I thought I was worth more than $38/hour.......

[Steve Clarkson]

There's a guy on Etsy selling an hour of laser cutting time for $38.........and an hour of CNC cutting is $54.........

I may just have to send him a bunch of leather to cut.......that's definitely worth paying $38 an hour for.

[Dan Hintz]

Steve,

I'm all for outsourcing in such cases... send him all of your work, take in the extra profit, and let him deal with the headaches and time crunch ;)

[Rodne Gold]

Generating $80k or so a yr from a laser is bad?
If you have multiples and hire a minder for each pair , you could make good money out of an operation like that

[Scott Shepherd]

Generating $80k or so a yr from a laser is bad?
If you have multiples and hire a minder for each pair , you could make good money out of an operation like that

Yes, it is bad. Take rent, wages,utilities, and taxes out of that, and you're a long way from $80K a year. My guess is all you'd do is break even.

[Rodne Gold]

Wasn't it obvious from my post what I was implying , maybe a one man one laser operation wont make it worthwhile .. certainly multiple lasers would..

[Scott Shepherd]

If it was obvious, I didn't see it :) Sorry for missing your point!

[matthew knott]

think of it like this
Laser = $6k (from china)
Works at home so rent free (sort of)
Electric = Not a lot $5 a day would be loads
Wages = Just him/her so nothing (sort of) & maybe they have to be there for another reason (baby sitting/retired)
Taxes = Still kind of volanatry using ebay/paypal (until you get caught)

Could just be working for beer money, hard to compete with someone like that!!

[Ross Moshinsky]

They may be able to make money doing things that way and they may make $5 hr doing things that way.

My guess is they'll end up "over charging" everyone. Magically it takes 5 hours to do a 3 hour job. I just see dealing with the emails as a quick way to go out of business. By charging so little, everyone is going to contact you. Filtering through emails will kill your profitability.

[Mike Lysov]

Generating $80k or so a yr from a laser is bad?
If you have multiples and hire a minder for each pair , you could make good money out of an operation like that

may be for someone who has invested 7-8K in a Chinese laser and does some orders part time $80K is ok, but let's think about others who paid $30-100K for US or other well know brands and do full time. $80K gross does not sound right as there is such things as depreciation and running cost.

BTW I charge 2-5 times more per hour for actual laser cutting time but I have not made $80K last year. It is just because I cannot get so many orders to run the laser 8 hours a day and 5 days a week. Plus I need to do some design for some orders, pack orders, drop them at my local post office and the most time consumable thing is to reply to my customers emails. I do not charge for all this things. I guess these guys from etsy do and it costs their customers the same $38/hour for all these things as for actual cutting. Otherwise their median hour rate is dropping well.. I guess $10-12/hour .

[Andrew Kazakoff]

Never be swayed by the under-cutters....

I have never tried to be the cheapest. {I am new to laser cutting but a screen printing veteran} I have always tried to be the most accommodating, the most accurate, and the easiest to work with. I have seen so many of the under-cutters slip away into oblivion over the last 8 years, that I expect the same to happen to the recent ones that try to be the cheapest in the world.

Fair prices, fair service and honesty go so much further than a few dollars....

All you have to do is go after clients with expense accounts ;)

[Jeff Greer]

I really need to work in a different shop to see what people are charging for the work they do. I took over a business and I have yet have a customer come in that I can stick a big hourly rate on. I would love to but just not the clientele that is around here...

[Scott Shepherd]

I really need to work in a different shop to see what people are charging for the work they do. I took over a business and I have yet have a customer come in that I can stick a big hourly rate on. I would love to but just not the clientele that is around here...

Jeff, I don't think of it as a "big hourly rate", I simply took all our expenses and divided it by the number of average hours our lasers run a month, and that got me my hourly rate. I know what my breaking point is. If it's less than that, then what I'm doing is slowly bleeding money and not making enough to pay the bills. A number of times I have done that, when I had better paying jobs in house as well. You burn all your time on "free" work, basically, and then you have no time left to work on profitable work. Once I did the calculation, then when I quote something, I can easily just multiple the time out by the rate and know what I have to make to pay the bills, or what I have to make to pay the bills and make some profit.

We also plugged that into our estimating software, along with rowmark pricing and now we're quoting a lot more accurately than ever before. It's really helped us have better pricing, become more profitable, and be a lot more consistent in our pricing.

['Jacques Malan']

I read this quote somewhere, it is very true.


"There is always someone who is willing to go bankcrupt faster than everybody else."

[Jiten Patel]

Smart business model if you ask me (if that is what he/she is doing). Undercut the competition, provide a quality service and gain exposure and contracts/contacts. Do this for long enough - your nearest competitors cannot compete and either go bust, and/or you take most of their business. Then slowly creep your prices once you have cornered your target market. More of a long-term plan and pretty risqué, but huge rewards if and when it works.

The zipper company YKK did exactly this way back when. They came on the market and their prices were so low, they almost went bankrupt, but in the process the captured almost 80-90% of the worlds zip market and the other companies simply couldn't figure out how they could offer it so cheap. They were making a loss for years, but as soon as the other companies went bust, up went the prices and bam...here comes the money.

But most of you are right, and they will end up bankrupt or stuck with an expensive toy. Either way - nothing to worry about, all of us still run our businesses and get on with what we are good at, being the best at what we do. Just my 2 pence!!!

[Dan Hintz]

Smart business model if you ask me (if that is what he/she is doing). Undercut the competition, provide a quality service and gain exposure and contracts/contacts. Do this for long enough - your nearest competitors cannot compete and either go bust, and/or you take most of their business. Then slowly creep your prices once you have cornered your target market.
It's only smart until the next up-and-coming competitor employs the same tactic in your newly-won market. Then you'll bitch like the rest of us.

[Jeff Greer]

We are re-evaluating all the work that goes through here now and are making adjustments. We do a ton of small work and that is where we need to focus our pricing as a lot of it is a slow bleed. Our big jobs is where the bread and butter is but it seems like this store is built on small jobs.

[Martin Boekers]

Steve I guess 2 things.... If he's running a 25watt or a 75watt how does he judge time? Obviously a 75watt will cut faster.
Hopefully he quotes the job and not says I'll do that when the job is finished. Also there has been mention of Kickstarter
here, I have seen quite a few wanting to buy a laser and use Kickstarter toi get it as a vehicle to get it. It's an interesting concept.
They keep prices low initially to get equipment paid for.

the second thing is more often than not I have been burned by outsourcing, delay in product, quality or mistakes so I tend
to be very very carefull about outsourcing to save a few $$

[Rodne Gold]

If *I* had work for 6 additional 80w lasers for just 5 hours a day at $38 an hour I could NETT about $130k per annum as a worst case scenario That $130k is profit and the only thing I would have to pay extra is the income tax on it.
I would do it in a heartbeat..the only fly in the oinkment is that I dont have the demand for an extras 30 hrs of laser time a day.
The going rate here for laser time on our Co2 style lasers for large lasering jobs or to wholesale clients is about $0.70c a minute..that not too far off the $38 an hour price anyway. We charge that rate and often cheaper than that and still make good money with our lasers.

[Walt Langhans]

Just an FYI guys, I'm charging $37.50 per hour for laser time :D

[Dan Hintz]

If *I* had work for 6 additional 80w lasers for just 5 hours a day at $38 an hour I could NETT about $130k per annum as a worst case scenario That $130k is profit and the only thing I would have to pay extra is the income tax on it.
I would do it in a heartbeat..the only fly in the oinkment is that I dont have the demand for an extras 30 hrs of laser time a day.
The going rate here for laser time on our Co2 style lasers for large lasering jobs or to wholesale clients is about $0.70c a minute..that not too far off the $38 an hour price anyway. We charge that rate and often cheaper than that and still make good money with our lasers.

Rodney,

I think you and I have discussed this before... but isn't labor in SA quite a bit cheaper than in the US? Having someone tend over those extra machines would take a nice chunk out of that per hour price...

[Scott Shepherd]

I've never understood the lowball mentality. I perfectly understand beating your competitors pricing, but who are you helping/hurting by doing things for 1/2 the market value of a product?

If the market value for something is $50, and everyone is town sell them for $50, what business model says it's a great idea to sell it at $25 instead of $48.95? As a business owner, you're leaving a boat load of money on the table AND ruining the market value for those products in the future. Sure, you might be working from home and have low expenses, but once you get flooded with all the work from lowballing, you'll quickly be looking for more space. With that comes rent, higher bills, etc. So now that $35 per hour needs to become $55 per hour just to pay the bills. Now all your customers that are used to paying $35 will get sticker shock when you tell them the old $35 priced stuff is now $55. In essence, you'll be competing with the people you were undercutting. And about the time you sign the lease and get moved in, some other lowballer will come along and think "hey, I can do this for $34 per hour" and he'll undercut you at $55.

It helps no one to lowball. Price by the value of a job and then it won't matter if you're working from home or from a store front, you'll be getting paid what the work is worth.

[Ross Moshinsky]

I don't know why people get so bent out of shape about stuff like this.

The owner of this business probably won't make any money because they are going to get lots of new "customers" contacting them every week and they'll spend hours and hours trying to get business which they won't be able to bill for. Whatever business they do get will probably not pay for the time spent trying to get the business. The only way a business like this could be successful is if they get enough repeat business per month that they can stop taking orders and just run their machine 40 odd hours a week with little interruption. That's not likely to happen.

[Rodne Gold]

Dan , In my scenario , I was working on a 20 day month and a 48 week year , would cost me round $1200 a month for a minder/programmer at worst ..currently I have 2 minders for 8 machines who are conversant in corel and work for less!!! However in my "worst case scenario" I have costed in 3 such "minders" for the extra 6 machines.
Works out at about $8.50 an hour take home , tho here we don't really work on an hourly basis. I worked out on an 7hr working day , even tho I worked laser income as 5 hrs a day. Minimum wage here is around 1/2 of that hourly rate.

I have fixed overheads , so whether I get another 6 machines or not it doesn't matter - however in my model I apportioned $3000 a month as a share of the overheads and rounded it up from $36k to $45k a year for the 6 machines and further amortised the $60k or so it would cost me to get the extra machines over 2 yrs , IE a further $30k a year depreciation expense for all 6.
I even apportioned a FURTHER $15k PA for sundry expenses I might not have thought of.
I have overstated my projected expenses in a big way and been conservative as to income even then the figures still look good.

[Martin Boekers]

Much on these business models succeed/fail deal with many variables, efficiency, overhead.
In the printing industry, you try to group jobs and limit press runs. Maybe Wed is your press day and the rest is
layout, pre - flight and prep work. Our industry many of us don't gear toward such runs. Mainly a couple pieces of at a time.
Most of my workflow for jobs is 10-20 pieces an order. So I tend to work order to order. Can someone do work for more or less $$
than me? Certainly! If I own a hamburger joint I may say how can McDonalds sell a hamburger for a buck? They figured out how to do it.
It may not be the quality I make but the understand their market.

I find the same with auto repair..... Dealers get $125 an hour.... Joe the mechanic down the block gets $65 an hour.

I focus my shop on service, I treat those fairly. At anytime someone will beat my price, where I beat them is the quality, consistancy and
dependability of customer service. That is what I want to be known for not lowest pricing. Watch these online
ordering, many provide limited service, shipping IS a profit center, turnaround guarentees, what if product quality lacks or is damaged in shipping.
I have quoted a job and the client showed me the web page with the cheaper quote, then I showed him the $40 set-up fee, $50 min order,
7 to 10 day turn around. Limited recourse for problems on the vendors end. So watch when bidding against online companies as their pricing
isn't as clear cut as your client wants you to believe.


Seems we spend quite a bit of time here trying to figure out why someone sells for less.....

[Rodne Gold]

It's all about economies of scale , if by deep undercutting you get the lions share of the market , you might find that even tho less profitable in percentage terms , you are making a lot more money in absolute terms. I might not jump ship to another supplier for a 15 or 20% reduction , but certainly might do so for 50%
Fixed Expenses would drop in line with economies of scale , so even if you can't see the guy being profitable at a particular price , he might well be.

Without knowing all the facts , I cant seem to find the ad on etsy, I doubt this guy is marketing his design service or creativity and I'm pretty sure at that price he requires laser ready artwork or close to that. (as we do) He, or I for that matter , wouldn't dicker around with 2 hrs of prep time and dialog with a customer and then charge $3.80 for a 6 min job...

[greg lindsey]

Let me throw my $.02 in. So what this person charges $38.00 an hour. They will get eaten up with those jobs you really don't want to do. I doubt they are taking any money out of your pocket and I don't know of any corporate clients looking on Etsy for vendors. Charge what makes you a living and let the bottom feeders do what they do. Now go back to work.

[Dan Hintz]

What Greg said. I recently had a (potential) customer contact me about some work that had potential to be long term. I provided what I thought was a fair price. As is often the case, they came back with "Person 'X' quoted me a price 1/10th of yours, do you think you can match that?" I wished them luck, as I always do. I know straight out there are a lot of issues that will need to be nailed down before the quality is there, and that kind of prep work doesn't come cheap (in terms of time or money). For the price quoted, it wasn't worth me turning on the machine, so I'm content with sending them down the road to my competitor.

[Bert Kemp]

You might wonder how much work he turns out in an hour, maybe one piece that you could do yourself in 15 mins LOL