Calculating the cost of your laser into products

[Michael Ramsey]

So I am just about ready to pull the trigger on a new laser. I am doing this as a "small part time business" but mainly as a hobby for something to do. I already have a full time job. Just curious how the pros calculate the costs of running the laser into the cost of the product or project?

Since I have no baseline to compare to I was just going to use 5K hours as a starting point. The 80w RECI tube says it has a life of 8k hours but I will just call it 5. My thoughts were to break it down by the minute such as:
Consumables (tube and lenses/mirrors) Replacement cost / 5000/60 = $ per min.
Machine Cost /5000/60 $ per Min
Electrical Costs $ per Min

I was just trying to be sure to incorporate some amount into each project I do. Mostly I will be cutting maybe some engraving. Perhaps it would be better to charge $ per inch cut?? Now that said I won't be doing much custom 1 off stuff, this will mostly be my own designs. With other woodworking projects I have done it is simple, Time+Material and occasionally a small charge for consumables. Mainly looking for the best way to capture the cost of the laser since my other tools really aren't in the same league with the cost of the laser.

[Michael Henriksen]

Because I buy cheap Chinese lasers for business use I calculate with a depreciation time of only 1000 hours. In reality they last much longer than that of course.

[Robert Bonenfant]

I would try to make no less than a $1 a minute, If your running bulk items on multiple machines than the price can go lower. Depending on the work I charge anywhere from $.90 - 2.25 Per minute depending on if its a prototype or a volume order. Make sure you dont sell yourself short alot of new user work for nothing and that helps no one. Try to set a goal for yourself, that you will have your machine paid for by this date - This always helps us push harder to get machines paid off and new machines coming in. What brand are you buying ???

Good Luck

[Michael Ramsey]

I would try to make no less than a $1 a minute, If your running bulk items on multiple machines than the price can go lower. Depending on the work I charge anywhere from $.90 - 2.25 Per minute depending on if its a prototype or a volume order. Make sure you dont sell yourself short alot of new user work for nothing and that helps no one. Try to set a goal for yourself, that you will have your machine paid for by this date - This always helps us push harder to get machines paid off and new machines coming in. What brand are you buying ???

Good Luck

Looking to get a RabbitLaser RL-80-9060

[John Lifer]

If you work it out at a thousand hours a $6000 machine and a $1500 tube, it works out to 12.5 cents a minute. Electricity cost is about a half a cent or less a minute. So you need to get 13 cents a minute to pay for your machine and a new tube. If you base it on 5k Hours, it is like about 3 cents a minute. Even doubling my original cost (and a rabbit will be higher if any size) it is only a quarter an hour. Kinda cheap isn't it :cool:

Your TIME is more valuable than that. I hope. A buck a minute is making decent money, I've been shooting for more and I get it on most items.

[Michael Ramsey]

If you work it out at a thousand hours a $6000 machine and a $1500 tube, it works out to 12.5 cents a minute. Electricity cost is about a half a cent or less a minute. So you need to get 13 cents a minute to pay for your machine and a new tube. If you base it on 5k Hours, it is like about 3 cents a minute. Even doubling my original cost (and a rabbit will be higher if any size) it is only a quarter an hour. Kinda cheap isn't it :cool:

Your TIME is more valuable than that. I hope. A buck a minute is making decent money, I've been shooting for more and I get it on most items.

Yeah my 5000k hour estimate is about $0.42 per minute and 2000k hours is about a buck a minute. My consumables would be covered in 1000k hours. Yes these are just COST figures. I certainly have additional costs to add into this for the products I plan to make, Design Time * Rate / Design Life, Assembly Labor and finally the markup to the customer.

I don't see how anyone could sustain a business on $1 per minute. The main purpose of this exercise was to calculate the costs of the laser only to apply to each project / product to cover the cost of the machine and consumables.

[Michael Henriksen]

I charge app. USD32 per hour purely for laser time. I then factor in time spent on setup, material handling, packging etc. I also put a markup on materials as it takes time to order them, do Customs clearance etc. I have to add 25% sales tax on top of it all. I apply the same costing method on my own products then mark up to what the market will bear.

[Michael Henriksen]

How much you need to make to sustain your business depends a lot on other overheads. In my case my workshop is in my home. If you have to rent an industrial unit your outgoings
go up considerably.

[Michael Ramsey]

How much you need to make to sustain your business depends a lot on other overheads. In my case my workshop is in my home. If you have to rent an industrial unit your outgoings
go up considerably.

Indeed! Same here just working out of my home. I currently work a full time job from home so in a effort to absolutely NEVER leave my house again I am starting up this business LOL. I have to have something to do.

[Michael Henriksen]

I've worked from home for the past year on a contract. Now I just have my laser business. I really don't want to go back to being an employee so we are moving to Denmark as there is better scope for running a business there. I currently live in a country with a population of only 50,000. We've bought an old farmhouse out in the sticks. It cost much less than you pay for a 1-bed flat in the city and there is 130sqm workshop space for me and enough land to build on should the need ever arise.

[Michael Ramsey]

I wanted to build a workshop but I just don't have the space. I will have to wait for my son to finish school before we move anywhere again. Good luck with your move. I am sure shipping everything from the islands back to Denmark is not an easy task.

[Michael Henriksen]

I just stick it all in a shipping container. It's more the cost that is an issue - around USD 4000.

[Joe Pelonio]

Tube life is unpredictable. I never counted hours, but mine is advertised at 11,000 hour life. I only went a few months before mine died, on warranty. The second lasted less than two years, probably about 3,000 hours, then the third went for 8 years, probably well over 11,000 hours.

[Robert Bonenfant]

I agree with Joe that 3000 hours is a more realistic Life of a laser tube - Im sure some get higher but joes estimate is a good working point. Rabbit offers some great lasers for the price and there customer support (Ray and the team) is great. The only down side I see is they only offer upto 80 watts (Maybe this has changed from a year ago)

How to sustain a business with $1 per Minute ??? Easy three machines running all the same parts for 10 - 17 hours a day - We normally only take bulk/volume orders and we have a huge product line of our own. Plus our operators can load the lasers and start working on something else, they dont need to look at them all day just load them up every 20 minutes (they have to be in the same area as the lasers though) . 10 hours a day x 60 min x $1 x 3 machines = $1800 per day (Minus Labor), If we run them 17 hours a day its around $3060 per day. So charging a $1 a minute is both profitable and it keeps orders flying through.

Another tip is try to focus on a few materiel types - We work with mainly plywood on our lasers and Cnc routers so when we order, we order a truck load of plywood. Cutting the cost per sheet by 45-60% (Depending on thickness and quality)

[Tim Bateson]

... 10 hours a day x 60 min x $1 x 3 machines = $1800 per day (Minus Labor) 17 hours a day is around $3060 per day. So charging a $1 a minute is both profitable and it keeps orders flying through...

You said $1,800/day revenue and $3,060/day expenses??? Is it my math or what am I missing here?

[Robert Bonenfant]

10 hour shift would make $1800 per day
17 hour shift Would make $3060 Per day

I didn't add labor or expenses for this example - ($11-15 Per hour Depending on who I have running them)
Our machines are not always active but we try to keep them running at least 5 days a week.
Was working off my iphone, its hard to edit on the go :)

[Gary Hair]

punctuation is key - I read it as 10 hours a day = $1800 per day minus labor, 17 hours a day =$3060 per day - probably minus labor for this $ as well.

[Kev Williams]

"How to sustain a business at only $1 per minute?"

Reminds me of a story-- years ago my cousin worked for a car battery place. Just a small shop, in an old gas station. He and one other guy were the only employees, and only one of them worked at a time, only takes one person to sell a battery... One day I asked him how many batteries he sold a day... Maybe 5 or 6... Ok wait a minute, so you're getting what, $80 a battery average, $480 sales, maybe 40% take, so around $190 profit, then minus your $100 wages and around $60 a day building overhead, that's only $50 a day profit!? How does the owner stay in business?

-- He owns 1200 of these places...

Where there's a will there's a way :D