Do you price laser time differently on your own products?

[Weston Porter]

Still sort of new at this, I've got a 45w Speedy 100 I do a fair amount of engraving and cutting on for clients and due to the limited size and wattage I low-ball at $60 an hour on the machine. My question though is when developing your own products, do you calculate the production cost/time the same, more or less? I'm trying to convince myself that repeatedly producing my own designs is easy enough (by comparison to work for clients) to excuse lowering the production cost inherent in the products I sell.

Basically, I'd like to know what you charge-yourself for lasering your-own products and how that compares to what you charge clients.

[Mike Null]

$60 per hour is what laser salesmen were telling people they could charge 20 years ago. It wasn't enough then.

[Weston Porter]

$60 per hour is what laser salesmen were telling people they could charge 20 years ago. It wasn't enough then.

Lasers were also a lot more expensive then, I try to stay compeitive with local businesses in my area. A chief competitor has around 70k tied up in new 80w Epilog machines and charges $80. I paid like 10k (great deal, mind you) for my used 45w Trotec, so I don't feel weird about charging $60. If I had a larger, more powerful, more costly machine I would charge more. I'm more interested in what I should charge myself though, for producing my own products. I'm an industrial designer and I've always been more interested in working on my own stuff, the services I offer are just a side line to help pay the bills.

[Scott Shepherd]

I'm afraid I don't understand the question. What you should charge yourself to do your own products? Seems like the backwards way of figuring out the price. You price to the market and decided if there's enough profit at the end to make it worth while.

For example, if you decide to charge yourself $60 per hour for your laser time, and that puts the product price at $30 each, but there are other products like it out there that sell for $80 each, then you just left a lot of money on the table.

We don't charge by the hour, and I am a firm believer that it's the incorrect way to price jobs, period. There are many, many times when we're making $300-400 per hour on our lasers. If we billed by the hour at $60 per hour, we'd have made a tremendous amount less at the end of the year.

Just my opinion, I know some don't share it.

[Gary Hair]

A chief competitor has around 70k tied up in new 80w Epilog machines and charges $80. I paid like 10k (great deal, mind you) for my used 45w Trotec, so I don't feel weird about charging $60. If I had a larger, more powerful, more costly machine I would charge more.

Sorry, but that makes no sense to me at all. If I buy a saw at a garage sale for $2.00 and you have one you bought at the hardware store for $80, should I charge less to cut a piece of wood than you do? I think not... Of course, I also don't base my pricing on my competitors, unless they are charge more than me anyway. That doesn't happen very often, I'm usually the highest priced engraver in town.

[Gary Hair]

We don't charge by the hour, and I am a firm believer that it's the incorrect way to price jobs, period. There are many, many times when we're making $300-400 per hour on our lasers. If we billed by the hour at $60 per hour, we'd have made a tremendous amount less at the end of the year.

Just my opinion, I know some don't share it.

I use a per hour rate for lasering to start building a price then add in for various factors - pita charge, packaging, prep, cleanup, pickup, delivery, market conditions, etc. Like you, there are many times I'm in the several hundred per hour range, very rarely below $150-$200.

[Weston Porter]

I use a per hour rate for lasering to start building a price then add in for various factors - pita charge, packaging, prep, cleanup, pickup, delivery, market conditions, etc. Like you, there are many times I'm in the several hundred per hour range, very rarely below $150-$200.

Same, I charge for design, setup, lasering and post-production (assembly, packaging, ect) rates separately in an itemized list. It comes out to being a lot more than 60 an hour but that's just how I calculate machine time.


Sorry, but that makes no sense to me at all. If I buy a saw at a garage sale for $2.00 and you have one you bought at the hardware store for $80, should I charge less to cut a piece of wood than you do? I think not.

Sorry, but that makes no sense to me at all. A saw works or it doesn't, it has a quality blade or it doesn't. There isn't much to it but a 10k import laser, vs a 20k western prosumer laser vs a 30k+ western professional unit, there are oceans of differences in terms of quality, speed and work area. You think someone with a Glowforge should be charging the same as you? I think not.



I'm afraid I don't understand the question. What you should charge yourself to do your own products? Seems like the backwards way of figuring out the price. You price to the market and decided if there's enough profit at the end to make it worth while.

I was just wondering if people charge themselves at the same rate they charge clients when figuring the production costs of their products. After that, I am doing just what you said.

[Mike Clarke]

My question though is when developing your own products, do you calculate the production cost/time the same, more or less?
The production cost and time is the same. Your development time is separate.


I'm trying to convince myself that repeatedly producing my own designs is easy enough (by comparison to work for clients) to excuse lowering the production cost inherent in the products I sell.

That is a choice you have, as long as you know what you are giving up/gaining. If you don't know then it can be a real shame. Or if you don't have to give up anything, then you have that option as well. You can build in some efficiency to your design that can make a difference. I am thinking more industrially and less artistic.


Basically, I'd like to know what you charge-yourself for lasering your-own products and how that compares to what you charge clients.
Basically, my daughter and I need to have a talk about all those school project I didn't bill her for . . .
I think it is good to know it would cost 'X' if I subbed it out. If you get your material or rent for free would you not charge for it? If I would charge a customer $5.00 to engrave a dog tag they brought in then if I charge myself less than $5.00 I am technically losing money in a straight up comparison. Where the true cost comes in would be different because some of the factors would change. Same as if you charge $5 each for a single piece vs $5 each for larger orders. Sale and invoice time would virtually be the same.

Every business I know of that has 2 people involved will have disagreements on how to figure costs and selling price. While some things are done in a standard manner, some things are wide open to the way they can be handled.

[Joe Pelonio]

I just did a job this weekend for a regular wholesale customer, 75 pieces of 1/8" acrylic engraved, cut, and paint filled. I charged $750.00 ($10 ea.) and in the time it took, 8 hours, deducting for materials I made $83.75/hour. The first time I did prototypes for them, I charged $100 for 3 samples, but that included setup, converting their CAD file and cleaning it up.For retail I would be at $100/hour minimum, but selling your own products it's what the market will bear and still make a profit, so you don't get stuck with them. I prefer regular, production manufacturing work.

[Scott Shepherd]

You think someone with a Glowforge should be charging the same as you? I think not.

Absolutely! The market sets the price, not the machine. The end price is the same, however, the time it takes would vary greatly, mainly based on the money spent on the features of the machine.

The Glowforge owner might make $60 per hour, while I'll be making $150 per hour on the same job, hence the value of higher end machines.

[David Somers]

I may be reading this wrong, but I think Weston was originally asking how we factor in our development work (time and materials spent designing, tweaking, etc....plus the value of our creative juices) when we design our own products. How are we figuring that and building it into the cost?

And Weston, if I am following you correctly I think the answer is you are still basically looking for what the market would support for a price for that product and then determining if you can continue to buy a bean to eat for that amount. For example. I enjoy playing with snowflakes. They are very time consuming to design because I trace them directly from actual snowflake photos. My cost in materials to actually cut them is about 50 cents. And I should be looking at time and power consumption, and presumably amortizing my laser and other tools. I work from my home so rent is not an issue.

My real concern though is what can I actually get away with charging for them? They are unique (aren't we all really just special little snowflakes??? <grin>) and are very delicate looking. And peoples reaction to them is "OMG. These are gorgeous!!!!" So I can probably charge a fair amount for them, at least until someone else starts copying the idea. Even though my development time per individual snowflake design is quite high, the more of that design I sell the less that is a factor. That cost is being spread through the total sales of each flake. So ultimately, my real question is what is my running cost for producing them and how much beyond that can I get away with charging? IF they sell well my development becomes such a small amount of each flakes cost that it almost doesnt matter over time.

Dave

[Kev Williams]

"... what the market will bear..." Sometimes I have to ask, WHAT market? :D

A few years ago I had some clown show up here, pretty much guarantees me that I'd have to quit what I'm doing and work for him just to keep up with the demand for his new product. He tried convincing me he had every Hotel in Las Vegas all ready to buy this product in droves. 100's of thousands per year. At least. And my pricing would have to reflect a substantial discount because of the quantities involved.

I never believe that kind of babble, don't know how many times I've heard the words "we'll sell a million of 'em!!" But since one never knows, I caved on my pricing. Turns out this clown lied like a rug to everyone he dealt with, and ended up stealing many thousands of dollars from his partners... and I have been engraving the pieces- very cheaply- for years. But 100's of thousands? LOL.. I do about 100 every other month. Not quite the stampede of buyers clown guy was expecting. The money's not great but it's easy work, and gives a couple of my older machines something to do.

But as for charging 'what I can get away with'-- it would be nice, but I've run into limitations more than not. The words "money is no object!" NEVER comes from any of MY customer's mouths!

Right now I'm doing a run of jobs where hundreds of parts at a time are diamond drag engraved. My customer is a business, but THEIR customers are people. And these people won't spend $12 each for hundreds of parts (and $12 is cheap by you guys's standards for this engraving). They have a limit they'll spend, and if that can't met, they don't need it that bad, no sale, period. So-- I'm at $7-ish. I'm barely getting $50 per machine hour, but this is for almost 1000 pieces- so far... But- since I have so many machines (and this is why I HAVE so many!) I can run these parts on as many as 6 machines. So far 3 is typical, and ran these on 4 machines part of one day. And this is work one person can do this easily. So distilling down the "machine hours" to simply "hours", with 3 or 4 machines running, my less than optimal pricing is now well above optimal. I'm making money, my customer is making money, and their customers like the prices so well they just keep coming back! Win-Win-Win :)

^^^ "keep coming back"^^^ This is absolutely positively the most important aspect of my staying in business for 50 years. It's why I WILL take less money. One and done won't cut it...

Yeah, it would be better to have $100 per hour work on all the machines, but that would be in a more perfect world than I'm living in! :D

[Scott Shepherd]

And these people won't spend $12 each for hundreds of parts (and $12 is cheap by you guys's standards for this engraving). They have a limit they'll spend, and if that can't met, they don't need it that bad, no sale, period.

Then that's the market price. You can decide if you want to do it or not for that price, but the market price has been set by the customer. That's exactly my point.

Another example is panel tags. For decades, panel tags around here have been $5.00 each, rotary engraved by local companies. Need 10 panel tags? $5.00 each. Need 50? $5.00 each. Electrical companies knew that they were $5.00 each and that's what the accounted for.

So for the last 30 years, the market price has been $5.00 each. Now a new fancy laser comes around and thinks "I can make these for .95 cents because the laser is so fast and I can do a row of them at a time". That's great, but you just left $4.05 on the table to people who expected to pay $5.00 each and were perfectly happy paying $5.00 each.

The vast majority of engraving items have a market price out there.

[David Somers]

Afternoon Kev!

I think we are really saying the same thing? In your experience many of your customers may not be willing to pay price A and will only pay price B. Or perhaps you can get price A from them once but not sustained over the years. So price B is what your market will bear.

In my case I am doing little product tchotchky like things like the snowflakes to sell alongside more expensive items at art and craft fairs. I have a different "price B" situation, being less worried about returning customers. And I have two classes of customers as well. Those who are attracted to higher end turned wood items and those looking for less expensive bric a brac. One group will pay top dollar for a turned piece they like. The other will hem and haw over a $25 set of really cool Christmas ornaments in a really cool box to give as a gift. My goal is to find the price point where I can get the most from folks for their purchases yet not drive too many away. A volume and price balance if you will. Same thing you are doing but you have a higher interest in frequent repeat customers and that affects your "price B".

One fun story and then I have to start driving. I had a turner friend in HI who specialized in doing large decorative turned wood Urns or vases. They were 4 or 5 feet tall and thin and light for their size. Lovely pieces that ran about $9k each. Typically his customers bought a pair for their beach estates to flank a door. But one person really liked them and had an arrangement for my friend top "pop" over with a bunch of finished vases and they would spend the day carry them around the 30,000 sq foot under roof beach house trying them in likely spots. The guy would sometimes buy a bunch. And sometime nothing. But it was a regular happening for them. Oddly. I don't think my friends price B was any different in this case than for his non repeat customers. $9k a vase was the going rate apparently.

Out of my league! As well as beyond the capacity of my lathe.

Dave

[Mike Null]

I thought I was competitive on a bid yesterday at $6.50 on 45 pieces of 4" x 4" tags-no tape, no bevel. The customer immediately said "I already have a $5.50 bid". I advised him to go for it. As far as I'm concerned that $5.50 was under the market. But that's my problem not his.

[Glenn Norton]

Then that's the market price. You can decide if you want to do it or not for that price, but the market price has been set by the customer. That's exactly my point.

Another example is panel tags. For decades, panel tags around here have been $5.00 each, rotary engraved by local companies. Need 10 panel tags? $5.00 each. Need 50? $5.00 each. Electrical companies knew that they were $5.00 each and that's what the accounted for.

So for the last 30 years, the market price has been $5.00 each. Now a new fancy laser comes around and thinks "I can make these for .95 cents because the laser is so fast and I can do a row of them at a time". That's great, but you just left $4.05 on the table to people who expected to pay $5.00 each and were perfectly happy paying $5.00 each.

The vast majority of engraving items have a market price out there.

Don't know how you can make any money at that price. He's got nearly that much in each plate in material alone. When he goes out of business i'll need to buy his machine because he's going to sell it cheap.

[Ross Moshinsky]

Don't know how you can make any money at that price. He's got nearly that much in each plate in material alone. When he goes out of business i'll need to buy his machine because he's going to sell it cheap.

The consensus is:

1. Cheap labor (This is paramount)
2. Quantity discounts from suppliers
3. Volume volume volume

If you pay someone $10-12/hr to run your laser, get your products 5-15% cheaper than the competition, and keep busy 8 hours a day, you can make money.