Pricing Help

[Kevin Clark2227]

I know pricing discussions always come up and I try to keep others recommendations in mind when pricing jobs. I try to make sure that I am not taking advantage of my customers nor am I being taken advantage of. However I am not sure how to quote this new job I might be getting. The client wants some anodized aluminum milled parts lasered with there logo on both sides. The parts are flat and easy to setup. It took me about 10 minutes to setup the job. The problem is the amount the client wants done. They want 1,000 parts to start. There would be a possibility that this could turn into 3,000 to 4,000 parts next year. The logo might take 1 minute or so to run if that. What do you guys think?

[George M. Perzel]

Hi Kevin;
A few questions:
1. What price do they sell the part for?
2. Is it part of a larger assembly?
3. Do they currently use a different process to print the logo?
4. Will you get the 1000 pieces all at once or over time?

The answers to the questions may/will change my recommendation, but, assuming you can take them out of one box-laser them-and put them in another box (minimum handling-no unboxing/packaging) I would go with $3 for each logo pair-looks like about a one week job for 1000-allowing about 3minutes/ two logo cycle. These kind of jobs can be profitable but can also drive you crazy as the short cycle means you have to be there (or someone has to) all the time. Alternate is to train your grandmother to run the job-good exercise for her getting up and down and also keeps her out of the bars.
Good Luck
Best Regards,
George
Laserarts

[Dan Hintz]

1. What price do they sell the part for?

This is a completely irrelevant question, IMO. What if two companies came to you with nearly identical jobs, but one charged 10 times the price for theirs... do you think it would be reasonable to charge that company 10x the engraving cost of the other company? Probably not.

You charge based upon what it takes to pay your bills, cover yourself in the case of mistakes, and make a profit you feel comfortable with (this is the path you should take, Kevin)... changing your pricing based upon what they "may" sell their finished product for is silly. I had a sign company try that once with me years ago when I asked them to make some vinyl windshield stickers... I had planned to give them to my buddies who were all in the same car club. I was asked if the stickers were for resale and was told if they were the charge would be much greater. I told them where they could stick their stickers... once they made a product for me, it was none of their business what I did with it, including making a profit.

For small-/medium-sized jobs, $1/minute for a single items actually works out to cover my costs pretty well with a healthy profit (note I'm not talking about $1/minute of engraving time)... the fact that I can run more than one item at a time is a bonus to me, then. For example, a 6"x1" logo @500dpi on anodized may take me (roughly) 5 minutes to completely process (put item in, press 'go', remove item and replace with next, etc.), so I'm charging roughly $5. Of course, I can put multiples in at once, so after all is said and done I may get $250 for about 2 hours of work (I'm including final packing and such).

[Mike Null]

Rule number one: if you aren't happy with the price it's not enough.

I don't ever use the $1 per minute thing as it makes no sense for any kind of pricing. That was something the mfrs were touting 20 years ago to guys buying their first laser. It wasn't enough then it is not enough now.

Consider art set up, building fixtures (for this job a must), unpacking and repacking, engraving and clean-up if any.

I doubt that I would be less than $3 and likely $3.25 to $3.50. (I have a job very similar for about 1000 per year.)

[Scott Shepherd]

Personally, I'd say no one can answer that yet. We don't have enough information. Is the part 18" x 24"? Or 3" x 3". That's the difference in running one part at a time and running 48 at a time on your table on the Helix. If you run 48 at a time, 8 across, 6 down, the cycle time goes from 1 minute each to about 15 seconds each.

That's stuff I'd have to know before offering up any pricing help. I often do things for .50 cents each, or less than $1 each. But it's always things with higher volume that I can fit a lot of on the table. Those jobs typically end up making us in the $200-400 per hour range.

[Tim Bateson]

I totally disagree that the sell price of an item should be considered. Before you go all postal on me, let me expand on the thought.
1. I would never ask for this info.
2. The selling point for an item weighs VERY heavy on what a customer, specifically a manufacturer will pay for a service.
a. A widget is a free give away and/or < $1.00: That customer/manufacturer will not pay $1-$3 for the engraving, but may well pay $.25-$.50 each - You then decide if that is enough profit or pass on the job.
b. A widget sells for $$$$ or a part for a larger widget that sells for $$$: The customer may not blink twice at $3 or even $5 a piece for the same amount of work.
3. Like Mike said, $1 is a dumb rule. I use to use it & more often than not customers were surprised at the low cost. Over time, and I'm still learning you get a feel for how far you can push a price.
3.5 (added) If you don't loose a few job bids, you are not charging enough.
3.75 (added) I'm not talking about gouging, but you should be able to pay yourself a fair wage.
4. If I'm wrong, why have most of my competitors gone belly up & I'm growing leaps & bounds?

Another note: Some jobs I practically give away minor work, because that same customer will & does pay a good price for large batch jobs. I'll stop there before giving away too much information . ;-) However... Get to know your customers.

[Ross Moshinsky]

The value absolutely has to be known because it has to be factored into the "what if something goes wrong" part of your pricing. Things happen in life. Machines sometimes don't do what you expect. If one mistake eats up all your profit, then you're not pricing something correctly. You have to know both your risk and your reward when quoting jobs out. It's up to you to decide if you need to charge more based on the price or if you can come up with another arrangement (5% over-run is a popular alternative).

I think Mike is pretty similar to where we'd be (assuming we'd be supplied 20+ extras). I'd figure about $2.00 per side. I'd wave any setup or template because the run is fairly large. Our pricing is probably on the higher side because we're setup for retail rather than wholesale/high production. I'd imagine a shop setup differently would charge probably around $1-2 per piece.

[Rodne Gold]

In a highish volume production job like this , The real question to ask is what would it cost to mark using other/alternative methodology like pad printing , screen printing , Galvo lasering.
if you cant make a profit at those prices or close ..you can take a chance and charge what you think is profitable if its not too out the ballpark..if your profitable price is way off ..best to pass.

4000 items a month at 1 min per side + taking out , replacing is probably realistically 3-4 minutes per item -- lets be optimistic and say 3 mins , which is 12000 minutes a month or 200 hours , assuming an 8 hour day - thats 25 days - a WHOLE month working full time including a saturday to do that job...you prepared to do that?

[Martin Boekers]

Although not necessary, it would be nice to know the value of the part for your client in relation to the whole assembled part. Many business operate differently on bidding jobs. Graphic designers and agencies vary their cost by exposure. A same piece that is used for a "sell sheet" would be cheaper than on used for an annual catalog with a distribution of 1,000,000. Auto repair places mainly charge by "book hours" and not how long it actually takes. Take "O" rings in the Space Shuttle, it doesn't cost much to produce, but because of it's use and safety it costs quite a bit. Be careful with Anodized things, just recently a post here showed a company that did tests on sample parts, then bought a laser that ultimately didn't work. There can be pretty good variances in these parts which could affect your costs....

[Dan Hintz]

I don't ever use the $1 per minute thing as it makes no sense for any kind of pricing.
Just so we're clear, I mentioned that my $1/minute was strictly for engraving one item and used as a base price... if I could engrave a second item in the same run for a %10 increase in time, the price still doubled but my time only increased by 10%. It gets me in the ballpark of where I want to be, and then I adjust the figure, as appropriate.

The value absolutely has to be known because it has to be factored into the "what if something goes wrong" part of your pricing. Things happen in life. Machines sometimes don't do what you expect. If one mistake eats up all your profit, then you're not pricing something correctly.
How much it costs to replace the item is what matters, not how much they plan to sell it for, two totally different values. If I make an engraving mistake on an aluminum business card, I can replace it for $0.25/pc... but I'm not paying them the $1/pc they quoted their customer.

Although not necessary, it would be nice to know the value of the part for your client in relation to the whole assembled part.

Take "O" rings in the Space Shuttle, it doesn't cost much to produce, but because of it's use and safety it costs quite a bit.
No, they cost a lot to produce. Just because you can purchase an o-ring from Harbor Freight for a few pennies does not mean you can compare it to an o-ring for the Space Shuttle. High-end QA processes are involved there, the materials are tightly controlled, and there is a lot of continual testing involved to make sure each batch meets spec.

Again, the parts you work on should be considered black boxes. You dial in the settings, accept money from the customer, and hand them back a modified product. What they do with it after that is up to them, be it put it in a $1 toy or in a $50k automobile.

[Scott Shepherd]

So.....if someone wants a $2,000 Macbook Pro engraved, I should charge enough to cover buying them a new MacBook Pro if I make a mistake? That's a nice theory, but it doesn't hold much practical use.

[Tim Bateson]

...Again, the parts you work on should be considered black boxes. You dial in the settings, accept money from the customer, and hand them back a modified product. What they do with it after that is up to them, be it put it in a $1 toy or in a $50k automobile.

It matters to my business. Example: One of my larger customers - I engrave their logo & info onto both anodized bin tags & on their anodized product. Bin tags are a consumable - no profit for the manufacture. On the other hand the product sells for $3,000 - $7,000. Same logo/info, same engraving time (with-in a few seconds). My charge is $.50 for the tags & $8.00 for the part. BTW: This is a tad cheaper then their prior engraver.

Another example: I'll charge a charity event less for an award than I do for that same award to a large corporation. My actual pricing model is a bit more complex than I make it sound here.

I should note for those just getting started in the business - markets are finicky and what works in one city may or may not work in another.

[Martin Boekers]

That's why each of us has to figure pricing on their own circumstances..... What works for me may not for you.... I would avoid charging the same engraving fee for everything the (the Black Box Method) as soon you'll find that doesn't work. That is why many of us just use and "hourly rate" as a guide....

[Ross Moshinsky]

So.....if someone wants a $2,000 Macbook Pro engraved, I should charge enough to cover buying them a new MacBook Pro if I make a mistake? That's a nice theory, but it doesn't hold much practical use.

I'd turn away the job because I wouldn't want to be bothered with it. If I really wanted to do the job, I'd charge a considerable amount more than a similar size piece of anodized aluminum that I can replace for $10-15. Making a mistake on a $2000 item, even if I assume no liability and the customer understands that, is not acceptable in my world. This isn't just about money. The money side is simple. Expensive items I'm going to take 2-3x longer to engrave because I don't want to make mistakes. More time = more money. There is another part of this. If things go badly, I won't sleep at night. I'll stress out about it. I'll feel badly. Last time I checked, high pressure, high stress jobs typically result in higher pay.

You can do whatever you want, but if someone wants me to engrave something expensive, I'm often turning the job down and frequently charging more money for the extra care and risk involved.

[Martin Boekers]

No, they cost a lot to produce. Just because you can purchase an o-ring from Harbor Freight for a few pennies does not mean you can compare it to an o-ring for the Space Shuttle. High-end QA processes are involved there, the materials are tightly controlled, and there is a lot of continual testing involved to make sure each batch meets spec.

Again, the parts you work on should be considered black boxes. You dial in the settings, accept money from the customer, and hand them back a modified product. What they do with it after that is up to them, be it put it in a $1 toy or in a $50k automobile. So I guess we are in agreement that the final use is important. :)

[Joe Hillmann]

Since we are already off topic I will throw in my two cents. I think knowing the value of the finished product is good to help pricing.

If the customer wants some doodad marked so it can be given away or sold cheap, I would keep that in mind throughout the whole process. When designing the artwork I would keep it simple so it is fast to design, and fast to mark, when engraving I would set the speed as high as possible and not bother with trying to get the best possible mark. Quality checking would be limited to just glancing at the parts. I probably wouldn't bother cleaning smoke damage or masking the parts, and packaging would probably be limited to tossing them into a large box when they are done.



If the customer wants a small run of a couple dozen parts that are highly visible on a half million dollar machine that could result in death if the marking I make aren't extremely easy to read in high stress situations I would first spend quite a bit of time with the customer make sure I know exactly what they want often working with measured drawings that show location and size of graphics and text down to .0005". I would also build custom jigs that locate the parts very securely while still allowing for slight variation of size in the parts. I would then make a mock part out of rowmark or plexi, engrave it and have the customer ok it in person, either I go to them or they come to me. I would do a test engraving on a scrap piece of the material they plan to use for the parts to see what the mark will look like on that exact material and to get the settings right and so they can do there secondary processes to it to make sure they don't conflict with the engraving. When figuring out the settings I would be looking for the best looking mark rather than the fastest mark. I would talk over with them what happens if I screw up a part, can they strip it and replate it? is the part scrap? Who is responsible for that cost?

In both situations these could be similar parts but depending on the value and use the prices and and processes would be very different. Of course there are reasons for those differences than just charging more because I can.

[Scott Shepherd]

I still say you can't price it until we know how many can be run at once.

[Dan Hintz]

I had a long response typed up, but you know what? These conversations always dribble down into a "he said, she said" kind of battle where everyone has their own view on what's "right". I don't have an interest in those kind of peeing matches anymore.

Do what you think is right for your business, take the risks you want to take... we're all happy with the money we make, so as far as I'm concerned that's the end of it.

[Kevin Clark2227]

Okay I am getting some great discussion going here. To answer a few of the questions.

A few questions:
1. What price do they sell the part for?
A: I have no idea what they sell the completed item for.

2. Is it part of a larger assembly?
A: It is part of a larger assembly. The part that I am quoting is approximately 3" X 3". The logo is 1.10" X .5".

3. Do they currently use a different process to print the logo?
A: They do not. They were going to try to use there CNC Machine to do it but wasn't doing what they wanted.

4. Will you get the 1000 pieces all at once or over time?
A: I will get 250-500 at a time as the parts are made. There will be about 2 weeks between each delivery. Next year,
there would be a potential for 3,000 to 4,000 parts next year.

I do know that they were contemplating buying their own laser, so I don't want to push the limits and not get anything. The market these guys are in is huge and they have a LOT of friends/colleagues that I would be able to pull in if I can get in the door.

[Chuck Stone]

These conversations always dribble down into a "he said, she said"

no they don't.

[Dave Sheldrake]

Next year,
there would be a potential for 3,000 to 4,000 parts next year.

Potential business is great Kevin, it's nice to get repeats but never base prices on it, a number of clients will use it to try and beat the price down with no intention of coming back.


I do know that they were contemplating buying their own laser

The fact they haven't means they have likely thought better of it, adding machines to an existing business isn't always limited to the machine purchase. They have to feed it (do any artwork required and format conversions) run it (they may not have anybody that can run it off the shelf) maintain it (it's not a blender ;))


The market these guys are in is huge and they have a LOT of friends/colleagues that I would be able to pull in if I can get in the door.

Joining the local Lodge is more effective. (1904 GLOP)

cheers

Dave

[George M. Perzel]

Hi gang;
Dan- you totally missed the point. The reason I asked for the sell price of the item has nothing to do with my pricing strategy-on that we agree. It has to do with deciding whether the job is even worth considering. If the item sells for under 10 bucks or so then forget it as the incremental cost of engraving will not be acceptable-=even if it's one dollar. I also think Joe has a valid point- I would tend to treat a $400 crystal vase a bit differently than a shot glass.
Best Regards,
George
Laserarts

[Glen Monaghan]

no they don't.

Um, yeah, they usually do! ;^)

[Mike Null]

In my experience Dave is closer to the mark.

[Joe Hillmann]

Um, yeah, they usually do! ;^)

But Chuck Stone said, No they don't. :)

Sorry I just had to do it.

[Mark Ross]

If it is a small part and I can fit 100 of them on my table? A buck a part a side but only in quantities of 1,000 or greater.

[Mikah Barnett]

To me, there are only a few things you need to know to quote a job like this accurately:

1) Does the company pay their bills (that's an important check these days, unfortunately)
2) How long will it take you to make the parts - as mentioned doing the full cycle of insert/etch/remove/repeat
3) What is your liability if a part gets ruined?

With those things, you can put together a number that you feel comfortable with. Under-pricing to gain business is a dangerous game - even when you win you often lose. Over-pricing because you think you can sometimes works but undermines your credibility. Keep your pricing method simple, be 100% transparent with anybody you give a price to, and the hardest part will be making sure you understand what amount of profit really feels good.