General pricing ideas forum?

[ironhorse]

Hi all, I am hoping this thread will intice many of you out there to get involved with general pricing ideas and share your thoughts with many of the new people out there who are having issues trying to figure out pair pricing for their products. Heck, I have been cutting for 3 years now and I still question myself. For many it is simple to plan out a custom job because you have the customer and they are willing to pay for the end result. But when I download a file someone else made what do I charge?

May, just maybe we can get a few of you interested in generating some interest for this forum idea? I think it would be a great addition to an already fantastic forum

Greg

[JJsCustomDesigns]

Theres a post about pricing w/ a spreadsheet in Admin Selected Posts

http://plasmaspider.com/viewtopic.php?f=45&t=637

[ironhorse]

Thanks for the comments. Yes the pricing spreadsheet is awesome and I use it as well for calculating my custom work, but if I sell a piece I downloaded here I can't really justify any design time so that leads me to question my pricing? So thoughts were a place people could share their ideas on how they price or answer questions that would help out the newbies.

If a newbie happened onto this forum they would already have been helped out by the comment on the spreadsheet

As for pictures, it's a possibility someone would post a pic in hopes of getting some pricing comments but that was not my intention in the concept of this forum. I would venture to say that if a newbie posted a question and a seasoned operator decided to help out pictures could be emailed?

Greg

[SCHIDTHEAD]

Check out my new version of XL I have been using. It has worked pretty well for my shop; I kinda built a little on the XL sheet you guys are talking about. I have a lot more control with the adjustable margins to give the customer the best possible price and remain profitable. Too many times I have seen you fellers ask for price advice on pieces you show us on here and most of them were priced low by a majority--I thought.

We hold a specialized niche in a market that encompasses everything steel, from art to industrial Machinery, brackets to interior design, Individuals to Business and Corporate Exec networks that all have a need for our field of plasma cutting and specialty fab. Not many can do what we do with what we have to work with. Most of us dont have a quarter of a million dollar table, but we test cut, we tweek, and we dial in our machines to be as close to tolerance as we can just to cut peace signs and grasshoppers, selling at the local flea market and getting jew'd down 30% under cost; living on vitamin C and cocain, wakin up next to a woman Loretta somthin or other trying to remember what happend for the last 3 days only to realizing... Hey...If I charged what I think it is worth according to comparative hourly CAD design rates & larger Welding Shop rates in town, then follow the XL spreadsheet for table pricing, Sharpen my margin pencil and show the customer how I'm the one being bent I can get my daughter out of rehab, my wife off the pipe and my dog outta that test lab and buy some nozzles.

[kbenz]

anyone have anything not in XL?

[iou]

anyone have anything not in XL?

if you don't have xl you can open it with this....its free and works like microsoft office...

http://www.openoffice.org/

[ironhorse]

You rock SHIDTHEAD, very well put and so right. I think we all owe it to ourselves to be competative in our market and by all means profitable. I guess thats partly why I was hoping to get this forum up and running because for every one of us that knows the worth of our work, there are 2 of us that just arn't there yet.

I know I have taken a loss here and there and that's the scary part, because if you get a rep for lower prices you can't change and make customers understand why your prices are higher!

Thank you for posting your XL sheet, it will be interesting to figure out how it works and very helpful for pricing.

I hope more ideas flow through this forum and I hope some of you benifit by what you see.

Greg

[kbenz]

how many use that xl sheet? It's showin I'm way under priced on my stuff and people gawk at my prices like I'm crazy

[SCHIDTHEAD]

If people are gawking at your prices don't let that discourage you. I have more time in on drafting and quotes that go south, because of price, than those that were successful sales, but successful or not, I follow a sales method to sell a product which I will touch on in a bit. There is an area of owning and running a business that so many think is the easy part but is an area of expertise that many don't understand, know or care to know; SALES. You have to become a SALESMAN to sell a product successfully. That old "Build it and they will come" is BS. They may come, but you got to make them want to stay, and it requires a people person with relationship skills or an incredibly outstanding, reliable, consistent product or service to make that happen--SOUP NAZI.

I owned a successful trucking company for 18 years hauling heavy equipment, flatbed and aggregates till the bottom fell out. Not many mid sized fleets can boast being in that cut throat industry that long. My prices were the highest of any of my competitors, and by the time they raised their rates to where I was; I raised my rates again. Rarely did I need to bid a job. I had a loyal customer base; they knew that I would deliver as promised--when said. Getting that base was not easy though. It took a lot of capital--Lunches, Golf, Alcohol, Strip Bars, Hunting trips, Poker Nights, Alcohol, Dinners and Fishing trips to Cabo and a little alcohol. That was what is coined as relationship selling. It is the easiest kind of selling; it's as simple as making a friend and building the relationship on one key word...TRUST. I went from an industry that all accounts were built on that, to this industry which isn't a daily need that I have found yet, I only have a handful of those type accounts right now; when they need something, I know they won't shop me out because they trust my work and word completely.

Our industry is different yet the same. On many days, I have set up sales meetings & lunches, put on my slacks and dress shirt, made a sales call list and route of businesses I could target for those relationship sales i.e interior and commercial designers, the large landscapers, contractors, rod shops, deck and patio builders, equipment companies, retailers, log home builders, etc. to include traveling to other cities to kick the bushes. Those bigger fish now know who I am and what I can do. Now I build on them to look at what I can offer them. SEE PT. 2

[SCHIDTHEAD]

PT 2----Pre-Qualify these types of customers; dont grasp at customers who can't pre-qualify. Find your FANS...the businesses you target need to be 1) Financially able to afford your business or service. 2) Make an appointment with the person who is in an Authorizing position to approve you and your business. And 3) Make sure they have a Need for your service.

As for the onesey twosey custom order and retail product customers, dont sell them short either. PRE-QUALIFY the custom order people right off by asking how much they expect to pay and design around their budget; it will save you much time and effort if you know what you have to deal with. Always keep in mind what they may bring to you in the future if anything and maybe give them a break if you feel good about future work. If you find a hint of sticker shock, don't bend. Thats where my spreadsheet has saved me by itemizing prices for the customer to see. If its on paper and is reasonable, most of the time they can see how the cost is broken down and is justified. If you don't make the sale, adjust your margins, if you can, and do a follow up call in a few days. I then give it a week and give one last follow up call and offer of the final price. I don't charge design time for work already on file, but I have a $50 option for my custom art pieces to delete the file after the cut.

You are in business to be profitable. HOWEVER, there is one thing that over 20 years in business works well and sometimes to your benifit--dont be afraid to barter. Last month I bartered a piece I would have charged $300 for a small trailer that I sold for $600, and last summer I did a retail sign I would have charged $2200 if I did it all, but we worked it out that he bought the material, I cut and disk'd, he auto finished and I was given floor and wall space in his MMA gym for product. I am currently having the steel for a 9'x9'x18' 4x4/.25 rack to hold 10 bag stations delivered and talked about building him a second fighting cage to put in an outdoor area for the fighters in the summer--He is now in a position to afford to pay for them.

[SCHIDTHEAD]

CHA---CHING.

My advise is to research successful sales techniques. Books, internet, advise from professional sales people. On larger jobs put together a nice organized and detailed proposal and spend $3 on a presentation sleeve at an office store and use your camera. The attached pics were a sale gone bad from sticker shock till I finalized my proposal pitch with detailed drawings and a finished product rendering. The sale turned on a dime with a "thats what it'll look like? COOL OK" It's a habit now to always have my digital camera when I do an estimate and show the customer a rendering.

Sorry for being long winded. In short, don't sell yourself short you just need to find and qualify the right customers. Always look for open opportunities and always be professional. You're in business, and admit it or not, to be in business for yourself is a gamble--especially today. Take a gamble on loosing a bit once in a while if you think it can pay off in the long run.

Try my spreadsheet, it is completely customizeable to tailor your prices to your area. If anyone has any Q's on how to use it, PM me. If anyone improves on it, PLEASE re-post it for us to use. Though we may not know each other personally, the contributers of this forum are knowledgable, inovative, and someone is always willing to take the time out of their day to lend a hand.

Anyone got 2 cents change for my nickle? sorry no margin break today.

[ironhorse]

Wow Schidthead, thank you for taking the time to write what you did. Very informative information to one and all.

Greg

[CPK_Jim]

Schidthead that was very well said!! I luv the FAN idea!!

I also like to use a digital cam to do renderings whenever possible it really helps the sale when they can see it. Alot of people have a hard time visualizing what things will look like. Its seems especially those in the position to spend someone elses money.

This brings me to another sales grooming idea ive been taught. People tend to judge the "unknown and the unseen" by the "known and the seen". Example: you are driving down the road in a new town, hungry looking for somewhere to eat, you see a Chinese restaurant but your wife says no im not eating there look at there sign its falling down and the outside of the building is rundown looking, they cant have good food, when if fact the only reason there still open is because they have the best Chinese food around. Meaning, if you are trying to sell to a new person, they are going to judge you by how you present yourself. Everything from how your dressed and how you act, to what you drive, whatever they can use to "assume" your quality of work. So when trying to sell, the nicer you can make yourself appear the easier it will be. Always have pictures of past work or samples, something to show the person the quality of work you do.

Appearance, is something ive been working hard at the last yr or so. Mainly the appearance of the shop both inside and out. Alot of you guys have big, real nice looking shops i have always been envious of. But my time has finally come, I built a new building last fall, moved into it this spring and have been finishing the inside of it ever since. We are almost done and its turning out great. I have notice 2 things since being in the new shop, 1: we can get more work done faster due to the layout being more efficient. 2: it has really helped to bring the attention of more and larger customers, its helped create more "buzz" about what we do here.

Advertising, is something that I have done very little of. Basically the extent of my advertising is a couple local internet forums (which i dont get much from but it really helps the "buzz") and the stacks of biz cards I hand to anyone that will take them. What this has done for me is create what I call the snowball effect. It starts with 1 customer who passes out a few cards which brings you 1 or 2 more customers which you hand a stack of cards to. They then pass out a couple cards which brings a few more customers and the snowball just keeps growing and growing and growing. This has worked well for me, but now we have become so efficient at what we do that I now have to begin to try and bring even more work in so I will try to apply the schidthead's FAN idea to seek out some new customers and start some more snowballs rolling.

Sorry kinda got off the pricing subject but I thought this may apply here.

Thanks to all that contribute to this forum you guys are great!!

Jim

B.T.W. biz cards are super cheap if you design them yourself and have them printed somewhere like gotprint.com

[jmsrbrt]

I've been looking through this forum and reading and re-reading all the posts, and looking at these spreadsheets that a few have posted, and one thing i cannot get clear in my head is the cost people are using for "inches of cut". I see it ranges from 15 cents up to 33 cents, then there is the discussion about charging $100 an hour.

My question deals with a design I'm working on. 52 inches wide by 24 inches tall. I'm cutting at 200 ipm, and my program says it will take 8 minutes 11 seconds. There are 37 pierces. If I'm cutting at 200 inches per minute, for 8.1833 minutes, that would mean 1636.66 inches of cutting, and at the lower value of 15 cents, that equates to $245.50 which seems WAY TOO HIGH for my little brain. Am I missing something in the math??

[SCHIDTHEAD]

I recon it all depends on how you have set up your rates; hourly or by the piece--or both. My spreadsheet numbers are just put in there for u guys to have filled in. My ipm cut rates are different than the sheet I put on here. My imp prices are different than the ones on the sheet. I just used the old numbers when I plugged in the table and this file was a blanked spreadsheet original. Dont be afraid to think outside of the box and change the pricing to your shop and what you think you should charge or make off your table. I didn't intend for any of the prices on the spreadsheet to be followed; just cause we all do the same thing doesn't mean we all have the same P&L's, and I'm sure the original feller who posted the original I worked off thought the same.

I do go on a flat hourly rate on the table also with jobs that the table and CAM software in the shop can easily cut in regard to basic gusset shapes etc.. So when the shop is doing a job with cutting involved in the fab of it an additional charge of $100/hr is used. Its easier than figuring design, CAD, CAM & CUT times in a part to get it to the table. When I have done that it was OK'd with the customer.

[mdwalker]

I've been looking through this forum and reading and re-reading all the posts, and looking at these spreadsheets that a few have posted, and one thing i cannot get clear in my head is the cost people are using for "inches of cut". I see it ranges from 15 cents up to 33 cents, then there is the discussion about charging $100 an hour.

My question deals with a design I'm working on. 52 inches wide by 24 inches tall. I'm cutting at 200 ipm, and my program says it will take 8 minutes 11 seconds. There are 37 pierces. If I'm cutting at 200 inches per minute, for 8.1833 minutes, that would mean 1636.66 inches of cutting, and at the lower value of 15 cents, that equates to $245.50 which seems WAY TOO HIGH for my little brain. Am I missing something in the math??

I think the thing you are missing is the value of your work. If you take a sheet of 10 ga steel worth say $ 2.00 a square foot (that's just an easy number I picked) and cut out a 1' square you end up with a 1' piece of metal worth $ 2.00. If you cut a bunch of lines in that 1' square you can dramatically increase it's value. You will always have people that are too cheap to pay what it is worth, people who don't care how much it is as long as they get what they want, and people that are in the middle, the ones that are price concious but realize what they are paying for. Don't under estimate the value of your work. If you do good quality work and/or custom work, most people will pay a fair price. If $ 245.50 is too high tell them for about 10 - 20 thousand dollars they can buy their own equipment and cut it themselves! I use the spreadsheet that I originally posted on here a couple of years back. I charge by the inch cut, number of pierces, & the amount of material used but when I am cutting I am usually making from $ 150 - $ 250 an hour & sometimes more.

[jmsrbrt]

I've been taking this all in and what confused me is the price per cutting inch, until I looked at the way it was calculated, then it made better sense. I agree that you should sell at what you consider a fair price and still make a profit, and that it won't be the same across the board. Some of us have thousands invested in equipment, some are mostly hobbyists. Some do custom work, some cut the same part hundreds of times. To everybody would submitted a worksheet to figure pricing, I thank you. Bob.

[DesertFabworks]

Here is how I calculate a price for a cut piece that did not involve art time. For example I have had the art all I had to do is load it and cut it.

I charge my customers for material to the square inch. So take your material cost per square inch you can add a margin here of whate every you want from 50% or 100% over cost. I usually double the square inch cost price.

Example: 16g steel cost= .010 per square inch Customer charge= .019 per square inch.

Now I take the linear inches of cut. I use sheet cam and it calculates this info for me automatically. This is the time the torch is on and cutting to give me an accurate price for cut time. I take the linear inches of cut and multiply it by the cost of material per square inch.

Example: 681 linear inches of cut (X) .019 = $12.94

So in the end if the Project was 592 square inches = 592 (x) .019 = $11.25

Add the two = $12.94 + $11.25 = $24.19

Ok some notes on this. Since I use double cost for my material it gives me coverage on the gas it took to bring it from the steel supplier and handling during the process, and in case I have a run error during the cut I still have a little protection built in. The Cut cost helps to cover the cost of machine parts and a little time. I think its a fair price and keeps thing accurate to each project. You can create a simple spread sheet and add or change the values and have excel do the math for you. I got this model from another cutter and it has worked for me.

There are my two cents on the pricing thing.

[RobertM]

I really like the discussions here in this site. I work in the machining business and I have found that you must place a high value on your time. Too many people will work for nothing. Be a person selling high quality and dependability and you'll be paid handsomely. The hobbyist that says I'm just trying to get my name out is always going to struggle if they base sales on being the cheapest. Cheap pricing is a race to the bottom.

[kbenz]

I been using the software SCHIDTHEAD posted which raised my prices a good bit. I have actually been selling more since then. I believe if you sell to cheap, people think they are getting cheap goods, maybe?

[AnotherDano]

OK, now that your piece is priced and cut, what about finishes and pricing for that?
$5.00/sq. foot for powder coating seems to be a 'standard' with a lot of the coaters. Add 50% for clear coating.

[Sampson Jones]

O k Im gonna step in it , what exactly is considered the number of indexs ?

[AnotherDano]

O k Im gonna step in it , what exactly is considered the number of indexs ?

Indexing is the movement and realignment of the steel to continue a cut past the physical limits of the table.

My PCam is a 4x4. When I design and cut a piece that is longer than 4', it requires repositioning for completion.
The software does a good job of making the process pretty painless, but if the steel isn't positioned correctly, it's scrap.

[Sampson Jones]

Now I take the linear inches of cut. I use sheet cam and it calculates this info for me automatically. This is the time the torch is on and cutting to give me an accurate price for cut time.

How do you get sheetcam to calculate the inches of cut automatically ? Do you run a simulation and divide it by ipm ?

Thanks ! And thanks for the indexing answer above !

[vmax549]

In Scam run the report section. Different reports give different info about the cutfile.

(;-) TP