Let's Play "What Would You Charge"

[Steve Clarkson]

Some engravers are all over the place with what they will charge to do a job.....one guy charges $1 and another charges $3. We all have our own calculation ($2/min or material cost times three, etc). If you charge too little, eventually you will go out of business. If you charge too much, eventually you will go out of business. So how do you find the sweet spot?


Let's play "What Would You Charge" and listen to each other's rationale. Here's an example of a job:


1) It's for an existing good customer with a national name brand (take your pick.....McDonalds, Home Depot, Sears.....basically a well known company) that has the potential for a lot of new business.
2) The job is to engrave 500 maple wood cutting boards that weigh 5lbs each
3) It takes 5 minutes and 20 seconds to engrave each board (you are not allowed to do the job faster......so it does not matter if you have a 30 watt Rabbit or a 130 watt Trotec). This time does not include loading and unloading. Regardless of the size of your bed, you can only engrave one at a time.
4) Customer supplies the boards......so your material cost is $0
5) Customer wants you to pick up and deliver the boards 40 minutes (one way) from your shop.....100 boards per week for five weeks.
6) Your shop is on the second floor.
7) No asking for additional clarification.

What would you charge? Would it be different if you were bidding on the job against 3 other companies? Would it be different is the customer was Joe's Automotive and Fishing Supply?

(hopefully, we can make this an ongoing series......I'll find it much more entertaining than a thread asking me to help identify a font).

[Keith Winter]

Interesting, a few other things I would factor in.

1 Who pays for damages?
2 Is the design the exact same on all or is there some variable text?
3 Salary (with benefits included) of person running the machines?
4 Do you have enough capacity to do this job too or will you have to turn down other jobs to meet their deadlines?
5 Will you have to pay any overtime to get this done?
6 What floor is their company on, can they accept pallets?
7 Can I do it all at once in one delivery to save back and forth?
8 Do you have a vehicle big enough to transport all these in at once?
9 Is it possible for them to switch to you for the supply too if you meet their supplier's cost? (I prefer to work on products I know vs some unknown supplier, also increases profit per sale)

[Steve Clarkson]

Obviously you didn't read #7.

[Scott Shepherd]

Well, since #7 is there, I'd no quote the job because there's not enough information.

[Dave Sheldrake]

Same as Scotty, not quoting on something I have no idea what my liabilities will be :)

[Keith Winter]

Lol I'd no quote then. I don't have enough info, apparently I don't even know the liabilities or my own input costs :)
Obviously you didn't read #7.

[Steve Clarkson]

Haha! You guys are taking this THAT serious? It was intended to be kind of a light-hearted learning experience for newbies.........I wasn't asking you to sign away your soul to the devil.

I tried to throw in a few twists (like carrying 1+ ton of wood up/down stairs that people might not factor into their pricing decision). I added #7 because I knew 1 or 15 people would send a laundry list of additional fact questions which I really didn't feel like making up answers to.

Or maybe you just don't want to show people how you calculate your pricing when you bid on a job......and that's fine too.

[Scott Shepherd]

Haha! You guys are taking this THAT serious? It was intended to be kind of a light-hearted learning experience for newbies.........I wasn't asking you to sign away your soul to the devil.

I tried to throw in a few twists (like carrying 1+ ton of wood up/down stairs that people might not factor into their pricing decision). I added #7 because I knew 1 or 15 people would send a laundry list of additional fact questions which I really didn't feel like making up answers to.

Or maybe you just don't want to show people how you calculate your pricing when you bid on a job......and that's fine too.

No problem playing the game, but you didn't give enough info to quote it. Are they all the same? Everyone different? If something changes is it something that can be done with print merge or is it so different, each one is keyed in manually?

Those things can can radically change the price, I think that was Keith's point. Define the job a little more and we can all play.

[Keith Outten]

Since the boards are 5 pounds each and you must deliver 100 per week thats 500 pounds to deliver on each trip. It should be very easy to make two trips from your delivery vehicle to the second floor using a heavy duty cart to deliver 50 at a time. I would guess about 30 minutes per trip using the building elevator so about one hour on the premises and 80 minutes of driving time or two hours and twenty minutes delivery labor cost total.

A) Add your delivery labor costs of 2 hours and twenty minutes per trip times five = eleven hours and thirty minutes.
B) Add the standard cost per mile (80 miles times 5 = 400 miles total) for the transportation costs.
C) Add your engraving charge for 5 minutes and 20 seconds.
Design time = zero, assuming all 500 boards are identical.
D) Add your company percentage profit margin.
E) Add your company percentage overhead.

The problem with this senerio is that labor, profit and overhead numbers will vary significantly from business to business and even more so based on physical location due to wage scales and the cost of living.
I have never been shy sharing my costs for jobs that I do in my shop but my East Coast rates are much lower than what you will find on the West Coast.

[Bert Kemp]

OK since I don't run a business and I'm gonna take this job on for some extra income, and I know absolutely nothing about real world pricing of jobs. I'm going to assume their all the same.OK
80 Min's driving time. I want $20 per hour plus Mileage which is impossible to guess but lets say 15 miles city traffic 40mins one way. .56 a mile cost $8.40 one way 16.80 RT 20 mins to run in grab a pallet jack load the boards into your truck (ramp roll right in) . 20 mins to unload you have a service elevator.

80 mnin drv time
40 min load and unload 2hr tot $40+16.80 milages. so 56.80 round up $60 pickup and deliver 100brds
now 7 min engraving each board includes load and unload $1 per min 7 bucks so so rough est 760 per 100 boards.

[Steve Clarkson]

OK.....let's assume all the same......a logo provided in a vector format by the customer.

Oh, and no elevator Keith!!!! Haha!

[Bert Kemp]

Steve your changing your own rule 2 people have made the decision there is an elevator come on guy



OK.....let's assume all the same......a logo provided in a vector format by the customer.

Oh, and no elevator Keith!!!! Haha!

[Bert Kemp]

Hey nobody will play if you changes rules mid flight, as it stood we have to make assumptions to each his own assumtions thus each pricing will be a lot different. But by you changing things then we that have participated will have to re do the job, NOT GONNA HAPPEN

so now no bid I guess



OK.....let's assume all the same......a logo provided in a vector format by the customer.

Oh, and no elevator Keith!!!! Haha!

[Dan Hintz]

Well, since #7 is there, I'd no quote the job because there's not enough information.


Hey nobody will play if you changes rules mid flight

This is exactly what customers do when you don't force them to provide enough information... at which point I nod towards Steve's answer and politely show them the door.

Though I do find it amusing the "game" is quickly turning into a real-world scenario ;)

[Ernie Balch]

I would tell them $6 each and they have to do the transportation or pay for shipping. Also they need to provide a couple extra in case of engraving problems.

[Jeff Belany]

Keith says: It should be very easy to make two trips from your delivery vehicle to the second floor using a heavy duty cart to deliver 50 at a time.

You're a better man than me (or younger and much stronger) if you can lug a 250 load on a cart up a flight of stairs. That's a tough pull for most people. I'm sure I could have done it 25-30 years ago.

I couldn't do a job like this. As a one man shop I could never take the time to make the pickup and deliveries unless I could do it after shop hours.

Jeff in northern Wisconsin

[Scott Marquez]

I would bid the job based on $60.00 per hour, that includes transportation and handling. I would then suggest that the customer could save some money by doing fewer deliveries, or transporting them himself.
The fact that he is a large National chain doesn't make me wet all over myself, it's actually a strike against him. Since I'm a small shop, I know that he will only use me at his convienance. Since I have limited resources and time I won't be able to handle a huge job, which means a large player will swoop in and get that job if it comes up. Larger companies aren't always quick to pay so I would also keep that in mind.
Scott

[Keith Outten]

Per the original post there was no mention of an elevator so I assumed their customer was in a commercial building and that means they have to have an elevator due to ADA laws. It was stated that the shop was on the second floor with no elevator which means it would not be much of a problem to slide the job down the stairs in a plywood box. If my shop was on the second floor I would probably have a way to handle material either from a dumbwaiter or a lifting device to get my machines up and down the stairs.

I'm old and work alone so I have lots of options when it comes to lifting and handling in my shop :) Starting with a tractor and pallet forks, hydraulic tables and an overhead electric winch. I rarely do any lifting over ten to twenty pounds. I also have a pallet jack in my shop so I can stack sign boxes on pallets and move them to the door where the tractor can pick them up and put them in my van. Twelve foot long sheets of Corian are brought to my shop door and placed on a panel saw to cut them down to workable sizes. I then place each piece on hydraulic tables so I can roll them over to the CNC Router and start machining plaques. Finished plaques go back on the hydraulic tables and are rolled over to the laser engraver. Every step in the process is planned to minimise manual lifting based on my experience with lots of commercial buildings and thousands of Corian signs. Wooden signs are so much lighter they are not a problem at all.

FWIW I rarely install signs in commercial buildings until the elevators are working. This is my company policy and I make sure my customer understands this by placing the following in my job quote, without an operating elevator the customer has to provide the labor necessary to move everything up and down the building.

I must have misinterpreted where the elevator was :)
.

[Graham Facer]

$10each based on $90/hour and 1 hour each way for pick up and drop off (if they want me to do it rather than a shipping company I round up). Loading up and down is just part of the business if its located on the second floor (my laser is too though I could forklift up a pallet if I wanted. Good workout and making money...

Actually its $9.60 but again - rounded up. If I was liable for errors - I'd allow 5% of the material cost on top and if I suspect the customer is picky - add 10% or more. Deposit of 50% and balance on delivery regardless of what they say their large chain's policies are.

But I'm not really in the engraving business but that's how I'd look at it.

[Kev Williams]

1) It's for an existing good customer with a national name brand
Let's just say Bed Bath & Beyond for giggles.
2) The job is to engrave 500 maple wood cutting boards that weigh 5lbs each
No problem
3) It takes 5 minutes and 20 seconds to engrave each board (you are not allowed to do the job faster......so it does not matter if you have a 30 watt Rabbit or a 130 watt Trotec). This time does not include loading and unloading. Regardless of the size of your bed, you can only engrave one at a time.
No problem
4) Customer supplies the boards......so your material cost is $0
No problem
5) Customer wants you to pick up and deliver the boards 40 minutes (one way) from your shop.....100 boards per week for five weeks.
It would be cheaper to pay a courier $25 each way than to pay my gopher, or for me to take time off to deliver...
6) Your shop is on the second floor.
Yes it is, actually.
7) No asking for additional clarification.
Don't need any
What would you charge?
$8 machine time plus $2 in/out, plus $50 for the courier per hundred comes to $15 each
Would it be different if you were bidding on the job against 3 other companies?
Don't matter to me if I get the job or not, I'm already working 17 hours every day!
Would it be different is the customer was Joe's Automotive and Fishing Supply?
Big Fat YES. I would discount based on the business. If Joe owns one store, he'll get a better deal than if he owns 5 stores, etc...

As for my liability, I always get graphic proofs okay'd, and on a job like this they'll get a first article to inspect before I continue...

As for if the engraving's the same, as long as they furnish a copy/paste-able list of the variables, no extra charge...

[Martin Boekers]

Don't be surprised if the game changes in the process, one week they will have 50 boards ready and want you to pick up the other 50 "tomorrow"
You need to define everthing or you can and will face additional costs,. You don't know how the boards are even packed.

You need to quote each part separately and have it written into the contract that there will be additional costs if these are not met. Say you go to
pick it up and the client doesn't have them packaged and ready for you... (Check and see what UPS would charge for pick up and delivery ;) )

Be careful when bidding on these type of jobs.... if you haven't dealt with the company before.... How will they pay you? When delivered each week, once a month?

Business is a learning experience... Good luck with this!

[Keith Winter]

You guys must have free labor working for you to be able to do these at $6 or $7 a board, or you're running yourself into the ground working 60-80 hour weeks (which I've been guilty of myself many times to finish a job :rolleyes:). 5 min 20 seconds per board + 2 minutes load machine and reload/stack would be 7.5 minutes per board. That's only 8 boards per hour. Let's say your worker is paid $14 a hour, average us benefits/admin cost per work is 30.7% for the private sector according to bls.gov, this tends to be higher with lower wage earners because the benefits and admin expenses make up a higher percentage of their salary. So let's just call a $14/hr worker true pay with benefits/admin expense factored in $20/hr for simplicity.

At $7 a board x 8 boards an hour you're only making $56 an hour. Subtract $20/hr for the employee running the machine $5 for all your electrical/lights/blower/ac etc so now you're down to potential profit of $31/hr. Subtract your machine rate. I think we'd all like to make a minimum $20/hr on the machine itself (I'd rather make triple or four times that per hour), which means on a $10k machine you'd have to run it 500 hours with no downtime or parts needing replaced, or 2000 hrs on a $40k machine just to pay it off and break even (and we all know you cannot run a machine and jobs 100% perfect all a time so this is optimistic). Factoring that in and your potential profit is now $31/hr - $20/hr = $11/hr for you. Congratulations you've just made $687.50 if everything goes perfect over the course of 1.5 weeks (62.5 hours to complete). Add in setup time, mistakes, defects, and any other things that might make the job take longer or cost more and you're probably at more like $587.50. At $587.50 every 1.5 weeks your annual profit for that machine for the entire year at this rate is $20,366 assuming everything goes perfect on every single job, and nothing ever breaks (very unlikely). If you are a sole shop that $20/hr for the worker goes to you, but we're also not even factoring all the other expenses that go into running a business, or other things that come up and take your time, so you cannot work and earn that extra $20/hr all the time.

My point is a $20,366 expected return if your machine and 1 worker is kept busy 100% of the time, no downtime, is really low for all the risks you take. It's never going to run 100% of the time, maybe 90% of the time in a really efficient shop, plus the wear and tear on the machine. Factor in all the real world stuff that happens and you're even lower, maybe making 2/3rd of that potential profit number. Just my two cents for what they are worth. :)

[Scott Shepherd]

You guys must have free labor working for you to be able to do these at $6 or $7 a board, or you're running yourself into the ground working 60-80 hour weeks (which I've been guilty of myself many times to finish a job :rolleyes:). 5 min 20 seconds per board + 2 minutes load machine and reload/stack would be 7.5 minutes per board. That's only 8 boards per hour. Let's say your worker is paid $14 a hour, average us benefits/admin cost per work is 30.7% for the private sector according to bls.gov, this tends to be higher with lower wage earners because the benefits and admin expenses make up a higher percentage of their salary. So let's just call a $14/hr worker true pay with benefits/admin expense factored in $20/hr for simplicity.

At $7 a board x 8 boards an hour you're only making $56 an hour. Subtract $20/hr for the employee running the machine $5 for all your electrical/lights/blower/ac etc so now you're down to potential profit of $31/hr. Subtract your machine rate. I think we'd all like to make a minimum $20/hr on the machine itself (I'd rather make triple or four times that per hour), which means on a $10k machine you'd have to run it 500 hours with no downtime or parts needing replaced, or 2000 hrs on a $40k machine just to pay it off and break even (and we all know you cannot run a machine and jobs 100% perfect all a time so this is optimistic). Factoring that in and your potential profit is now $31/hr - $20/hr = $11/hr for you. Congratulations you've just made $687.50 if everything goes perfect over the course of 1.5 weeks (62.5 hours to complete). Add in setup time, mistakes, defects, and any other things that might make the job take longer or cost more and you're probably at more like $587.50. At $587.50 every 1.5 weeks your annual profit for that machine for the entire year at this rate is $20,366 assuming everything goes perfect on every single job, and nothing ever breaks (very unlikely). If you are a sole shop that $20/hr for the worker goes to you, but we're also not even factoring all the other expenses that go into running a business, or other things that come up and take your time, so you cannot work and earn that extra $20/hr all the time.

My point is a $20,366 expected return if your machine and 1 worker is kept busy 100% of the time, no downtime, is really low for all the risks you take. It's never going to run 100% of the time, maybe 90% of the time in a really efficient shop, plus the wear and tear on the machine. Factor in all the real world stuff that happens and you're even lower, maybe making 2/3rd of that potential profit number. Just my two cents for what they are worth. :)

+1 - Fantastic post Keith. Someone paid attention in college :) One of the best posts I've seen on here in a long time regarding pricing.

[Keith Winter]

Thanks Steve! :D


+1 - Fantastic post Keith. Someone paid attention in college :) One of the best posts I've seen on here in a long time regarding pricing.

[Ross Moshinsky]

You guys must have free labor working for you to be able to do these at $6 or $7 a board, or you're running yourself into the ground working 60-80 hour weeks (which I've been guilty of myself many times to finish a job :rolleyes:). 5 min 20 seconds per board + 2 minutes load machine and reload/stack would be 7.5 minutes per board. That's only 8 boards per hour. Let's say your worker is paid $14 a hour, average us benefits/admin cost per work is 30.7% for the private sector according to bls.gov, this tends to be higher with lower wage earners because the benefits and admin expenses make up a higher percentage of their salary. So let's just call a $14/hr worker true pay with benefits/admin expense factored in $20/hr for simplicity.

At $7 a board x 8 boards an hour you're only making $56 an hour. Subtract $20/hr for the employee running the machine $5 for all your electrical/lights/blower/ac etc so now you're down to potential profit of $31/hr. Subtract your machine rate. I think we'd all like to make a minimum $20/hr on the machine itself (I'd rather make triple or four times that per hour), which means on a $10k machine you'd have to run it 500 hours with no downtime or parts needing replaced, or 2000 hrs on a $40k machine just to pay it off and break even (and we all know you cannot run a machine and jobs 100% perfect all a time so this is optimistic). Factoring that in and your potential profit is now $31/hr - $20/hr = $11/hr for you. Congratulations you've just made $687.50 if everything goes perfect over the course of 1.5 weeks (62.5 hours to complete). Add in setup time, mistakes, defects, and any other things that might make the job take longer or cost more and you're probably at more like $587.50. At $587.50 every 1.5 weeks your annual profit for that machine for the entire year at this rate is $20,366 assuming everything goes perfect on every single job, and nothing ever breaks (very unlikely). If you are a sole shop that $20/hr for the worker goes to you, but we're also not even factoring all the other expenses that go into running a business, or other things that come up and take your time, so you cannot work and earn that extra $20/hr all the time.

My point is a $20,366 expected return if your machine and 1 worker is kept busy 100% of the time, no downtime, is really low for all the risks you take. It's never going to run 100% of the time, maybe 90% of the time in a really efficient shop, plus the wear and tear on the machine. Factor in all the real world stuff that happens and you're even lower, maybe making 2/3rd of that potential profit number. Just my two cents for what they are worth. :)

But that only accounts for your business. Remember, people, lots of them on here, are running out of their homes and they are the only employee. So you have no operator cost (or you pay yourself to be operator), no real additional facility costs (how much does running a laser really effect your utilities bill at the end of the month?), anyone smart would have their insurance changed a bit to cover them, but that might add up to a few bucks a day. Run those numbers and it's not difficult to justify doing the job. Hell, if you're running a Chinese laser, this job pays could cover most of the initial investment.

I'd love to bill this job out at $15 a board. I don't think you can get that kind of money unless the company isn't shopping the job. I'm saying that living in one of the most expensive places to live in the US. I just got beat up the last month with people walking into my store asking to pay the lowest internet prices out there. It's 12 hours a week to knock off 100 boards without talking about delivery. It's an easy job to fit into just about any shop's production schedule. It's going to be bid at a low price because it's not a difficult job to do, based on the information given here.

You can preach about this stuff, and I'll agree with it, but there are other people just jamming out volume and as long as they're making money, they're happy. McDonalds, for example, is very happy dishing out $3.50 hamburgers because they pay their employees "nothing" and they sell a ton of them every week.

[Dan Hintz]

You guys must have free labor working for you to be able to do these at $6 or $7 a board, or you're running yourself into the ground working 60-80 hour weeks (which I've been guilty of myself many times to finish a job :rolleyes:). 5 min 20 seconds per board + 2 minutes load machine and reload/stack would be 7.5 minutes per board. That's only 8 boards per hour. Let's say your worker is paid $14 a hour, average us benefits/admin cost per work is 30.7% for the private sector according to bls.gov, this tends to be higher with lower wage earners because the benefits and admin expenses make up a higher percentage of their salary. So let's just call a $14/hr worker true pay with benefits/admin expense factored in $20/hr for simplicity.

At $7 a board x 8 boards an hour you're only making $56 an hour. Subtract $20/hr for the employee running the machine $5 for all your electrical/lights/blower/ac etc so now you're down to potential profit of $31/hr. Subtract your machine rate. I think we'd all like to make a minimum $20/hr on the machine itself (I'd rather make triple or four times that per hour), which means on a $10k machine you'd have to run it 500 hours with no downtime or parts needing replaced, or 2000 hrs on a $40k machine just to pay it off and break even (and we all know you cannot run a machine and jobs 100% perfect all a time so this is optimistic). Factoring that in and your potential profit is now $31/hr - $20/hr = $11/hr for you. Congratulations you've just made $687.50 if everything goes perfect over the course of 1.5 weeks (62.5 hours to complete). Add in setup time, mistakes, defects, and any other things that might make the job take longer or cost more and you're probably at more like $587.50. At $587.50 every 1.5 weeks your annual profit for that machine for the entire year at this rate is $20,366 assuming everything goes perfect on every single job, and nothing ever breaks (very unlikely). If you are a sole shop that $20/hr for the worker goes to you, but we're also not even factoring all the other expenses that go into running a business, or other things that come up and take your time, so you cannot work and earn that extra $20/hr all the time.

My point is a $20,366 expected return if your machine and 1 worker is kept busy 100% of the time, no downtime, is really low for all the risks you take. It's never going to run 100% of the time, maybe 90% of the time in a really efficient shop, plus the wear and tear on the machine. Factor in all the real world stuff that happens and you're even lower, maybe making 2/3rd of that potential profit number. Just my two cents for what they are worth. :)
There will ALWAYS be someone out there willing to take on that job... and at much lower prices, too.

The question then becomes... are YOU that person? ;)

[Keith Winter]

Absolutely Dan there is always someone willing to take the job for next to nothing. That same person is going to screw up the job on their eBay laser or be late to deliver, or whatever else because they are super stressed out and over worked because they aren't valuing their time properly. Once they screw up the job, or go out of business wondering why they never could pay bills on time. I'll gladly take it, but but not at $7 a board ;)

Ross if say you get that $20/hr since you have no staff, I'd figure you can only really work about 1/2 that time engraving. (Rest is spent doing all the business tasks, accounting, getting new jobs, working on your equipment/building, filing irs paperwork (a favorite of every business owner I know :)), marketing, etc.) So $20/hr x 50 weeks x 20 hours a week (this assumes you celebrate 10 days of holiday/vacation a year you don't work) = $20000 + 2/3 of $20,366 = $33,441.56 a year in income. Not horrible, but not great either. Not going to put your kids through college with that, and not much reward for all the risks you take as a business owner. Is it really worth it being in business at that point you've got to ask yourself?

[Jerome Stanek]

2 minutes to load and unload seems like you must be disabled I cut plexi units and it takes me about 19 seconds to load and unload. I have a jig set up and the cuts are within 1/16 of each edge.

[Keith Winter]

Keep in mind I'm only pricing the scenario given with the $ per board posters gave. My intent is not to make anyone feel bad, rather I'm just breaking down factors and numbers for the group in the manner I would for any large job.

$ per year etc. are based on this being the job you do every day of the year, I realize some jobs are more profitable than others, so your actual income would be different, unless you priced every job this way at the same margin. ;)

[Ross Moshinsky]

Absolutely Dan there is always someone willing to take the job for next to nothing. That same person is going to screw up the job on their eBay laser or be late to deliver, or whatever else because they are super stressed out and over worked because they aren't valuing their time properly. Once they screw up the job, or go out of business wondering why they never could pay bills on time. I'll gladly take it, but but not at $7 a board ;)

Ross if say you get that $20/hr since you have no staff, I'd figure you can only really work about 1/2 that time engraving. (Rest is spent doing all the business tasks, accounting, getting new jobs, working on your equipment/building, filing irs paperwork (a favorite of every business owner I know :)), marketing, etc.) So $20/hr x 50 weeks x 20 hours a week (this assumes you celebrate 10 days of holiday/vacation a year you don't work) = $20000 + 2/3 of $20,366 = $33,441.56 a year in income. Not horrible, but not great either. Not going to put your kids through college with that, and not much reward for all the risks you take as a business owner. Is it really worth it being in business at that point you've got to ask yourself?

Or you could say while the machine is running you're doing all that admin work at the same time. Assuming you can do 2 boards at once, you're looking at 11 mins per cycle to do other stuff. As I said, I don't disagree with your assessment, I just think it can be seen as incomplete.

The other thing to mention is, rate per hour is very rarely consistent. It's very common to have a very profitable job one day and a less profitable job the next. You want it to average out where you're making your goal rate, whatever that may be. Why do the less profitable job? Why not stick to just very profitable work? Well, if the choice is between no money and some money, which is better? That's why I believe this job would bid out at $6-8 a pop. Ignoring the delivery, it's a low burden job that even under worst case scenarios situations is profitable and low risk. My head says price it at at least $12 each but I also think someone else is getting the job because they quoted it out at $8.

[Scott Shepherd]

My head says price it at at least $12 each but I also think someone else is getting the job because they quoted it out at $8.

I'd be right in that area too Ross. At $8, I'd let someone else have it. If I want to make $30,000 a year, I'll get a job working for someone else.

[Keith Winter]

2 minutes to load and unload seems like you must be disabled I cut plexi units and it takes me about 19 seconds to load and unload. I have a jig set up and the cuts are within 1/16 of each edge.

No need to call me disabled Jerome. I would love to hire someone like you if you can load, unload, stack, inspect, reque the job, start it up again, etc. in 19 seconds. No doubt you can, I've just never seen a staff member move that fast every time the laser goes off in a real life scenario.... This was also factoring the slack. Laser stops I doubt you 100% of the time are standing right next to it pouncing on the lid to open it at the second it finishes. My goal here is to be realistic, not best case.

[Keith Winter]

See post of mine right above yours Ross :p I was factoring on the scenario only.



The other thing to mention is, rate per hour is very rarely consistent. It's very common to have a very profitable job one day and a less profitable job the next. You want it to average out where you're making your goal rate, whatever that may be. Why do the less profitable job? Why not stick to just very profitable work? Well, if the choice is between no money and some money, which is better? That's why I believe this job would bid out at $6-8 a pop. Ignoring the delivery, it's a low burden job that even under worst case scenarios situations is profitable and low risk. My head says price it at at least $12 each but I also think someone else is getting the job because they quoted it out at $8.

[Ernie Balch]

This is a funny thread, some machine owners appear to be stressed out over engraving prices. The overhead of rent, employees and expensive machines must be weighing heavily on business owners.

Some of us older guys have no bills, no employees and have the luxury of only working when we feel like it. Being in a commercial space on an upper floor does not compute for me. Likewise running around town in my van delivering parts is not going to happen.

As for screwing up jobs with my Chinese laser, don't count on it, I have 26 years of laser micromachining experience. As a process engineer I have purchased and set up production on 6 different custom built UV laser galvo machines ranging in price from $500k to $2M each.

Recently I have been thinking about getting a galvo system so I can spend more time fishing.

[Jerome Stanek]

No need to call me disabled Jerome. I would love to hire someone like you if you can load, unload, stack, inspect, reque the job, start it up again, etc. in 19 seconds. No doubt you can, I've just never seen a staff member move that fast every time the laser goes off in a real life scenario.... This was also factoring the slack. Laser stops I doubt you 100% of the time are standing right next to it pouncing on the lid to open it at the second it finishes. My goal here is to be realistic, not best case.

I have a work table right beside my laser it takes 3 minutes to cut one and while that one is being cut I peel the mask off and put the mounting tape on the one that is getting ready to cut and inspect the one that just came off the laser. I also make the blanks on my cnc while this is going on. Cnc is to the side and I am near where I stand and one of the Estops is right there. I worked with a handicapped person that it took about 3 times longer than everyone else but he was steady.

[Steve Clarkson]

Ahhhh......finally........this is the type of discussion I was hoping to promote.

Now, since my facts and assumptions were apparently not detailed enough.......who wants to start a new thread with a different pricing scenario?

[Scott Shepherd]

How about your input on pricing the job Steve, since you started the topic?

[Kev Williams]

You guys must have free labor working for you to be able to do these at $6 or $7 a board, or you're running yourself into the ground working 60-80 hour weeks (which I've been guilty of myself many times to finish a job :rolleyes:). 5 min 20 seconds per board + 2 minutes load machine and reload/stack would be 7.5 minutes per board. That's only 8 boards per hour. Let's say your worker is paid $14 a hour, average us benefits/admin cost per work is 30.7% for the private sector according to bls.gov, this tends to be higher with lower wage earners because the benefits and admin expenses make up a higher percentage of their salary. So let's just call a $14/hr worker true pay with benefits/admin expense factored in $20/hr for simplicity.

At $7 a board x 8 boards an hour you're only making $56 an hour. Subtract $20/hr for the employee running the machine $5 for all your electrical/lights/blower/ac etc so now you're down to potential profit of $31/hr. Subtract your machine rate. I think we'd all like to make a minimum $20/hr on the machine itself (I'd rather make triple or four times that per hour), which means on a $10k machine you'd have to run it 500 hours with no downtime or parts needing replaced, or 2000 hrs on a $40k machine just to pay it off and break even (and we all know you cannot run a machine and jobs 100% perfect all a time so this is optimistic). Factoring that in and your potential profit is now $31/hr - $20/hr = $11/hr for you. Congratulations you've just made $687.50 if everything goes perfect over the course of 1.5 weeks (62.5 hours to complete). Add in setup time, mistakes, defects, and any other things that might make the job take longer or cost more and you're probably at more like $587.50. At $587.50 every 1.5 weeks your annual profit for that machine for the entire year at this rate is $20,366 assuming everything goes perfect on every single job, and nothing ever breaks (very unlikely). If you are a sole shop that $20/hr for the worker goes to you, but we're also not even factoring all the other expenses that go into running a business, or other things that come up and take your time, so you cannot work and earn that extra $20/hr all the time.

My point is a $20,366 expected return if your machine and 1 worker is kept busy 100% of the time, no downtime, is really low for all the risks you take. It's never going to run 100% of the time, maybe 90% of the time in a really efficient shop, plus the wear and tear on the machine. Factor in all the real world stuff that happens and you're even lower, maybe making 2/3rd of that potential profit number. Just my two cents for what they are worth. :)

Glad I'm just a basement business, that's WAY too much to think about. To echo what Ross said a bit... What worker(s)? I have a BIL who works 6 hours a day, all else is up to me (and sometimes the wife). I would do this job myself. And-- in between the 5 minutes 20 seconds each board runs I would likely be keeping other machines busy, or getting jobs set up for the other machines. My bid was $8 per 5:20 strictly machine time, plus $2 'incidental' time between parts.

My math works out like this: 60 minutes / 5.33 minutes each = 11.25 parts per hour, X $8 each = $90 per hour machine time. And I added in $2 for an estimated minute and a half in/out time (probably less) so regardless, I'm still making $90 an hour on this job. Courier is break-even. That's how I arrived at my quote. If it were for Joes car & fish shack, I might be closer to $75 an hour. It all depends my opinion of Joe's net worth. :)

[Steve Clarkson]

Good point Steve!

I would look at this with three components.....engraving, carrying and shipping. I normally try to get $2 per minute (40 hrs/wk = $250K), however, for a GOOD commercial customer I have no problem dropping that down to $1/minute since I believe you need to be competitive to keep a large commercial account. If not, they will be pressured by their stakeholders to put it out to bid (they will always be able to find someone cheaper) or even worse, simply buy their own laser with petty cash. I would also think that swapping one board in for another and pushing the button would only take 10 seconds....so 5 min 30 sec would be $5.50 for engraving (100 boards = $550/10hrs = $55/hr). For carrying, I'm too old and fat to carry 500lbs up and down a flight of stairs......so I would hire a high school kid (I happen to own two of them) to do it for $0.25/board/trip.......so $0.50 per board (100 boards = $50 for ten minutes of work). Lastly, for delivery I would definitely do it myself rather than hiring someone because it would give me crucial face-to-face time with an important customer. They would also be happy about this because they could never ship it inexpensively if they are paying union wages. I would charge the standard mileage rate times two (call it $1.00 per mile) plus my hourly profit for time away from the shop (call it $60/hr).....so 80 minutes round trip (80 miles * $1 = $80 + $60/hr * 1.5 hours = $90) would be $170. So all in, for 100 boards, I would be at $7.70 per board ($550 + $50 + $170 = $770) or $3,850 for 500 boards.

I would much rather have one $4,000 job rather than forty $100 jobs (and I highly doubt that you are going to get many $100 jobs that only take 5 min 30 sec to engrave).

However, if this was a new customer or Joe's Bait and Tackle, I would definitely be at $2/min or $13.20 per board ($1100 + $50 + $170 = $1,320).

Like I said at the very beginning......if you charge too little, you will go out of business and if you charge too much, you will go out of business. So we all need to find our sweet spot.

[Bert Kemp]

You and Kev think opposite on Big Guy Little guy :D and I find out that even tho I know nothing about business and pricing jobs I'm still in the ball park with my bid .



Good point Steve!

I would look at this with three components.....engraving, carrying and shipping. I normally try to get $2 per minute (40 hrs/wk = $250K), however, for a GOOD commercial customer I have no problem dropping that down to $1/minute since I believe you need to be competitive to keep a large commercial account. If not, they will be pressured by their stakeholders to put it out to bid (they will always be able to find someone cheaper) or even worse, simply buy their own laser with petty cash. I would also think that swapping one board in for another and pushing the button would only take 10 seconds....so 5 min 30 sec would be $5.50 for engraving (100 boards = $550/10hrs = $55/hr). For carrying, I'm too old and fat to carry 500lbs up and down a flight of stairs......so I would hire a high school kid (I happen to own two of them) to do it for $0.25/board/trip.......so $0.50 per board (100 boards = $50 for ten minutes of work). Lastly, for delivery I would definitely do it myself rather than hiring someone because it would give me crucial face-to-face time with an important customer. They would also be happy about this because they could never ship it inexpensively if they are paying union wages. I would charge the standard mileage rate times two (call it $1.00 per mile) plus my hourly profit for time away from the shop (call it $60/hr).....so 80 minutes round trip (80 miles * $1 = $80 + $60/hr * 1.5 hours = $90) would be $170. So all in, for 100 boards, I would be at $7.70 per board ($550 + $50 + $170 = $770) or $3,850 for 500 boards.

I would much rather have one $4,000 job rather than forty $100 jobs (and I highly doubt that you are going to get many $100 jobs that only take 5 min 30 sec to engrave).

However, if this was a new customer or Joe's Bait and Tackle, I would definitely be at $2/min or $13.20 per board ($1100 + $50 + $170 = $1,320).

Like I said at the very beginning......if you charge too little, you will go out of business and if you charge too much, you will go out of business. So we all need to find our sweet spot.

[Kev Williams]

I would much rather have one $4,000 job rather than forty $100 jobs (and I highly doubt that you are going to get many $100 jobs that only take 5 min 30 sec to engrave)
Whenever you get 100 $40 jobs or 40 $100 jobs and you don't want 'em, call me! And in trade I'll send you any $4000 jobs I get. Personally, I can't stand big jobs. They take days to finish, they get in the way of the $100 and $200 jobs (many of which I can do in a few minutes), and I get bored stupid before they're complete...emphasis on 'stupid'. I'm nearing the end of a $3000 or so job right now, and this is when stupid mistakes get made- like forgetting to press the 'next job' button just ONCE, and there goes a $35 part. I ALMOST did that but caught the pause button in time!

Differn't strokes... :)

[Scott Shepherd]

However, if this was a new customer or Joe's Bait and Tackle, I would definitely be at $2/min or $13.20 per board ($1100 + $50 + $170 = $1,320).



Why is your price different for the same work, different customer? When someone calls, do you ask them 20 questions to determine which quote they get? If someone calls us for a quote, we don't ask questions about their business structure or if they have shareholders. The price is the price, big or small. I can't imagine having to change my pricing and remember who I'm supposed to charge what rate every time the phone rings. Big companies often don't like to pay for 30-60 days, so that's something to be aware of as well. It's all great to do $4,000 worth of work, but if they won't pay for 60 days, then you've become their bank and loaned them $4,000 for 2 months for free.

My official answer is we would charge what the market would stand. First questions I'd ask them would be "What's your budget" and "Is this something new, or have you had them done before?" to start getting important information about the project.

We aren't, and don't want to be, known for being the cheapest guy in town.

[Ross Moshinsky]

Why is your price different for the same work, different customer? When someone calls, do you ask them 20 questions to determine which quote they get? If someone calls us for a quote, we don't ask questions about their business structure or if they have shareholders. The price is the price, big or small. I can't imagine having to change my pricing and remember who I'm supposed to charge what rate every time the phone rings. Big companies often don't like to pay for 30-60 days, so that's something to be aware of as well. It's all great to do $4,000 worth of work, but if they won't pay for 60 days, then you've become their bank and loaned them $4,000 for 2 months for free.

My official answer is we would charge what the market would stand. First questions I'd ask them would be "What's your budget" and "Is this something new, or have you had them done before?" to start getting important information about the project.

We aren't, and don't want to be, known for being the cheapest guy in town.

We literally ask this question all day long.

[Scott Shepherd]

We recently stopped working for a customer because they changed their company policy to pay in 90 days. They'll get nothing from us until that changes. We're a sign company, not a bank.

[Keith Winter]

Call me when you get that $4000 job. Unless it's engraving boards at $8 a board :p. Seriously though if the job is big and you don't have the man power IM me, we'll work something out.

Steve and Ross we always ask those same questions you too, that's a good practice. Typically our rate changes based on volume, but we aren't the cheapest guy you're going to find, but the job is going to get done right and on time. Learned a long time go that people who just want the cheapest deal are the worst to work with. Larger orders, or customers who order multiples and we think will repeat over and over, we will give a better price, that's just good business in my book. Guy who comes in and wants his logo on 1 cutting board I'm going to turn him away, what I'd have to charge him would not make it worth either of our time. Typically you've got to get into 12-24 pieces depending on the item or more if you want a custom design or artwork and me to bid the job. If you want just text then I would lower that bar, that's pretty easy to do. The lady who has the 1 cutting board her grandma gave her and wants a special design on it inevitably is the same person who is going to be standing over my shoulder critiquing everything I do, blowing up my phone, and 50% of the time no matter how good you do it she's A) either going to think it cost too much or B) be unhappy because they thought the design they drew up would look different on wood. Those are always the hardest customers to please I've found.

As to the scenario, I think the lack of starting data is a large part of the issue in the varying prices. Some guys are looking at it like hey it's summer and I'm slow right now and I have my machine only running part of a day, so I'd bid it low right now. Ask the same group who bid it low in a peak season when it's still just them running the shop and the laser is already maxed out and I bet they'd bid it higher. The shop owners on the other hand have a lot more expenses to figure out including labor. However I would think most of the shop owners on here would have a more consistent price. Myself at least, I'm looking at it NOT like hey my laser isn't busy this week. I'm more looking at it like here are all my expenses, my building, my staff, my laser, etc, and no matter if we are running at 90% or 50% this is how I would bid it. I wouldn't cut my rate just because I'm not busy this month, because enviably that customer is going to pop back up during a busy time and say "hey I'm ready now" and I will have shot myself in the foot. At that point I will have to run his job at next to nothing, and likely have to turn down better paying work.



Whenever you get 100 $40 jobs or 40 $100 jobs and you don't want 'em, call me! And in trade I'll send you any $4000 jobs I get. Personally, I can't stand big jobs. They take days to finish, they get in the way of the $100 and $200 jobs (many of which I can do in a few minutes), and I get bored stupid before they're complete...emphasis on 'stupid'. I'm nearing the end of a $3000 or so job right now, and this is when stupid mistakes get made- like forgetting to press the 'next job' button just ONCE, and there goes a $35 part. I ALMOST did that but caught the pause button in time!

Differn't strokes... :)

[Kev Williams]

Why is your price different for the same work, different customer?
Because I'm a small business, so I'm familiar with the advantages and disadvantages of small businesses. Some guy trying to market a new idea and needs some parts engraved for his first articles, I'll charge the bare minimum to cover my time, usually no setup charges. Many times I'll do first articles for free. Many of these companies never get off the ground, but many do. And for the most part, those that do get off the ground usually end up getting their parts marked in other ways, or buy their own equipment to do it themselves. Simply due to the fact that my normal prices are too high for high production parts.

So what do I get for cheap work and free samples? Priceless word of mouth advertising. Whether these guys falter or flourish, they never forget that I helped them out. And if they, or someone they know down the road needs some words or logos or graphics put on something, I'm who they remember. Which is why we have never had to advertise, and I'm rarely if ever low on work to do. Years ago I built a 'picture information' website. Almost 2 years ago I took it down. Just 2 days ago I had the online yellow pages remove my name from their list. I can't handle the additional business.

But for bigger established businesses, I'm not afraid to charge 'market rate', even tho I'm still below market rate usually. Case in point, my biggest customer; I charge them less than half what they were paying their own sister company in Austria to build their control panels. They're done right, look great, I get them done on time, I fix any mistakes without question... they will NEVER bother looking elsewhere for a lower price. And I still average over $180 an hour profit on their jobs. Yes I could charge more, but then they MIGHT go looking elsewhere. I know this to be true because 20 years ago, they did. 18 years ago, they came back.

As for customers changing their pay policies to 90 days, no problem for me. If they PAY in 90 days, that's better than having to send 2nd and 3rd and 4th invoices to some of my net 30 customers who're always late. Many years ago one of my long-time customers did the 90 day thing, to help with cash flow issues. Yeah it seemed inconvenient and ballsy, but I wasn't about to turn down their money. And for the past 5 years they've been my 2nd or 3rd best customer, and they're still on net 90. Good money, and they're never late to pay. While my receivables isn't gaining interest (which is offset 6-fold by CC fees anyway), it's still 'money in the bank'. :)

[Keith Winter]

But for bigger established businesses, I'm not afraid to charge 'market rate', even tho I'm still below market rate usually. Case in point, my biggest customer; I charge them less than half what they were paying their own sister company in Austria to build their control panels. They're done right, look great, I get them done on time, I fix any mistakes without question... they will NEVER bother looking elsewhere for a lower price. And I still average over $180 an hour profit on their jobs. Yes I could charge more, but then they MIGHT go looking elsewhere. I know this to be true because 20 years ago, they did. 18 years ago, they came back.


This is EXACTLY why I wouldn't drop my prices to the floor to get a job. Many times, the two jobs come in around the same time and I'd have to choose between the profitable job or the mega corp job that might repeat over and over. One way or another you're either going to burn a bridge if you say sorry I cannot do that job now, or you're going to break even or loose money on the job you bid low, because you're going to have to hire/pay someone overtime to work a midnight shift on the laser for 60 hours to get it done.

[Joel Ifill]

flat rate around 8-10 per board, flat rate $50 for each pickup, or I would just quote a local delivery service because my time is too important to be stuck in LA traffic for 40 minutes once a week, and I don't have any employees that I want doing that either.

[Scott Shepherd]

Well, there you go Steve, the answer is :

Anywhere from $5-15 per board, hire a delivery driver to deliver them, or take them yourself. Charge a flat rate fee to deliver them, unless you'd rather charge by the mile plus your time. Use them as fill work unless you're busy, if it's a small/medium size company, charge one price, if it's a larger company, charge another price, you can change them out in 5 seconds to 2 minutes each, and depending on the payment terms, you might or might not do the job :D

Whew.....I'm glad we solved that riddle :p

[Bert Kemp]

If it was simple what would it be. 500 boards all the same they supplied perfect art work and file, they delivered to your door and they pick them up at your door. and you have 30 days to complete the job. Now what do you charge.

[Keith Winter]

If it was simple what would it be. 500 boards all the same they supplied perfect art work and file, they delivered to your door and they pick them up at your door. and you have 30 days to complete the job. Now what do you charge.

Do I have Employees or not?
Do I work from home or office?
How full are my lasers on average 50%? 80%?
Who pays for mistakes me or the client?
Are they a big client, and is there likely potential for repeat business?

[Bert Kemp]

Answer your own questions and price job

[Keith Winter]

Answer your own questions and price job

Very very rough estimate since the data is better but not complete. Somewhere in the neighborhood of $12-$16 a board if they are covering damages, engraving is all the same, and they are likely a potential repeat customer. This assumes you have the excess capacity and don't have to bump any other jobs.

[Bert Kemp]

The Data is complete Use what I gave you and adjust for you. Your trying to figure out all the variables for everyone then come up with a price for everyone you have to do it for you and your situation. Mine and everyone else will be3 different because were all in different situations.

[Jeffrey Dewing]

$30 bucks dry run??? Then we will see if it works out?

[Bert Kemp]

Holy smoke I'm not comin to you. gessh your in NH that automatically drops it down to $7 a board. dry run what doesa tat mean


$30 bucks dry run??? Then we will see if it works out?

[Jeffrey Dewing]

:eek:$7 dollars a pc. to start with... then see where it goes. The first 100 = $700.00. Shipping is really my only issue. I would prob. charge $150.00 dollars a week for pick up and delivery. That is $850.00 x 5 =$4250.00 and my machine would be running about 50 hours. If I could run my machine every week like that I'd make 221,000 dollars a year! I'm really new at this as this is a very new business for me, These figures are low. After reading Keith Winters posts I have to rethink all this! It's all good food for thought.

[Keith Winter]

Bert I thought you were asking for everyone to use the same variables based upon you providing more info, that's why I asked for them. Shame on me for asking for more details I guess? :confused:

If you want us to all use different variables that's fine too, just be clear in what you want and relax. :o


The Data is complete Use what I gave you and adjust for you. Your trying to figure out all the variables for everyone then come up with a price for everyone you have to do it for you and your situation. Mine and everyone else will be3 different because were all in different situations.

[Scott Shepherd]

Just a guess here, but Keith's got 2 Trotec Speedy 300's, and 1 Trotec Speedy 400, along with a couple of rotary engravers, and a number of employees that keep the machines running every day, and I seriously doubt he's misunderstanding how to price things. My guess is he's pricing them a lot more accurately than many others, who aren't doing a fraction of the volume or revenue he's doing.

Maybe there's a lot to learn from his advice on pricing.

[Bert Kemp]

The reason you have to use your own variables is because each persons situation is unique to them. For me I'd be perfectly happy doing that job at $7 a board. At 8 min a board that includes 5+min for engraving and 2+min load and unload or 67 hours total time or 17 hours a week for 4 weeks and $3500 or $42000 a year. For me it works great.
I totally understand it won't work for someone who has a shop, pays employees, pays Ins. and all the other expenses that come with owning and running a business. But hey When I was a working stiff I didn't earn 42k a year

OH Hey Jeff I lived and worked in NH for 45 years so if you can get a job that pays you 42K a year awesome dude.

In 2013 New Hampshire was the state with the fifth highest per capita income (https://en.wikipedia.org/wiki/Per_capita_income) in the United States of America (https://en.wikipedia.org/wiki/United_States_of_America), at $33,269 as of the 2013 American Community Survey (https://en.wikipedia.org/wiki/American_Community_Survey) 1-year estimates.[1] (https://en.wikipedia.org/wiki/New_Hampshire_locations_by_per_capita_income#cite_ note-1)

[Scott Shepherd]

Yeah, I don't agree with that at all Bert. Items and services have value. The markets determine the value. I don't follow the train of thinking that if you're not doing anything, you should charge less. Some people do, I'm just not one of them. Our services have value. That value doesn't cheapen depending on our financial situation. Starbucks custom makes every drink that comes through. Their product has a value. They don't lower the prices when there's no line, or raise the prices when the line is out the door. If they have a great quarter, they don't lower the price of their products.

There's the example of people having a slow machine. Let's say you have a machine that takes 5 minutes to do this job and you get $5 for it. If you go buy a faster machine and spend $30,000 to get it, but it does it in 2 1/2 minutes, do you lower your price to $2.50? Then you get a faster machine, you lower it to $1.25? Or you buy 2 more cheaper machines. Do you lower it to $1 each? No, you profit from your increase in productivity. Otherwise, there would be no incentive to spend money on modern, faster machines. If I take $1000 in machine time to make a sign, but then buy a machine that does it in 1/2 the time, I'm certainly not going to lower my price to $500. That would defeat the purpose of buying a faster machine. The faster machine lets me double my profits, not maintain them at the same level.

Some people don't look at it the same way I (and others) do, but I still believe that all products and services have a market value and that's what the price should be.

You might find out that the market value for these imaginary plaques is $23 each. If that's the market value for them, and what their budget is set for and has been for years, then you just left a pile of money on the table at $5 each. You could have been making 4 times the money in the same time frame, which, to me, is a good thing.

[Jerome Stanek]

When I was bidding drug store installs I would give them a break if I knew that I only had that store for the next month as I would have to still pay my help. I would rather make a little less money than no money. Just like when we would be out of town and some motels would give us a break as they still had to pay the help and there wasn't anyone staying there. A couple of the clerks said not to let anyone walk out because of the motel next door is cheaper. I did get some great rates that way. had a couple tell me if you find it cheaper they will beat the price.

[Neil Pabia]

This one is easy, I would just load them up and bring them to my shop in CT which has 2 steps down and the truck is less than ten feet from the door. My laser is about fifteen feet in from the door so this is getting real easy. Now, I would do it for $6 each as long as you bring them here and I could have them done in two days (early in the week) for you (one day if you want to pay more). We will even load and unload for you.:)

[Keith Winter]

Bam! And just like that Bert is no longer the low bid! Let's see how long this takes to race to the bottom. :p


This one is easy, I would just load them up and bring them to my shop in CT which has 2 steps down and the truck is less than ten feet from the door. My laser is about fifteen feet in from the door so this is getting real easy. Now, I would do it for $6 each as long as you bring them here and I could have them done in two days (early in the week) for you (one day if you want to pay more). We will even load and unload for you.:)


Wise words Scott! Kirk, Bones, and I approve.

316648316649





Yeah, I don't agree with that at all Bert. Items and services have value. The markets determine the value. I don't follow the train of thinking that if you're not doing anything, you should charge less. Some people do, I'm just not one of them. Our services have value. That value doesn't cheapen depending on our financial situation. Starbucks custom makes every drink that comes through. Their product has a value. They don't lower the prices when there's no line, or raise the prices when the line is out the door. If they have a great quarter, they don't lower the price of their products.

There's the example of people having a slow machine. Let's say you have a machine that takes 5 minutes to do this job and you get $5 for it. If you go buy a faster machine and spend $30,000 to get it, but it does it in 2 1/2 minutes, do you lower your price to $2.50? Then you get a faster machine, you lower it to $1.25? Or you buy 2 more cheaper machines. Do you lower it to $1 each? No, you profit from your increase in productivity. Otherwise, there would be no incentive to spend money on modern, faster machines. If I take $1000 in machine time to make a sign, but then buy a machine that does it in 1/2 the time, I'm certainly not going to lower my price to $500. That would defeat the purpose of buying a faster machine. The faster machine lets me double my profits, not maintain them at the same level.

Some people don't look at it the same way I (and others) do, but I still believe that all products and services have a market value and that's what the price should be.

You might find out that the market value for these imaginary plaques is $23 each. If that's the market value for them, and what their budget is set for and has been for years, then you just left a pile of money on the table at $5 each. You could have been making 4 times the money in the same time frame, which, to me, is a good thing.

[Mike Null]

It's fairly easy to see who's playing and who's trying to run a business.

[Kev Williams]

Neil's bid may be lowest, but only with stipulations! ("as long as...")

But that's fine! "Businesses" and "small businesses" simply can't do business the same way. You guys with big shops and employees and meetings and accountants and lawyers and tax advisers and all that that entails have to hold fast to your rules and pricing. Totally understood.

Us 'one-man-show' guys who are all-of-the-above, and who consider nearly every regular customer who picks up and drops off as "friends" (what percentage of YOUR customers bring you gifts around the holidays? ;) ), we have some wiggle room to make adjustments depending on the situation.

And I'll always figure out a way to work the work in. Since my dad bought a Scripta 3D pantograph and a business license in 1966, we have never turned a single job away.

[Ross Moshinsky]

This site illustrates what's going on in the engraving industry. You have "real businesses", "home businesses", and "hobbiest businesses". As a result, you see different thinking, different situations, and different pricing practices. It's very easy for a home business to charge less. They don't have any real additional fixed costs. As a result, they can easily afford to charge less. Imagine if rent, utlities, ect all went away or went down to essentially 0. It makes bidding lower on certain jobs easier because you have that flexibility. Home businesses often have to charge less, unless people don't know you operate out of your home. Home businesses, in general, have a horrible reputation for being unreliable. How many B&M stores get customers coming in with a job because their guy dropped the ball or couldn't handle the job?

The other thing that's going on in the awards industry is there are a few big companies that have really dropped the price on everything. They have low cost employees ($10-15/hr) and are making their money on numbers. They don't want 10 plaques where they make good money. They want 100 plaques and they'll make okay money on each. I contacted one of the companies last month out of curiosity if they could do a very rush job. Their answer was no problem and the price was the same. Who am I to tell them how to run their business? I don't know if they're actually making a profit but I do know they've expanded their business 3 times over the last 10 years. They could be in huge debt with their fingers crossed that they'll keep growing and pay off their debt in a few years.

[Bert Kemp]

So Scott you have an engraving business in Rural Louisiana and a local store big box or not wants you to do this job you charge $12 a board.


So Scott you have an engraving business in Beverly Hills California and a local store big box or not wants you to do this job you charge $12 a board.

If you tell me yea on both I wouldn't believe you. You'd go out of business in both place's

Everything I read here in this forum and other places I see a term called what the market will bear and if your overpriced you loose and if your under priced you loose.

[Bert Kemp]

My point exactly Scotts statement doesn't hold water. If he doesn't adjust his prices for what the market will bear he will lose. He's getting 12 today but whats his name is doing it for 11 so who gets the job.



This site illustrates what's going on in the engraving industry. You have "real businesses", "home businesses", and "hobbiest businesses". As a result, you see different thinking, different situations, and different pricing practices. It's very easy for a home business to charge less. They don't have any real additional fixed costs. As a result, they can easily afford to charge less. Imagine if rent, utlities, ect all went away or went down to essentially 0. It makes bidding lower on certain jobs easier because you have that flexibility. Home businesses often have to charge less, unless people don't know you operate out of your home. Home businesses, in general, have a horrible reputation for being unreliable. How many B&M stores get customers coming in with a job because their guy dropped the ball or couldn't handle the job?

The other thing that's going on in the awards industry is there are a few big companies that have really dropped the price on everything. They have low cost employees ($10-15/hr) and are making their money on numbers. They don't want 10 plaques where they make good money. They want 100 plaques and they'll make okay money on each. I contacted one of the companies last month out of curiosity if they could do a very rush job. Their answer was no problem and the price was the same. Who am I to tell them how to run their business? I don't know if they're actually making a profit but I do know they've expanded their business 3 times over the last 10 years. They could be in huge debt with their fingers crossed that they'll keep growing and pay off their debt in a few years.

[Ross Moshinsky]

My point exactly Scotts statement doesn't hold water. If he doesn't adjust his prices for what the market will bear he will lose. He's getting 12 today but whats his name is doing it for 11 so who gets the job.

That's actually not what I said. If I had the choice of dealing with someone out of their garage pricing lower vs a business with a reputation that is working regularly but charging more, I'm more inclined to pick the regular business. Not always, but if it's serious business where I need something done right, I'm not taking a risk. I've had little luck going with the guy who thinks he can price lower because of all the reasons listed in this thread. They either don't know what they're doing, do a bad job because they think they can get away with it, a flake, or a million other things. You can't be those things and afford $6000/mo in fixed costs. You'll go bankrupt or go out of business in a few months if you are. Being able to make rent every month and pay your employees is a decent test to see if a business has a clue what they're doing.

Also I have no clue what the company I'm talking about in the awards industry is doing. They could be debt free making money hand over fist. I know their material costs, within 5-10%, but the rest is a complete unknown to me. They could be growing but driving themselves out of business or they could be growing and being insanely profitable or somewhere in-between.

My point is, there are a lot of different people out there and they can charge different amounts for different reasons.

[Keith Winter]

My point exactly Scotts statement doesn't hold water. If he doesn't adjust his prices for what the market will bear he will lose. He's getting 12 today but whats his name is doing it for 11 so who gets the job.

This is so incredibly inaccurate it's hard to put into words. Open any college text book and the first thing they will tell you is you cannot win on price alone which is what you are suggesting. It's ALWAYS a race to the bottom. I recently completed certification in Business Strategy from Cornell University. The first thing they taught on there, just like they taught in college, was you cannot compete on price alone unless you are one of the big boys in the industry who can weather the price war storm + those super big guys have lower input costs than anyone on this board does. That is why they can charge those lower prices. The guys Ross is talking about are those types. To compare yourself to those massive players and say hey I'm right and Scott is wrong is ridiculous. Your time is valuable too even if you don't have to pay someone else for it. There is always a cost for everything and an opportunity cost. For example, yours might be might seeing your children as much, instead of financial. If you choose to not consider all the costs you put into something that's fine, but don't make it personal we're all friends here :)

[Keith Winter]

I had the opportunity to talk to one of these "mega" shop owners last spring at the ARA in Las Vegas. I'm sure I have his card in my desk somewhere. He flew there from the UK just for the show. He didn't give me exact numbers but I got the impression he was running not 2 or 3 machines, more like one or two dozen lasers and an army of sandblasters. He talked in 1,000s of units not in dozens or hundreds like we're talking about. It was really eye opening to hear. I got the impression that mega shops/vendors like him didn't really view us as the competition. A 100 plaque job they might take, but it really wouldn't be of much interest to them, low priority. They wanted 1,000s or 10,000s of units. Leading me to assume they probably are competing more against a customer going direct to china and having it done, vs most, if not all of us on this board. When you get to that level say you're Jack Daniels and you want 10,000 engraved cutting boards to give away with your new BBQ sauce, the engraver has to be extremely cheap or JD will just leap frog you and go direct to China. Plus when you are doing serious volume like 1,000 or 10,000 boards the pendulum on cost starts to swing the other way. You get more efficient at it, you find ways to make the job take a few seconds less on every board, you source the boards cheap + you do the engraving, and sell the boards and engraving combo as a package to Jack Daniels to increase margin, etc. Local guy who says he'll do it for $5 a board isn't even in their decision matrix.



The other thing that's going on in the awards industry is there are a few big companies that have really dropped the price on everything. They have low cost employees ($10-15/hr) and are making their money on numbers. They don't want 10 plaques where they make good money. They want 100 plaques and they'll make okay money on each. I contacted one of the companies last month out of curiosity if they could do a very rush job. Their answer was no problem and the price was the same. Who am I to tell them how to run their business? I don't know if they're actually making a profit but I do know they've expanded their business 3 times over the last 10 years. They could be in huge debt with their fingers crossed that they'll keep growing and pay off their debt in a few years.

[Ross Moshinsky]

I had the opportunity to talk to one of these "mega" shop owners last spring at the ARA in Las Vegas. I'm sure I have his card in my desk somewhere. He flew there from the UK just for the show. He didn't give me exact numbers but I got the impression he was running not 2 or 3 machines, more like one or two dozen lasers and an army of sandblasters. He talked in 1,000s of units not in dozens or hundreds like we're talking about. It was really eye opening to hear. I got the impression that mega shops/vendors like him didn't really view us as the competition. A 100 plaque job they might take, but it really wouldn't be of much interest to them, low priority. They wanted 1,000s or 10,000s of units. Leading me to assume they probably are competing more against a customer going direct to china and having it done, vs most, if not all of us on this board. When you get to that level say you're Jack Daniels and you want 10,000 engraved cutting boards to give away with your new BBQ sauce, the engraver has to be extremely cheap or JD will just leap frog you and go direct to China. Plus when you are doing serious volume like 1,000 or 10,000 boards the pendulum on cost starts to swing the other way. You get more efficient at it, you find ways to make the job take a few seconds less on every board, you source the boards cheap + you do the engraving, and sell the boards and engraving combo as a package to Jack Daniels to increase margin, etc. Local guy who says he'll do it for $5 a board isn't even in their decision matrix.

Sadly, I'm not even talking about those people. I'm talking about internet companies doing standard plaques for $15, providing proofs in 24 hours, and shipping 24 hours after. Buy $100 worth of stuff and shipping is free. Those people are counting on doing 1000's of plaques and other items a week so that they can pay the bills.

[Keith Winter]

Wow free shipping too, that's really low margin. Are these promo companies?


Sadly, I'm not even talking about those people. I'm talking about internet companies doing standard plaques for $15, providing proofs in 24 hours, and shipping 24 hours after. Buy $100 worth of stuff and shipping is free. Those people are counting on doing 1000's of plaques and other items a week so that they can pay the bills.

[Bert Kemp]

Ross said
"The other thing that's going on in the awards industry is there are a few big companies that have really dropped the price on everything. They have low cost employees ($10-15/hr) and are making their money on numbers. They don't want 10 plaques where they make good money. They want 100 plaques and they'll make okay money on each. "

were talking 500 boards here remember

and I said this is my point if you don't adjust your prices to whats going on around you your gonna loose.

Scott said that he prices by value that his price is his price no matter what.

I said so Its 12 bucks in Rural Louisiana and 12 bucks in Beverly Hills Right Scott.

I don't think so.
OK I'm done here because no matter what I say someones going to argue the point. You seem to not understand what I'm saying and just see your sides of it. I see the whole picture, not just my side as I mentioned I understand your sides and why you price the way you do but Ya'll want to tell me I'm wrong, But I'm just as right as ya'll are:D

[Dan Hintz]

This site illustrates what's going on in the engraving industry. You have "real businesses", "home businesses", and "hobbiest businesses". As a result, you see different thinking, different situations, and different pricing practices. It's very easy for a home business to charge less. They don't have any real additional fixed costs. As a result, they can easily afford to charge less. Imagine if rent, utlities, ect all went away or went down to essentially 0. It makes bidding lower on certain jobs easier because you have that flexibility. Home businesses often have to charge less, unless people don't know you operate out of your home. Home businesses, in general, have a horrible reputation for being unreliable. How many B&M stores get customers coming in with a job because their guy dropped the ball or couldn't handle the job?

The other thing that's going on in the awards industry is there are a few big companies that have really dropped the price on everything. They have low cost employees ($10-15/hr) and are making their money on numbers. They don't want 10 plaques where they make good money. They want 100 plaques and they'll make okay money on each. I contacted one of the companies last month out of curiosity if they could do a very rush job. Their answer was no problem and the price was the same. Who am I to tell them how to run their business? I don't know if they're actually making a profit but I do know they've expanded their business 3 times over the last 10 years. They could be in huge debt with their fingers crossed that they'll keep growing and pay off their debt in a few years.


My point exactly Scotts statement doesn't hold water. If he doesn't adjust his prices for what the market will bear he will lose. He's getting 12 today but whats his name is doing it for 11 so who gets the job.

I run my business form my garage (well, basement actually)... but you can bet your sweet bippy I don't charge basement prices. I did when I started, and that quickly grew old. I wasn't making a true "profit". I think Steve and I would be competitive in pricing models. And while I may have lower overhead (no employees, no building rent, etc.), I feel no need to reduce my prices to get business. All of my business is word of mouth, not a shred of web advertising (well, advertising of any kind).

My workshop is down... has been since I moved into the new house months back, which means I'm sending all of my work to a sub-contractor(s). I hate taking less profit, but I'm still making a profit with very little work. I trust this small group of people, and I know their quality is to my high standards. Occasionally I have to step in with new projects to make sure everything is just right, but that's mostly a one-time shot. It will do until I can start taking the work back in house again.

But because I charge the prices I do, like a real business, I can afford to eat some profit via sub-contracting... I keep my business running, which means I don't lose special customers. If a typical garage business loses their workshop (or just the laser), how many of their customers will be lost?

[Scott Shepherd]

Bert, I think you've grossly misunderstood what I've said. I did not say that the price in every market was the same. I said the price is what the market will withstand. If the market in rural USA is $6, then the value of that service is $6. If the market for the same item in Manhatten is $18, then the value is $18. What I said was that we set our price based on the market value of the product based on competitive analysis in our area. We don't offer different pricing for a two location customer verses a 20 location customer when they are ordering the exact same item and quantity. The market set the price, not the customer.

We must be doing something right, we've been featured in several trade magazines, made the cover of a sign magazine, and get to pick and choose which customers we want to work with for the most part. If that means we have no idea on how to price jobs, I guess we will stick to not knowing.

[Mike Clarke]

If I can have lower cost I will still try to get top dollar. The problem with our business is determining what the going rate is. On some items it is easier than others. Every time I try to look at what others charge I keep finding cheaper until it is too cheap to be worth it. So I just go back to having to think for myself.

I try to simplify my decisions whenever possibly. What goes on inside my head, four walls, etc is what I know. It is much harder to find the truth from customers. I try to just stick with knowns vs guessing unknowns. In my business I just figure customers can lie, but i can't. I also know I can't be everything, to everybody, every time. Some customers I just can't please.

I routinely have to be the best value for my customers whether I am in a bid situation or not. I seldom have the luxury of knowing what the right answer is.

In the past 40 years I have had to deal with some things, including people with no overhead that were going to put me out of business. I'm still here and they aren't. Sometimes we charge more and get it. I also have had times where I am just not getting a job being cheaper. At the beginning of the day my goal is to make a profit. Not break even or lose money. Since I am not that smart or can tell the future I try to get more money whenever possible. We will all do what we need to survive. I just don't like to start out in survival mode.

Recently a large account asked me to lower my price. It came from above the people I deal with. It would have been really easy to cut price and keep moving. I decided to say no. Why stop at no? So I also included what my value is as a vendor and some documented instances. I also am going to do a case study on an upcoming proposal to change a part. I proposed the change after visiting there shop floor. It will be neat to put a dollar amount on what my expertise saves them.

answer this:
Why would you want to give up profit?
Have you ever had formal request to lower prices?
Have you ever had to justify your price or value?

Now, I have given things away or done things cheaply. I have had my reasons. The only requirements for me are am I aware of the reality of the situation and are my reasons satisfied.

I don't really care that much what others do. I would probably care more if I had some way to control it. I care more about what I do, as that affects me more.

[Mike Null]

Fundemental rule #1: Don't take a job if you're not happy with the price.

[Neville Stewart]

The amusing thing about that Mike Clarke is , another part of the chain increased price, they asked you to reduce so they could either keep the same price for their end product or make a little more profit from your reduction.

[Steve Morris]

The amusing thing about that Mike Clarke is , another part of the chain increased price, they asked you to reduce so they could either keep the same price for their end product or make a little more profit from your reduction.

That's what Buying Departments are paid to do, get best value at lowest cost. Which is why manufacturing in places like the far east has taken off

2 rules:
a)make an acceptable profit or walk away
b) enjoy what you do

[Mike Clarke]

The amusing thing about that Mike Clarke is , another part of the chain increased price, they asked you to reduce so they could either keep the same price for their end product or make a little more profit from your reduction.

Could be. It wasn't all that amusing to me at the time though! Eventually I can look back on things and laugh, but you just know some wounds are going to need more time to get over.

My thought process: There is no way of knowing that. I could have thought up any number of scenarios as to what the motivation was but again no way of knowing. Waste of my time worrying about somebody elses internals. What to do? Worry about my end of the deal. I don't want to lose the account because of the profit. If I remove the profit then it doesn't matter. So for it to matter I have to keep the profit.

One thing I did was call the guy I deal with and try to educate myself on the situation.

Bottom line is I had to make a decision and take a risk. No matter what it was on me and I was the one that was going to Win or Lose. This just happens to be one I won. For now. Matter of fact I need to go in today & tomorrow to run some jobs for them. These may be the last 2 jobs I ever do for them. You never know.

-----------------------------------

Your comment also reminds me of how some customers will be as 'thrifty' as possible on price, yet turn around and not provide a tax exempt certificate. So my time is not as valuable as their money, but their time is more valuable than their money. All they need to do is get me the tax exempt certificate and save 8.75% tax on every purchase until the TEC expires and it is too much trouble. Another motivation not to reduce price for me. Ultimately money is not the driving force for them. BTW tax exemptions can be a can of worms. Many customers don't understand what classification they are in. Some think they are exempt from sales tax and are not.

[Neil Pabia]

It looks like some folks are overthinking this. The reason I can do it at a low price is simply because my laser is usually not running early in the week. I also have two employees (college kids/summer help) that can run these while doing their other work. I feel it is better to make a small amount of money as opposed to making none. I had a young man quit recently because "I am worth more than you are paying me" and I know that he is now out of work and making nothing. When my laser isn't running, it is making nothing too. Granted, I won't get rich off of a job like this, but I won't starve either.

[Scott Shepherd]

And that might be a great strategy for you right now. However, if you price them low, and then you get slammed with other work that pays twice as much, then what? That's the reason some of us price to the market. No matter if I'm a one man shop at home, or a 10 people company with 10,000 sq. ft, the price is set by the market.

What tends to happen (seen it many times), is people price things really low because they have "low overhead", then they get flooded with business because of their low pricing. Then they start growing and they end up growing into a place that has bills, lights, rent, other utilities, insurance,dumpster, etc, and with all of that added in, now they can't do the work for the "low" prices. Once that happens, they start raising their prices to cover those things. When they do, many customers go looking for the next cheapest guy in to pop up on the scene. Then they are left with all the expenses and few of the customers. I've watched it happen many times in our area.

If you set the price to the market, then it wouldn't matter where you were working from or what you were working with.

[Steve Clarkson]

Steve, you keep referencing that the "price is set by the market" and that we should "set our price to the market"......can you explain that better? And in this example with the cutting boards, what is the market price and how did you calculate it?

[Mike Null]

Neil

I am a one man home based shop. In the past 12 months I have spent over $7500 in maintenance and repairs and replacement of equipment. In your plan have you accrued that much to cover those expenses? Mine is a business, not a hobby so I have to plan such things.

[Keith Winter]

The two most common ways of determining market price for a good are:

1) Determine all of your input costs x your profit multiplier = price you charge. This is the most simplistic model, and probably the most commonly used because it is fairly easy to figure. However it only works if you factor all your costs. Aka your time cannot be figured at $0 cost, and your machine cost cannot be figured at $0. Everything that goes into your end product must be figured from start to finish. Additionally you should factor for some percentage of errors in your formula. The mistake many businesses make is they always factor for best case, and when things don't go 100% perfect, they go out of business.
2) Look at all the businesses around you and/or you are competing with. Look at the lowest and the highest priced. Are they offering the exact same services as you? Or are they offering more/less services? Aim for your price to be somewhere in the middle to high end if you offer the same or better service, in the low to mid end of that scale if you offer worse service or less features. Then adjust over time, if you find you are getting a lot of jobs try moving your rate up 10%, not enough down 10%, etc. until you find the proper "market rate" for your service/product.



Steve, you keep referencing that the "price is set by the market" and that we should "set our price to the market"......can you explain that better? And in this example with the cutting boards, what is the market price and how did you calculate it?

[Scott Shepherd]

Just a quick real life, example here. We hadn't done many banners. It's not something we wanted to do, or had much interest in, but we'd get asked from time to time if we made banners. Not too long ago, we had a request for 1/2 a dozen banners that were 4' x 8' (32 sq. ft.). Since we hadn't done many, and those that we had done were more for playing around with the printer or doing something for our better customers as a favor, we picked the phone up and called something that rhymes with MastSigns. "How much would (6) 4' x 8' banners be with us supplying the proper artwork, ready for print?".

$320 per banner ($10 per sq. ft.).

Okay, there's one data point on the market. If a nationwide company is charging $10 a sq. ft., and the ink is costing us .25 cents/sq.ft, and the material is .14 cents/sq. ft, I've got .39 cents plus my time to setup the print job and put a hem and some grommets in place. What would my strategy be? Sell them for $2 per sq.ft? Why? Why in the world would I charge someone $2 sq. ft. when if they go to my competitor, they'll be paying $10 sq. ft? That's just not smart business. You don't have to be at $9.89, but there's certainly a lot of room for profit there. Charge $8 and roll on. You'd still come in $64 cheaper per banner than a national chain and a lot of people want to support local businesses. We did just that, charged $8 per and got the job, made really good money, they were happy and said they'd be back next time they needed them because of our pricing.

That was a $1,536 job that we could have charged $2 sq ft on if we wanted to lowball, and gotten $384. Which check do you want to deposit in your company bank account, the $1,536 or the $384?

[Steve Clarkson]

A banner example is way too easy.....how about an engraving example? There are significantly more variables in engraving than there are in printing a banner. Again, what's the market value of the cutting board example? Can you give me a price for what a "nationwide engraving company" would charge?

[Scott Shepherd]

A banner example is way too easy.....how about an engraving example? There are significantly more variables in engraving than there are in printing a banner. Again, what's the market value of the cutting board example? Can you give me a price for what a "nationwide engraving company" would charge?

Pick the phone up and call them. There are plenty of nationwide companies that offer laser engraving. It doesn't have to be a nationwide company, I used that as an example because it's recent in my mind, but the same rules apply. Call around, get pricing, do the calculations Keith talked about.

It's clear that many in this thread don't wish to go that route, and are happy at the lower end of the market. I'm just not one of them.

[Mike Clarke]

At our shop everything is paid for. That should allow me to be cheaper. It doesn't happen because we don't allow it. You need to keep something in reserve. Being on the edge will get you caught out. The easiest time to make more is when you don't need to make more money. The first dollars you give up come straight out of your pocket.


The two most common ways of determining market price for a good are:
I am in total agreement with #1
1) Determine all of your input costs x your profit multiplier = price you charge. This is the most simplistic model, and probably the most commonly used because it is fairly easy to figure. However it only works if you factor all your costs. Aka your time cannot be figured at $0 cost, and your machine cost cannot be figured at $0. Everything that goes into your end product must be figured from start to finish. Additionally you should factor for some percentage of errors in your formula. The mistake many businesses make is they always factor for best case, and when things don't go 100% perfect, they go out of business.

While I can't truly disagree I find trying to determine what competition does time consuming. It won't even matter if you don't know your own deal.
2) Look at all the businesses around you and/or you are competing with. Look at the lowest and the highest priced. Are they offering the exact same services as you? Or are they offering more/less services? Aim for your price to be somewhere in the middle to high end if you offer the same or better service, in the low to mid end of that scale if you offer worse service or less features. Then adjust over time, if you find you are getting a lot of jobs try moving your rate up 10%, not enough down 10%, etc. until you find the proper "market rate" for your service/product.

Past that I think as long as you are ethical and legal I am a pretty firm believer in y'all can all do what you want.

[Steve Clarkson]

Calling around isn't practical. Do I really want to add 5 hours of market research to my costs every time I want to bid on a job? If I want to figure out what I should charge for an engraved flask or an engraved pint glass......sure calling around would work....but not for this cutting board example. And if there are only 4 other engravers in my town, don't you think they would eventually stop telling me how much they would charge for a job if I called them every time I wanted to bid on a job? And when I call around, won't the prices I get be based upon that company's costs and profit margins, which likely won't match mine (and what are the chances they would tell me theirs anyway)? And if I can't get a consensus "market rate" on here with dozens of engravers chiming in on this example, what makes you think I could get a "market rate" by picking up the phone and calling engravers, local or nationwide? I think a market rate (other than for flasks, glasses and dog tags) is an illusion.

[Dan Hintz]

The two most common ways of determining market price for a good are:

1) Determine all of your input costs x your profit multiplier = price you charge.
But that's not market value. In fact, calculating this has absolutely ZERO to do with market value.



Calling around isn't practical. Do I really want to add 5 hours of market research to my costs every time I want to bid on a job? If I want to figure out what I should charge for an engraved flask or an engraved pint glass......sure calling around would work....but not for this cutting board example. And if there are only 4 other engravers in my town, don't you think they would eventually stop telling me how much they would charge for a job if I called them every time I wanted to bid on a job? And when I call around, won't the prices I get be based upon that company's costs and profit margins, which likely won't match mine (and what are the chances they would tell me theirs anyway)? And if I can't get a consensus "market rate" on here with dozens of engravers chiming in on this example, what makes you think I could get a "market rate" by picking up the phone and calling engravers, local or nationwide? I think a market rate (other than for flasks, glasses and dog tags) is an illusion.

You certainly wouldn't call around every time you get in an order... at some point, you have to make an educated guess. Those who are poorly educated will outprice themselves compared to the market (either over or under) and will lose the business. "Market rate" refers to what the customer can be reasonably expected to get elsewhere... for wedding glass engraving, that likely means within a 25 mile radius... for a 10k-piece order of cutting boards, that market will likely have to include China. Asking what I charge for a hamburger in Maryland when you live in Alaska is silly (and hamburgers in Alaska are NOT cheap!).

You don't CARE what the other company has for operating costs, as long as your price gets you the job while still making a reasonable profit margin. Of course, you want to maximize that margin whenever possible.

[Scott Shepherd]

Calling around isn't practical. Do I really want to add 5 hours of market research to my costs every time I want to bid on a job? If I want to figure out what I should charge for an engraved flask or an engraved pint glass......sure calling around would work....but not for this cutting board example. And if there are only 4 other engravers in my town, don't you think they would eventually stop telling me how much they would charge for a job if I called them every time I wanted to bid on a job? And when I call around, won't the prices I get be based upon that company's costs and profit margins, which likely won't match mine (and what are the chances they would tell me theirs anyway)? And if I can't get a consensus "market rate" on here with dozens of engravers chiming in on this example, what makes you think I could get a "market rate" by picking up the phone and calling engravers, local or nationwide? I think a market rate (other than for flasks, glasses and dog tags) is an illusion.

You are completely missing the concept. The first step, which apparently was missed, is to ASK THE CUSTOMER for their budget. My guess is that most people don't, or won't do that. Some very seasoned business people on here have said that's the first thing they ask, yet I bet most people don't ask it. Until you are comfortable having conversations like that with customers, then you'll never get market pricing. If you ask the customer what their budget is, the majority of the time, they will tell you. It saves everyone a lot of time. If your budget is $2 per plaque and I know my rough price is going to be in the $10 per plaque price, then there's no need for either of us to waste each other's time. If they say their budget is $20 per plaque, then I know where I stand. That's the market value of that plaque to them. If you want to come in under that, then that's your business.

Etsy and ebay aren't places to get the market value. You certainly don't need to call your 4 local people, or call them every time. Like Dan said, at some point, very quickly, you can make educated decisions about your quotes in the market. It's about understanding the business you are running. If everyone in town or surrounding area charges $90 per hour for engraving, why would you quote $32 per hour? It's really that simple. Understanding your competition, what their pricing is to some basic degree and coming in there in a place that gives you market share.

Market pricing is not an illusion. Finding people that understand might be.

[Steve Clarkson]

Well, obviously I'm one of those people that doesn't understand it.......which is exactly the reason why I asked you to explain it to me.

So you're saying that a customer's budget determines market value? That's crazy. I always try to ask for their budget, but more to weed people out, rather than trying to determine what I will charge. If I know a job will take 1 hour per piece and their budget is $2 per piece, I show them the door. I'm not going to waste my time trying to make it fit within their budget.

But let's take the cutting board example.......you never explained what you would charge or how you arrived at that price. Ross said that "in his head" he would be at $12 per board and you said that "you would be in that range". So let's assume that you are at $12. If the customer's budget is $10 per board, do you show them the door or do you reduce your price down to the "market rate"? A customer usually has no idea how long a job takes to run or what it should cost (unless they have had them done before). They don't understand that a 12" x 6" engraving might take 10 minutes and that by increasing the engraving to 12" x 9" it increases the time by 50% (15 minutes) and at $2 per minute that increases the cost from $20 to $30....."but it's only 3 extra inches!". If I'm at $8 per cutting board and they tell me their budget is $10......I might go up to $9, but not $10 since I want them to look good and come in "under budget". But if I'm at $12 per board and their budget is $10, then I'll work with them to figure out how to make it work (ie. reducing the time to engrave it by making the engraved area smaller, etc) or I'll negotiate the price with them (ie. $11 each which means they come in over budget and I take a little less profit).

Again, you can't really compare a price per hour either (ie. $90/hr verses $32/hr).......If I have a 300 watt Trotec and a job takes 1 hour and that same job takes 3 hours on a 35 watt Chinese laser......they really can't be at the same hourly rate.

So is market rate simply determined by an educated guess, like Dan said? So you basically charge as much as you feel that you can get away with?

I said from the beginning......if you charge too little, you will go out of business, and if you charge too much, then you will go out of business. The key is finding the sweet spot in the middle. Maybe that's the market rate.

So people on here quoted anywhere from $6 to $15 per cutting board.......and I'll ask again.....what would the market rate be that you refer to and how is it determined?

[Keith Winter]

You are of coarse correct on this Dan :) the 1st method I stated is not market price, it's just the most common way of factoring price. If you're too shy to do market research then it's another way to do pricing, better than just shooting from the hip.


But that's not market value. In fact, calculating this has absolutely ZERO to do with market value.


I completely agree with Dave's paragraph below this as well. :D



You certainly wouldn't call around every time you get in an order... at some point, you have to make an educated guess. Those who are poorly educated will outprice themselves compared to the market (either over or under) and will lose the business. "Market rate" refers to what the customer can be reasonably expected to get elsewhere... for wedding glass engraving, that likely means within a 25 mile radius... for a 10k-piece order of cutting boards, that market will likely have to include China. Asking what I charge for a hamburger in Maryland when you live in Alaska is silly (and hamburgers in Alaska are NOT cheap!).

You don't CARE what the other company has for operating costs, as long as your price gets you the job while still making a reasonable profit margin. Of course, you want to maximize that margin whenever possible.

A couple more suggestions, if you are worried about pricing your competitor then have your wife or friend call, or...ASK YOUR CUSTOMER. What is your budget is a great start, which multiple people in this thread have said over and over. That way you know what they have in mind for price. Nothing says your services have to fit into the budget they list, but it at least gives you a place to start from. Some times our cost ends up being more than their initial budget, but guess what, that's your opportunity to prove your worth to the customer. A professional that makes their lives easy by doing it right, offers more service, and stands behind their work is worth more than the cheapest price, so many times even if we are higher they will still go with us. Same for Scott, Dan, Ronnie, Ross, Mike, Dave the dozens of others on this board that make a profession of engraving.

Another idea for market research, why not survey old customers you can ask them about the quality of work etc and then one question about the price on your list of 10 questions. Survey monkey is free, use it.

One more scenario I'd like you to consider:
Painters charge $60+ an hour, with the overhead of a $20 paint brush and some cheap liability insurance. Plumbers charge $100+ hour with the overhead of a truck, toolbox, and some cheap liability insurance. In both of those professions every mistake they make the CUSTOMER pays for both in extra time on the job and in parts. Why in the world would you charge less than $60 or $100 an hour with the overhead of a $15,000 to $60,000+ laser, maintenance on that laser, mistakes on you make YOU PAY FOR, setup time YOU PAY FOR, electrical, and building costs etc? It seems crazy when I factor it like that doesn't it? Why would you want to have higher costs and product risks, and charge less than every other professional trade?

[Scott Shepherd]

So you're saying that a customer's budget determines market value? That's crazy.

How's that crazy? If they've been buying the items for years, they have a price they are used to paying. You knowing that information gives you the market price (market price, meaning the price someone is willing to pay). You're getting the market price directly from the person that is buying the item. That can be some of the best market value information you'll ever get. It can be the holy grail. What better price guide than the actual prices your customers are paying someone else?



But let's take the cutting board example.......you never explained what you would charge or how you arrived at that price. Ross said that "in his head" he would be at $12 per board and you said that "you would be in that range". So let's assume that you are at $12. If the customer's budget is $10 per board, do you show them the door or do you reduce your price down to the "market rate"? A customer usually has no idea how long a job takes to run or what it should cost (unless they have had them done before). They don't understand that a 12" x 6" engraving might take 10 minutes and that by increasing the engraving to 12" x 9" it increases the time by 50% (15 minutes) and at $2 per minute that increases the cost from $20 to $30....."but it's only 3 extra inches!". If I'm at $8 per cutting board and they tell me their budget is $10......I might go up to $9, but not $10 since I want them to look good and come in "under budget". But if I'm at $12 per board and their budget is $10, then I'll work with them to figure out how to make it work (ie. reducing the time to engrave it by making the engraved area smaller, etc) or I'll negotiate the price with them (ie. $11 each which means they come in over budget and I take a little less profit).


One of my favorite quotes I recently saw was :

There are two rules for success...

1) Never reveal everything you know.

[Kev Williams]

What if you have your market cornered? Around 80% of the work I do is unique 'off the wall' work to an "engraving" business -- I'm an engraving shop, and I do 'light' machining in plastics and non-ferrous metals. But most other engraving shops don't do what I do, and most machine shops don't do what I do. 95% of my customers are other businesses. Never done 'retail'. The shops who I'd call for 'test quotes' are the shops who call ME to do the work they can't do. But I DO get some market price 'reference', usually in the form of them sucking air thru their teeth when I give a ballpark quote. ;) -- but when I hear that, I ask "so, it's okay for you to make a profit, but not me?" (tongue-in-cheek usually) Businesses as customers can be a joy sometimes. One of my customer's end product sells for over $3000, but he insists he can't afford $10 per part (which is stainless) for my engraving. He doesn't like it much when I tell him 'so charge $3010 for it then'... BUT I capitulate and charge him $8. He's happy, the $2 won't kill me, and in the end his business will likely produce another customer or two down the road. That's why we've never had to spend a penny on advertising...

Last 3 years have been our best ever, by far, so I'll stick with my plan I think!

[Keith Winter]

What if you have your market cornered? Around 80% of the work I do is unique 'off the wall' work to an "engraving" business -- I'm an engraving shop, and I do 'light' machining in plastics and non-ferrous metals. But most other engraving shops don't do what I do, and most machine shops don't do what I do. 95% of my customers are other businesses. Never done 'retail'. The shops who I'd call for 'test quotes' are the shops who call ME to do the work they can't do. But I DO get some market price 'reference', usually in the form of them sucking air thru their teeth when I give a ballpark quote. ;) -- but when I hear that, I ask "so, it's okay for you to make a profit, but not me?" (tongue-in-cheek usually) Businesses as customers can be a joy sometimes. One of my customer's end product sells for over $3000, but he insists he can't afford $10 per part (which is stainless) for my engraving. He doesn't like it much when I tell him 'so charge $3010 for it then'... BUT I capitulate and charge him $8. He's happy, the $2 won't kill me, and in the end his business will likely produce another customer or two down the road. That's why we've never had to spend a penny on advertising...

Last 3 years have been our best ever, by far, so I'll stick with my plan I think!

You are in the golden spot Kev! Congrats to you! I'd suggest you tinker with pricing a bit when a new project comes your way then, you've already proven your worth to the customer and they know you will do quality work. That's worth a lot.

[Steve Clarkson]

It didn't go unnoticed.

[Scott Shepherd]

It didn't go unnoticed.

Steve, there's a reason the most successful people on this forum don't post photos of their work much. People aren't too keen on handing the keys to their business models over to the internet, whether it's pricing, marketing, or jobs for customers.

[Steve Clarkson]

Oh, I completely understand......and I don't disagree with you on this.......I was just saying that I noticed. :)

[Ross Moshinsky]

I didn't read the whole last page but the thing with asking about budget is you can fit the product to meet the budget.

For example, if someone walks into my shop and says they want 10 widgets and have $20 to spend each, I show them items I can sell for $20 and make the profit I want. If their expectations are unrealistic, I'll say that and give them an alternative that would work.

On a straight engraving job it's a bit more tricky, but you can also sell your services if you choose. Running the cutting board at 300dpi vs 500dpi will cut the engraving time roughly in half. You can show your customer the two different options, give them your opinion, and let them make the final decision. You could also do the opposite and try to justify the value you're offering. Maybe you figured out a "trick" to get a nice dark burn that most people don't achieve. That may be worth an extra $5 to the right customer.

Getting someone's budget is a great way to insure profitability. It puts you in the driving seat. The only issue I've come across is people at times think you're "cheating" them when they say they have $1000 to spend and you spend $999.99 of it. Sometimes you have to explain you're maximizing their value.

[Dan Hintz]

So you're saying that a customer's budget determines market value? That's crazy.


For example, if someone walks into my shop and says they want 10 widgets and have $20 to spend each, I show them items I can sell for $20 and make the profit I want. If their expectations are unrealistic, I'll say that and give them an alternative that would work.

^^^^ This is the true purpose, Steve. When you ask a customer what their budget is, it's not to maximize your profit margin, it's to determine the boundaries of your work. If the customer expects to spend $20/plaque, that opens up more options... you can present them with a $10 plaque and save them money (customers love it when you save them money), and you can show them a $20 plaque as an upgrade to their original idea (if the customer wants a higher quality, they now know they can get that at the same shop... also good for repeat business when the next award ceremony comes up, but this time for managers, not peons).

Knowing your market allows you to maximize your profits without losing the average customer, and knowing your customer allows you to maximize their satisfaction... both very good things to maximizing the long-term stability of your business as a whole.

[Scott Shepherd]

What if you have your market cornered? Around 80% of the work I do is unique 'off the wall' work to an "engraving" business -- I'm an engraving shop, and I do 'light' machining in plastics and non-ferrous metals. But most other engraving shops don't do what I do, and most machine shops don't do what I do. 95% of my customers are other businesses. Never done 'retail'. The shops who I'd call for 'test quotes' are the shops who call ME to do the work they can't do. But I DO get some market price 'reference', usually in the form of them sucking air thru their teeth when I give a ballpark quote. ;) -- but when I hear that, I ask "so, it's okay for you to make a profit, but not me?" (tongue-in-cheek usually) Businesses as customers can be a joy sometimes. One of my customer's end product sells for over $3000, but he insists he can't afford $10 per part (which is stainless) for my engraving. He doesn't like it much when I tell him 'so charge $3010 for it then'... BUT I capitulate and charge him $8. He's happy, the $2 won't kill me, and in the end his business will likely produce another customer or two down the road. That's why we've never had to spend a penny on advertising...

Last 3 years have been our best ever, by far, so I'll stick with my plan I think!

A couple of points (like you were waiting for me to post them, right? ;) ).

If you are the only person in the area offering services, then it's you that sets the market price. "The price for my services is ______". You are in the place so many people strive to be. Use that to your advantage. You say you never turn customers away, but you do, because you've pulled your YP ads and your website offline. You are turning people away, they just don't happen to be existing customers. You're turning down future customers. Why wouldn't you want to serve all of those people? I'd take all I could get from as many people as I could. If that meant finding some good people to help run the machines, then that's what I'd do. I already know that's not anything you're interested in, as you've said so before.

When I walk into my printer's shop, there's a sign on the wall "Graphic Design Service Rates are $90 per hour".
When I walk into my auto mechanic's shop, there's a sign on the wall that says their rates are $90 per hour, flat rate.
People charge $90 per hour to cut grass here.

Why is it that everyone, many with much less investment than we have, should be okay to charge $90 per hour, but when we quote things, some people think we should be quoting at $45 per hour, or less? I don't get it. I have just as much, if not more, time invested into learning my craft as the guy with the $10,000 lawnmower sitting in a cushy seat, cutting grass, but he's supposed to make more than me? Why?

Products and services cost money. No one else seems to have a problem charging me money, so why am I supposed to have an issue charging the same for my skills and services that everyone else does?

[Dan Hintz]

Why is it that everyone, many with much less investment than we have, should be okay to charge $90 per hour, but when we quote things, some people think we should be quoting at $45 per hour, or less? I don't get it. I have just as much, if not more, time invested into learning my craft as the guy with the $10,000 lawnmower sitting in a cushy seat, cutting grass, but he's supposed to make more than me? Why?

This is an ongoing debate I have with some others who are more of the woodworking persuasion. Those folks (and I'm sure the vast majority of our customers) truly believe what we do does not require much knowledge, testing, etc. With that mindset, it's no wonder they balk at a $90/hr shop rate. To them, our skillset (and that's truly what it is) is hardly more impressive than a landscaper (someone who mows lawns, I might add, which is NOT a true landscaper)... but WE get to work in an air-conditioned space and sit on a comfy chair, so why should they even pay us as much as the gardener? Needless to say, they are truly ignorant to the hard work I (we) have put into this field over the years. I'm okay with that ignorance, as long as it doesn't cost me... but it usually does.

[Rich Harman]

My base rate is $90/hr ($1.50/min). I adjust up or down depending on the job. I ask what the customer's budget is and try to figure out what I can do for that much. I almost always come in under budget for them - they tend to like that. For this example I think I would charge about $12 ea, adjusted upwards from my base rate because I cannot do multiple items at a time plus I have to deliver.

I don't give one whit about market rate. I charge what I think it is worth. I don't up the charge just because I can. I'm not a very good capitalist, and I'm okay with that.

[Keith Winter]

This is an ongoing debate I have with some others who are more of the woodworking persuasion. Those folks (and I'm sure the vast majority of our customers) truly believe what we do does not require much knowledge, testing, etc. With that mindset, it's no wonder they balk at a $90/hr shop rate. To them, our skillset (and that's truly what it is) is hardly more impressive than a landscaper (someone who mows lawns, I might add, which is NOT a true landscaper)... but WE get to work in an air-conditioned space and sit on a comfy chair, so why should they even pay us as much as the gardener? Needless to say, they are truly ignorant to the hard work I (we) have put into this field over the years. I'm okay with that ignorance, as long as it doesn't cost me... but it usually does.

Interesting to hear what people in other industries think. Perhaps that's why you see so many people buying ebay lasers thinking they are going to strike it rich, then being sadly disappointed when it doesn't work and the jobs don't roll in?

[Neil Pabia]

Neil

I am a one man home based shop. In the past 12 months I have spent over $7500 in maintenance and repairs and replacement of equipment. In your plan have you accrued that much to cover those expenses? Mine is a business, not a hobby so I have to plan such things.

Mike, I closed up my shop about 2 years ago and moved my laser to my home until my most recent divorce and then it went to a friends sign shop and I work out of there. He has a couple of guys working there and I'm there whenever I'm in town and free. I take about 50%of each jobs cost and put it away for repair/replacements. The last 4 years I've put less than $1000 into my machine and it has very low hours on it so it will hopefully last for several more years. I buy all my equipment outright so I don't have any payments, so far I have put enough away to replace my Helix with a Fusion if I decide to go that route but I'm going to let them work the bugs out of them before/if I decide to order one. My laser was bought to make a specific product that I never made...lol, so anything that I do use it for is a bonus.

[Kev Williams]

If anyone gets testy about my hourly rate, I just ask them what their auto mechanic charges.

[Mike Null]

Dan


This is an ongoing debate I have with some others who are more of the woodworking persuasion. Those folks (and I'm sure the vast majority of our customers) truly believe what we do does not require much knowledge, testing, etc. With that mindset, it's no wonder they balk at a $90/hr shop rate. To them, our skillset (and that's truly what it is) is hardly more impressive than a landscaper (someone who mows lawns, I might add, which is NOT a true landscaper)... but WE get to work in an air-conditioned space and sit on a comfy chair, so why should they even pay us as much as the gardener? Needless to say, they are truly ignorant to the hard work I (we) have put into this field over the years. I'm okay with that ignorance, as long as it doesn't cost me... but it usually does.

This strikes me as humorous as when I realized nearly 20 years ago that I was being forced into early retirement and would have to find other work I decided I would buy a laser and market to wood workers. I quickly found that woodworkers were a pretty cheap lot and would provide a paltry source of income. Now I do no work at all for woodworkers and am much better for it.

As you say they had no appreciation for the skills nor the investment. My laser cost more than their entire shop--I know I am also a woodworker.