View Full Version : Charges vs Replacement costs

greg lindsey
04-07-2011, 12:49 AM
I was wondering if any of you take the replacement cost of materials or of a special part into consideration when quoting a job. I know that none of us would ever screw up a job:rolleyes: but stuff happens sometimes. I just finished engraving 25 very expensive guitars and although I didnt have any mishaps:D the thought did occur, one mistake could cost me a big portion of the job (profit) even with my insurance it would still cost me the deductable. At what point do you do you feel the cost vs the risks.

oscar martinez
04-07-2011, 2:08 AM
Thats a good one. I have customers with expensive parts $250 to $300 dls a piece.The engraving takes les than one minute
logos or serials numbers .But my question to my customers is always wath if i made a mistake how would you like to be compensate for the lose if he answear high you charge high most of the customers agreed according with the costs.
I other cases the engraving takes one minute but the part to be engraved is less than the cost of engraving on those cases you charge by time basis ang get ride of the pieces with out worries.

Joe Pelonio
04-07-2011, 7:50 AM
This is one reason I prefer doing manufacturing over personalization. The profit per item may be less but the quantity is a lot better and no risk of damaging an expensive item. Charge more for all of the personalizing jobs, and save some of that money to cover that inevitable "accident".

David Takes
04-07-2011, 8:50 AM
I have a line item in my financials specifically to track the expense of errors, scratching or breakage. Since I have been in business for over ten years I have a good handle on what that expense runs annually. Amazingly, this line items stays fairly consistent each year, give or take $100. This is an overhead cost I figure into my shop rate, so in essence, I allocate replacement cost into every job I do. I recommend spreading out this cost.

To lower the stress of doing expensive items, which I do a lot of, I have a fund that is in the bank and dedicated specifically for expensive replacement items. Knowing it is there and specifically for that purpose gives me peace of mind when doing those jobs. In with that fund I also deposit over the first two years of owning a new laser enough funds to purchase a replacement cartridge for the laser. That again gives me peace of mind. There are other funds in there as well for other more expensive pieces of equipment I own. You might call this my minor disaster fund. Fortunately, I've avoided the major disasters. I do replace my laser engravers every 3-1/2 years, so that helps me avoid the need for laser cartridge replacement most of the time.

Mike Null
04-07-2011, 9:31 AM

Excellent answer for a full time engraving business. In my case I do little high end engraving and then it's usually customers' goods. I have them agree before hand that I won't be responsible for damage to their items. If I supply the items (rare) it's on me to replace them.

Over the years my mistakes have been reduced dramatically simply through experience and taking the time to do a "dry" run on such items. On certain items it is easier to let a supplier do the item. (usually crystal, though I can do that also)

Steve Clarkson
04-07-2011, 10:11 AM
Some of those crystal/acrylic awards are $50-$100 or more.......at a minimum, I make sure I charge atleast twice my cost.....so worst case scenario, I have to buy a replacement one......then I'm only out for set up/engraving time........not a big loss for a mistake I made.

David Takes
04-07-2011, 10:17 AM

The same math applies to someone engraving part time. They simply have fewer transactions to spread out their risk. This will make their pricing less competitive, unless they ignore this exposure, which wouldn't be fiscally responsible.

I should mention that I do not operate without signed waivers in some instances. If the item is unique and can't be easily replaced, is an unfamiliar or risky substrate, or is customer supplied and valued over $500, I will engrave the item only when I have a signed waiver explaining that I am engraving at 100% customer's risk.

Regardless of whether the item is provided by me or my customer, the customer is still 100% responsible for getting me accurate information to be engraved, etched or imprinted. If I don't engrave their information correctly, I replace it at my expense, unless it falls under one of the categories listed above.

Martin Boekers
04-07-2011, 10:24 AM
Some of those crystal/acrylic awards are $50-$100 or more.......at a minimum, I make sure I charge atleast twice my cost.....so worst case scenario, I have to buy a replacement one......then I'm only out for set up/engraving time........not a big loss for a mistake I made.

The Crystal ones can be a B^%$# at times. I do a lot of Crystal Globes with base and had to change suppliers because the bases
weren't always square.

I have a method now that seems to work a bit better. I do some expensive ones a couple times a year, but I job it out to a local sand etcher.
Those awards deserve a sand etch!

Like Mike, I always make sure the client is aware of a problem that may occur, may not be our fault, laser quits or misaligns or that sporadic glitch that
happens when you least want it to!

Mistakes will happen that we know for a fact when, and on what is the issue.

Bill Cunningham
04-07-2011, 9:38 PM
Other than some pen barrels for a few customers, I 'rarely' do any expensive items supplied by customers. I usually just send them to a local trophy shop that's always trying to undercut me:D But usually add the caveat that just because they 'own' a laser, it does not mean they know how to use it;). I keep all my business sales/purchase info on a spreadsheet, and it automatically takes 5% of everything I do on the laser, and puts it in a column and subtracts it from my bottom line. That assures me that this amount is always a 'tax paid' amount, so my accountant doesn't hand me any surprises at the end of the year. If I use any for laser repairs, or other product, it then becomes a deductible expense.. If I don't use it, it just accumulates year to year, and will eventually go towards a new laser when mine finally gives up the ghost! Or maybe a nice holiday :rolleyes:..