My first Cermark Job

[Jeff Greer]

Really happy with the turn out of the job. I did 13 polished stainless filter housings. The were about a 7 minute cycle time , the base is 4.70 in dia.

On a side note - what would you charge for this if it was in your shop? I have no history on how to bill it so I guessed going in - cheap but still made money.

251720

[Ross Moshinsky]

$50 setup + $15-20 a piece.

[David Rust]

$50 setup + $15-20 a piece.

Did you base the $15-$20 on the 7-min engraving time?

Are there "special" jobs that get priced higher because they are "special"? I have been asked to quote a grip on a gun stock, a 3D engraving with the stock pattern from the Epilog site. I consider this "special" because it is not the normal engraving I do and if I screw it up someone has to settle for the engraving or pay for a new stock... It will require some setup and a little extra care on the layout. Would this get the $2 per minute or does it get a "special" rate??

thanks...

[matthew knott]

We would have charged £15 setup ($23.80) then £1.50 each ($2.40)
Total Bill $55 but we have a minimum charge of $63 so they would pay that (excludes taxes and shipping)
BUT we would use a galvo-fiber laser, setup time less than 5 mins, engraving time less than 1 minute per item, no cermark, so a pretty easy job.
Cost of machine used $18200.00
Not in the USA (UK) so not sure how we compare

[Scott Shepherd]

We would have charged £15 setup ($23.80) then £1.50 each ($2.40)
Total Bill $55 but we have a minimum charge of $63 so they would pay that (excludes taxes and shipping)
BUT we would use a galvo-fiber laser, setup time less than 5 mins, engraving time less than 1 minute per item, no cermark, so a pretty easy job.
Cost of machine used $18200.00
Not in the USA (UK) so not sure how we compare

So if I buy a faster machine, I get to charge less? With that pricing model, wouldn't it be better if I bought the slowest machine on the market? :)

[Dan Hintz]

We would have charged £15 setup ($23.80) then £1.50 each ($2.40)
Total Bill $55 but we have a minimum charge of $63 so they would pay that (excludes taxes and shipping)

Cripes... at those shop rates, I'd be better off sending my work to you, then skimming my profit off of the top. You are seriously undervaluing your work.

[Jeff Greer]

Set up is a wiz - vector a hole in a piece of card board that is square against the top and left side - bang. Location is 100% for each piece, just plop the next one down and run the next program. I did 2 at once - big time soak as the machine does not rapid travel between burn areas in the x axis. It would be better to stack them in the y axis for still a fast cycle time if I did multiple parts at once.
I still have a hard time charging set up fees but I do believe I am going to on a this job as a took my time on the first one. I am charging $12.50 each for them but I am going to tell them the next will be a little more. Still working myself into the pricing game - completely new to it as I use to work on jobs that I would have $30,000 just in matl. cost before. I need to learn pricing to the average customer.

Thanks for input and please let more come!!

[matthew knott]

This job with our galvo machine would be a sinch ! At that rate I would still be making a killing, max time spent 15mins start/finish! Faster machine means you charge less (if you want) but your onto the next job quicker! If I had to use my epilog then I would want $200 as its a pain! Interestingly I just exhibited at a show in the uk (trophex) no one took a galvo machine,we had epilog, trotech, hpc laser, gravograph all come look at the machine and general public where staggered at how quick and easy some jobs where! I think some of you guys are missing a trick here! If I get a chance I will Video a dummy start/finish run on this job just so you can see how easy it is.
Matt

[Scott Shepherd]

I think some of you guys are missing a trick here! If I get a chance I will Video a dummy start/finish run on this job just so you can see how easy it is.
Matt

I've been to a number of seminars by one of the top sign makers in the world. He's talked extensively about pricing. His example has always been, that you never lower the price because you have a faster, more expensive machine. You price the job for the value of the job, not how fast it can be run. If you charge by the minute, then the faster, more expensive machines you buy and pay for means you have to crank out more and more work, where the value of the jobs didn't change at all because of what it was run on. If the value of something is $10, and you can do that in 10 minutes, then great, but if the value of something is $10 and you can do it in 1 minute, then who's more profitable? There would really be no incentive to spend the money to buy newer, faster machines if all you're going to do is have a race to the bottom of the market. I'm trying to race to the top of the market, not the bottom.

Plus, now you've devalued the service for everyone else. Now everyone will see that as a $2 job. The galvo is a very special machine and I'd be pricing work on the normal lasers and doing it on the galvo and I'd be carry the money home in a sack large enough to be mistaken for Santa Clause on Christmas Eve.

[David Rust]

I've been to a number of seminars by one of the top sign makers in the world. He's talked extensively about pricing. His example has always been, that you never lower the price because you have a faster, more expensive machine. You price the job for the value of the job, not how fast it can be run. If you charge by the minute, then the faster, more expensive machines you buy and pay for means you have to crank out more and more work, where the value of the jobs didn't change at all because of what it was run on. If the value of something is $10, and you can do that in 10 minutes, then great, but if the value of something is $10 and you can do it in 1 minute, then who's more profitable? There would really be no incentive to spend the money to buy newer, faster machines if all you're going to do is have a race to the bottom of the market. I'm trying to race to the top of the market, not the bottom.

Plus, now you've devalued the service for everyone else. Now everyone will see that as a $2 job. The galvo is a very special machine and I'd be pricing work on the normal lasers and doing it on the galvo and I'd be carry the money home in a sack large enough to be mistaken for Santa Clause on Christmas Eve.

Scott,
Is there formal or informal guidelines on what the "value of the job" is? This is a revolving topic on the forums. Experienced people that seem to have a handle on pricing (and have successful businesses) often talk about price levels higher than "new engravers" that are wrestling with priceing... Obviously the experienced people know what they are talking about because they are making a living at it. I look at some of the major supply catalogs that offer "Suggested Retail pricing" and it really seems over-the-top in their guidance.

What are the "Rules of thumb" for pricing?
Do the prices change by what area of the country you are in?
Are there some products that have a higher engraving value than others, e.g. water bottle versus granite memorial versus Gun stock, if so is it 2x, 3x base pricing?

It has been my experience that pricing is a magnitude more difficult than learning CorelDraw, Laser operation, and talking to customers.

Thanks for your input!!

[Mike Null]

I would be in the $12.50 range with a $25 set up but I'm not sure I could do that with the 2" lens I have.

Having a faster machine should not enter into your pricing formula.

[Scott Shepherd]

David, I'm no "pricing expert" by any means, but I've learned a lot over the years and my pricing model is still being shaped. I think it's more to it than just setting a price. You need to understand the value of something. I'll give a quick example. I know a home based company that sells services. If you picked up a phone book and called every company in the book that does what they do, and asked for pricing, you'd get a price of $30 for what they sell. This company sells then for $8. Why $8? What's the purpose of being in business? To have something to do? To keep you busy? Or to make money? If the market says the product is valued at $30, why, under any circumstances would you price it at $8? You're leaving $22 on the table for every one you sell. Sure, you can be less expensive, but make it $28, or $26, but to drop all the way down to $8? It just has no logic for running a successful business.

If you owned a car and wanted to sell it, and the book value was $15,000. Would you list it for sale for $6,500? No? Why not? Because it has more value than that? Same thing with the work we do.

Of course there are segments of the market that have been turned into commodities and those area are hard to deal with. Things like t-shirts, mouse pads, etc. But, there's still a vast amount of work out there that is custom and it does require skills, talent, and equipment. You have to learn, over time, what the value of things is, whether it's searching online, calling people, going to shows, etc. You just need to get out there and look hard.

We recently did a large number of stainless items, all using cermark. Took 10 seconds each to do. If we charged $1 per minute, that would be .10 cents each + .10 cents each for cermark. That'd be $80 to do 400 of them. We charged $4.00 each for a total of $1,600. Why? Because there's no one else that would have done it for less. If they wanted plastic engraved tags (like panel tags), they would have paid $5 each, all day long from our competitors. So if a plastic tag is worth $5, then I'm confident that my cermarked stainless is worth equally as much.

The customer was very happy with the price (we quoted it and got it). If the customer is happy with the price, (they actually upped the order quantity once we have them the price), then why leave all the money on the table?

I still have work to do on my pricing. I'm having a hard time because my close ratio is something stupid like 98%. If I'm getting everything I'm quoting, then my prices are too low. I'm working on that. I've made some tweaks to my estimating program and I'm trying to slowly get that close ratio down, and profits up. I don't want to do more work, for less, for the same money, I want to do less work for more money.

The sign guy I mentioned early shoots for 10-12 projects a year. That's all he wants. I'm not trying to get to that level because we're dealing with two different things, but his point is well taken, try to do less jobs, larger jobs, and more profitable jobs, and you'll maximize the amount of work you do for the money you make. One thing he also stressed is that he never lets his customers see his machines run. He said if they saw how fast his machines made things, it would devalue his work.

[David Rust]

David, I'm no "pricing expert" by any means, but I've learned a lot over the years and my pricing model is still being shaped. I think it's more to it than just setting a price. You need to understand the value of something. I'll give a quick example. I know a home based company that sells services. If you picked up a phone book and called every company in the book that does what they do, and asked for pricing, you'd get a price of $30 for what they sell. This company sells then for $8. Why $8? What's the purpose of being in business? To have something to do? To keep you busy? Or to make money? If the market says the product is valued at $30, why, under any circumstances would you price it at $8? You're leaving $22 on the table for every one you sell. Sure, you can be less expensive, but make it $28, or $26, but to drop all the way down to $8? It just has no logic for running a successful business.

If you owned a car and wanted to sell it, and the book value was $15,000. Would you list it for sale for $6,500? No? Why not? Because it has more value than that? Same thing with the work we do.

Of course there are segments of the market that have been turned into commodities and those area are hard to deal with. Things like t-shirts, mouse pads, etc. But, there's still a vast amount of work out there that is custom and it does require skills, talent, and equipment. You have to learn, over time, what the value of things is, whether it's searching online, calling people, going to shows, etc. You just need to get out there and look hard.

We recently did a large number of stainless items, all using cermark. Took 10 seconds each to do. If we charged $1 per minute, that would be .10 cents each + .10 cents each for cermark. That'd be $80 to do 400 of them. We charged $4.00 each for a total of $1,600. Why? Because there's no one else that would have done it for less. If they wanted plastic engraved tags (like panel tags), they would have paid $5 each, all day long from our competitors. So if a plastic tag is worth $5, then I'm confident that my cermarked stainless is worth equally as much.

The customer was very happy with the price (we quoted it and got it). If the customer is happy with the price, (they actually upped the order quantity once we have them the price), then why leave all the money on the table?

I still have work to do on my pricing. I'm having a hard time because my close ratio is something stupid like 98%. If I'm getting everything I'm quoting, then my prices are too low. I'm working on that. I've made some tweaks to my estimating program and I'm trying to slowly get that close ratio down, and profits up. I don't want to do more work, for less, for the same money, I want to do less work for more money.

The sign guy I mentioned early shoots for 10-12 projects a year. That's all he wants. I'm not trying to get to that level because we're dealing with two different things, but his point is well taken, try to do less jobs, larger jobs, and more profitable jobs, and you'll maximize the amount of work you do for the money you make. One thing he also stressed is that he never lets his customers see his machines run. He said if they saw how fast his machines made things, it would devalue his work.

I agree with you that engraving should not be given away for less than the value of it. It is the value that is the challenge. I also agree with you that a market research of similar offerings along with availability and your historical "close ratio" is the best way to assess value.

Thanks for your thoughts/advice...

[Jeff Greer]

I would be in the $12.50 range with a $25 set up but I'm not sure I could do that with the 2" lens I have.

Having a faster machine should not enter into your pricing formula.

I used my new 4.0 lens - I am loving it. I still use my 2.0 lens on everything else but I love being able to have some distance from the table and a longer focal range when I need it. It has been coming in handy for lasering duck calls - big sweeping contours.

[matthew knott]

Pricing is a tricky one, i think in some ways in the US of A you have an advantage as people like local, in the UK (its tiny but 60m people) and with the advent of google, if you have to ship something it matters not where in the UK it goes, its like one big state. That means competition is harder, for example maybe 100 engravers+ in the state. I personally like to have lots of machines, employ people to keep them running and charge a fair rate $100+ per hour per machine. That way i keep customers as someone will always undercut you. What i dont get is the lack of the type of machine we use being sold to guys like you, they seem to be used buy industrial users only. Price now for a good machine less than $25K for everything. As i say at the trophex show all the machines where the same, its like thats what they want you to buy.I spoke to a guy that had just brought a new machine to engrave stainless name plates, he told me what he spent on cermark a year, and how long they took. When i showed him how quick he could do them using no cermark he was gutted, doesnt mean he need to drop his prices, just he could make more profit.

[Ross Moshinsky]

I would be in the $12.50 range with a $25 set up but I'm not sure I could do that with the 2" lens I have.

Having a faster machine should not enter into your pricing formula.

To indirectly answer the questions addressed to me, I'd say Mike is slightly on the low side for a setup because if I buy essentially anything from an ASI vendor, I'm hit with a $40-60 setup. It doesn't typically matter where in the world they are from, it's $40-60. As a result, we try to hold to the same standards. The setup fee is just that, it's supposed to account for the time taken to setup the jig and figure out the computer layout and do whatever testing you need to do.

The difference in pricing between Mike and myself probably has a lot to do with cost of living. New Jersey dollars are not the same as Missouri or Nebraska dollars. Our cost of living is much higher. As a result, our service prices are much higher. That's just the way it is. So you might not be able to charge $15+ for that item but you also might not need to because $12.50 is still good money. When you figure the median household income in NJ is $67,500 and MO is $45,300 it illustrates my point perfectly. That's a 33% difference and when you apply that factor you'll see more or less that's the difference in our pricing. Considering Nebraska has a median household income of about $50,000 a year, I'd assume that any job I charge $15.00 for you could, and probably should, charge $12.50 for.

[Mike Null]

Ross

I think your points are entirely valid. I do not have a fixed set-up fee and usually adjust that to the job. My terrible inclination is to charge too little for set-up then regret it. I have some jobs where my set-up is well beyond $50 (multi-line ID tags all different where I have to use a macro).

Too give an example I have used before; I can be sure that if I quote $10 or more for name tags I will never hear from the customer again. Yet I know people on the west coast who commonly charge $15.

[Tim Bateson]

I rarely charge setup fees. My customers appreciate a flat fee for items. I figure setup time is part of engraving and adjust prices accordingly. The only time I charge separate setup fees is for graphic design work - for example 400 dog tags ALL with different photos and names, or designing a logo.