Pricing out plasma table cutting

[wghughes7]

I opened my business up about a month ago. I have a 5x10 plasma table, a 210 sandblaster, and a 8x8x20 powder coating oven. What I am struggling is pricing out plasma cutting. I am not sure how to charge for cutting out metal and then change up my prices for different thicknesses. Right now I am only using the table to cut out home decor designs that I powder coat and sell on my website. I want to try to get into cutting out parts for oilfield companies around my area and also contract cutting. I do not even know where to begin to start with the contract cutting. If anyone has information they don't mind sharing with me, I will greatly appreciate it!

[Shane Warnick]

Where are you located? Makes a difference on what steel costs and the surrounding industry etc.

Shane

[wghughes7]

I am located in Central Louisiana.

[JEd]

I have a feeling this is going to be long winded.

I start with the size of whatever I'm cutting say it's a 24X44 piece of 14 gauge CR. I then add a waste factor, because I can't always use the drops and this accounts for that. This piece would leave me with a 24X4 piece of scrap from a 48" wide piece of steel. I may never find a use for it. That means there's about 9% waste. I usually put in 15-20% unless it's obvious what the waste will be, like if I'm going to cut up a full sheet for something. If I do find a use for that drop in the future that's a little extra margin. Usually for a quick quote I just half way do the nesting to get a rough, but conservative idea.

In this case 24X44 is 7.33333 ft^2 of material, if I use 10% waste I'm at a little over 8 ft^2. 14 guage CR was $2.05 a ft^2 last time I bought it so my material cost is $16.51. I then mark that up 0-50% depending on who the customer is (I'll give a break for regulars although they may never see this), how much work it is to pick up, handle, and work with that material. Say I put in 50% for this. I'm at $24.76 material price.

Then I start accounting for my time. I've got it split into 4 sections at differently hourly rates I'm still tweaking these some. It is important that I get these times as close as possible for how I look at it in a bit. Let's say this is how it breaks down for this job.

45 minutes of CAD time @ $30 an hour. $22.50
15 minutes of CNC time @ $50 an hour. $12.50 (An estimate, I may import into my cutting software and see)
10 minutes of Misc Shop Time @$30 an hour. $5 (This is setup, materials handling, general extra time spent)
45 minutes of finishing @ $30 an hour. $22.50 (Grinding, Painting, whatever)

So I'm at $62.50 for labor.

Then I have a section for additional consumables/materials. This doesn't explicitly have anything for plasma consumables although if it's a job where I know I'll go through them I may put something here for them. I cut a lot of 14 gauge using finecut consumables on my PM65 and I get long enough life out of them that it's almost negligible on a per job basis. In this section I've got a spot for flap wheels/grinding discs, paint, and other. Say I put in $4 for discs and $8 for paint. This puts me at $12 for additional consumables.

This would put me at $99.26, but I've got a spot for Profit Margin%. This isn't necessarily just a profit margin, but a place for me to tweak my price if I feel it needs to be. I default to something like 25% here, but vary it heavily by job. This applies to material, labor, and consumables. I'll tweak it to get the price to what I feel is a good market price. If something seems too cheap, or I know it will have to be cheaper to sell, I'll vary this. If I made good estimates for everything else, I'll know my actual cost and time and can make sure I've got enough money in it to be worthwhile. If I put in 25% here I've got a pretax price of $124.07.

I can see that I'll spend 115 minutes and my actual costs before markup and the profit margin is $28.51, so labor/profit is $95.57. This is $49.86 an hour. For me being a backyard guy, that's a decent rate and I'd probably go with it. That's enough for me to cover all my overhead and make decent money for what would otherwise be free time. If I was running out of a shop, with more significant overhead that probably isn't nearly enough.

This has to cover all my time, machine maintenance, the time I spend picking up and prepping metal, future upgrades, new tool purchases, machine consumables. I'm turning most of my profit back around into new equipment (I'm looking to build a powder coating oven), but for me that's ok, because this is something I enjoy doing, I get to buy new tools with it, and am still making a little money. If this was to feed my family I'd have to make a more serious assessment of the cost of all this overhead, but for now I know that I'm able to buy some new tools when I want and still see the business bank account inching upward.

[JEd]

Yep long winded just like I thought.

I should point out that I have a math degree and work as an Actuary during the day so I like playing with the numbers.

[acourtjester]

Well written about the cost and pricing the other thing you asked about was breaking into doing some commercial business.
There is a post here that a guy showed what he made as a calling card I cannot find it now using search (cannot think of the right name to search). He cut a design (something small) and went around and left them at future business sites as a sample of what he could do for them. Show what you can do gives them ideas of what you can do for them. One thing could be a business card holder with their Logo or name on it.
have fun
Tom

[Larry83301]

I think the piece you are talking about was " a round 2 it" a circle with "2 it" cut thru it. I can not find the file or the post either.

Larry

[Shane Warnick]

Ok, I was in the same dilemma as you when I started (Jan this year) doing this for a living. So I was lucky enough to get some advice from Jim Colt (thank you sir) in regards to staying profitable and being competitive.

Take the COST of the material. This includes the plate, going and fetching it if you have to, time to rack it etc. DOUBLE that number, and divide by the number of square inches in the material. This number, we shall call it "P" for price, is the number I use to charge not only for the material that will be consumed for the project, but also for the price per cut inch. This covers cutting the part, plus knocking off the dross.

Waste, I usually overcharge the material just a little (15.5 inch flange is 16"x16" etc) and odd parts get a square drawn around them. I have found the only time I have to be careful is if someone wants something like a bunch of 18" flanges cut, you have a lot of waste on the sheet. So I charge them the whole sheet if it's more than 75% of the sheet, at double the COST, then also for cut inches. If it's less then 75% of the sheet they pay for however much sheet it takes to do the ones they want. Also same double cost.

Loading / unloading- I cut certain thin metals once a week unless you want to pay a rush fee. If you wait until that day, no charge as I usually have a whole sheet nested out to cut. Dependent on the job. If it's thicker than 1/4" and you don't order at least $500 of cutting/ material, then there is an $80 fee for load / unload. I have an overhead gantry on wheels, I use plate clamps etc. I can load / unload 1" plate 15 mins total.

Secondary operations- General shop labor $60 / hr. Welding, $80 / hr $25 minimum. I have a mag drill and can broach holes in up to 3" plate, that starts at $5/ hole for under 1" and goes up from there, that is in addition to the $60/hr general shop labor. Gotta pay for the drill and jet broaches. Biggest I can do is 2 3/16" diameter in 3" plate. I no longer paint, it's either raw or goes to the powder coater.

I don't charge for pierces, etc this is all covered in the one number. I usually run $150-200 / hr when I am cutting easy. I have lots of days I do $1000 of cutting in 2-3 hours then spend an hour cleaning it up. Nice day. Wish I had 5-6 a week like that

As far as the industrial market, you will not beat a large welding shop with a table on pricing, you will be damn close but not quite as cheap (unless you work for damn near free), as they are killing you on material costs. They are buying $500,000 or more of plate a year. They get a deal. You will be cheaper for cutting the part probably, but not on material. You can however kill them on delivery and service, and more than likely quality once you get it all dialed in. I am usually 5-15% higher than the local shop, but they have crap cuts, deplorable customer service, and horrible delivery times. Their customers are slowly finding me. They don't go back. Doesn't matter what price they give them, if they can't get it done for them or it sucks then they can't get it for that price now can they?

Material- I keep plate up through 1/2" on hand, some 1"x12" flat bar as well as angle etc for welding and gates etc. If someone wants something cut from 3/4" plate etc they can either have it delivered and pay me for handling it, plus per cut inch or I will get it for them and it's the standard deal. I have some customers that need certified steel, with a certificate etc. That is their steel, the whole plate is charged out to them when the first job is cut. I will store it (outside) for 6 months, if I haven't cut it up for them it becomes mine after that.

Marketing- It's sucks getting going. Bottom line. Go visit some of the smaller shops that have small tables, work something out with them, especially if you have an 85 amp torch and can handle and cut thick plate. As far as industrial, no sales calls on Mondays or Fridays, they don't wanna see you. 9-11 and 1:30-4 on Tues-Thur. If I have nothing to do, I go cold calling. 25-30% conversion so far on cold calls. Make 10 in 2 days get 2-3 new customers. Slow growth is a blessing, trust me. Ask for the welding supervisor or the shop foreman. You will blow the secretaries MIND 1.2 seconds after cnc plasma comes out of your mouth. If you don't mind getting up at 2am and helping them out, don't hesitate to tell them. I live right next to my shop, I don't like getting up at 2am but damn I'm hungry, I gots bills to pay!!!! I have a number for that. Normal shop rates plus $100 / hr. If they have a rig shut down and need something cut the $30-50,000 a day they are losing isn't a drop in the bucket to your $300-500 after hours charge. Try getting someone at xyz welding and fab to get up and cut parts at 2am. Do this once, and you will be their first call from then on. Big companies take a while to pay, but once you get over the hump it's a nice addition to the business. Get 6-8 industrial customers and the stress gets a lot less once you know you are flowing some cash.

Probably a lot more info than you wanted to know, but I figured it couldn't hurt. Prob lots of people reading this saying I am overcharging, or leaving a ton of money on the table. I just try to be fair, cover my costs and make a living. It seems to be working so far. I ain't starving anyways. Yet......

Stay safe
Shane

[acourtjester]

From what has been said you can get a real life picture of the business you want to get into. Hearing from those that are there and their policies is worth a lot. One of the things Shane said about doing commercial work is the cost for your service is not out of their pocket but a normal business expense that is part of their operating budget (tax write off at the end of the year). Amount of money in minus costs equals profits (living wage) the more you have left the better it is.

[Shane Warnick]

I agree with the above. I bet some people would roll over and die if they knew what I charge for some of the jobs that come through for some of the big drilling companies etc. However, if they need 1" plate cut and fabricated they are willing to pay for it. They either need it or they don't. By the time I buy it, make it, and wait 45-60 days for my invoice to be paid I figure it's worth it on my end as well as theirs. HUGE PIA to get set up with each one. Insurance, getting AP / AR set up, invoice needs to have this here and that here, email it to 9 different people, etc. Make it worth your time if you go that route. I have never even had one flinch until yesterday, and I figure he is full of crap and was just testing the water. Price is what it is.

It's either a business or a hobby. Yours to decide.

Shane

[wghughes7]

Thank you all for the LOADS of information shared. I learned a lot just from reading what yall had to say. I went out today to one oilfield company and I spent about 3 minutes talking and they seemed like they did not want to talk. Shane you are right about not going on Fridays for sure. Also Jed you did sorta lose me with some of the figures but I have found a spreadsheet on this sight that has helped me tremendously. I do like the way you count all of you're costs and then add the profit margin, it can be an easy way to know exactly how much you are making after costs. I will probably read all of the posts a couple more times in case I missed something. This is very helpful as I am use to being the grunt doing the dirty work and not the business side also. There are only two other shops around that I know of that have plasma tables. I use to work at one that has a plasma and also a water jet. I just need to get some work out there that people can see and say "Hey who did this" so that my name can get out. Thank yall for the help and advice, I will surely use it!

[acourtjester]

Remember there is a function in SheetCam the will help yo figure info for billing.
It is under the file tab and is called Job Report it will tell you how many pierce and how many inches and other things about the cutting operation.

[wghughes7]

Thanks Acourtjester! I have been trying to figure out how to find the number of inches cut!

[andyn08]

Jed and Shane.... Thank you!!! Just fantastic!!! I had a customer today that asked the great question...... HOW MUCH???? After I quoted a price, I then broke it down just like you guys did. His response was wow thats cheap after he figured the labor costs. Wish it was that easy all the time. I still use the worksheet from this forum but I still need to modify it to meet my expectations. IMO I am worth 30 an hr regardless what I'm doing running the machine or driving to get supplies. I also value the 19yr old helper at 30 an hr because he has as much attention to detail as I do and I spent countless hours teaching him how not to hurt himself.

[AnotherDano]

I think the piece you are talking about was " a round 2 it" a circle with "2 it" cut thru it. I can not find the file or the post either.

Larry

Here is one that I use. They are about 3.5".
Another, is the number 2 and 'IT' as you described.
No file should be needed, just type in the text.

IMG_0064.JPG

These are a great way to make the most of what would otherwise be sent to the scrapyard.
They are also a good way to show the colors, textures and versatility of powder coating.
I sell them for $8.00 but also give them away to selected customers and chalk it up to 'marketing'.

[acourtjester]

I think that if you create a sign that can be posted on the wall (plasma wall art). That would show the steps involved in custom projects that your customers could read would help. wording your choice as a reference you could tell them what the sign would cost.

[AnotherDano]

With obnoxious customers, I asked them if they would be willing to tag along through the steps it would take to finish their piece.

I've never really done this but it sure is tempting!

We would start by filling up the gas tank.
Then we would take the 65 mile drive to Ft. Collins, Co to buy a full 4x10' sheet of steel and drive back to the gas station to replace the gas used on the trip. They go glassy-eyed about this point. But Wait! There's more!

We'll unload the steel and muscle it onto the table, spend time on the computer making the cut-file and then fire up the compressor and make the cut. Then grind off the dross.

Next comes the powder coating - sorry, I don't stock the color you want. I'll order a pound of it. That will take three days to deliver. I buy it by the pound at $9.00~22.00/pound. Don't forget the shipping.

Come back this weekend and we'll continue. Their eyes are really glazed by now.
I spray each piece with alcohol to get rid of oils and other contaminants. DA costs $16.00/gallon and I use a lot of it making sure there are no 'breaks' in the flow.
We'll prepare the PC equipment, load the powder and start the oven. See that elec. meter over there? Watch it start spinning.

When I open my shop, I figure it costs about $25.00 just to turn on the lights, computer, compressor and other stuff. In the winter, add the cost of heating.

And you thing I'm gonna do all that for your $30.00 sign?

[beefy]

Hey Dano & Acourtjester, you could really add to that list. Chuck some capital investment and fixed / variable overheads into that too:

Plasma table
Plasma cutter
Compressor
Air dryer / filtration
Material handling equipment
Welder
Maintenance / repairs / consumables on equipment
Vehicle + trailer used to collect material
Utility bills
Real estate - mortgage / rent
Real estate - rates
Workshop fitout shelving, workbench, etc, etc
Various hand and power tools
Various workshop consumables
Finishing equipment - painting, etc
Protective clothing
Business marketing costs
Telephone
Office equipment
Internet service provider
Various purchased software
LEARNED SKILL (that was a serious investment of time and effort)
Purchased graphic sets (e.g. Signtorch)
Accountant fees
Sales tax, income tax - this is a serious fact. All that the customer pays does not go in our pocket. A business will not exist if it cannot turn a profit and provide a net (not gross) income to its owner(s) and employee(s).

There doesn't seem to be much you can remove from the list and provide this service.

I'm sure I'll have missed a few. Maybe with a big sign on the wall listing everything mentioned so far, they might not be so quick to play little birdy - cheap cheap, cheap cheap. If they do, fire those customers at once, nobody needs em. My experience is you can't change those types, they don't care about the WHY, they just want stuff for nothing regardless.

Keith.

[AnotherDano]

Too true, Mr. Beef!

Aggravation allowance; 100%

[beefy]

Too true, Mr. Beef!

Aggravation allowance; 100%

Ha ha, forgot that one, as well as the failure / risk part of things

Keith.

[KIDTech]

I built a simple tool that is very similar to the way Jim Colt goes about pricing, stores jobs,, stores customer accounts, gives each job a unique number, creates an invoice and allows for price "tweaking" if you feel the price is a little off. I can price a job very quickly with it but to answer your question, Jim Colt is very similar to the way I do it.

[beefy]

I built a simple tool that is very similar to the way Jim Colt goes about pricing, stores jobs,, stores customer accounts, gives each job a unique number, creates an invoice and allows for price "tweaking" if you feel the price is a little off. I can price a job very quickly with it but to answer your question, Jim Colt is very similar to the way I do it.

Thanks KIDTech, but I'm left hungry for more info now you've mentioned that

I've seen some of Jims great pricing posts but haven't seen any where he talks about jobs, customer accounts, unique job numbers, etc.

Where did you learn that about Jim, anything you can direct us to ??

Cheers,

Keith.

[KIDTech]

Sorry for the confusion but I came up with that myself with the app I built. It is not finished because I have not had spare time to work on it with my regular job and cutting metal. I work in SAP and used a lot of things I have learned business tracking wise to create it. I got it to a point were I can use it accurately to price jobs and it has been sitting since.... Some screen shots have been added so you can see what some of it looks like and get a better idea of what I am talking about.

[KIDTech]

I plan on taking some time during deer season to haul the laptop and get some programming in. I tend to be a data nut and try to keep track of as much as I can. There is also an inventory tracker built into it but for now it is manual until I can finish debugging the scanner interface. You create the customer acct. with the cost calculator tool, when you enter their name it knows if they are an existing customer or new and so on. I plan on using to eventually keep track of the books as well whenever I get to that haha. If you get your pricing figured out the way you want it let me know and I can lend a hand in keeping track of it.

[beefy]

OK thanks Kidtech, and good luck with the program.

Keith.