized artsy stuff, $75-$100hr for prototyping pieces to match precision measurements from a customer and go to as much as $150hr if I'm expected to take on engineering tasks not already addressed in the design from the customer.
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Re: How do you handle design/computer charges?

Post by Gustav129 »

This is a very good post, as I used to do production CNC plasma cutting for a business, not on my own. I intend to do small run production and light fabrication when I get around to aquiring my own CNC.
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