Discussion
Is there an easy way to figure how much to charge for a "widget" (other goods are avaialable) that has to be manufactured from raw material on a machine(s)?
So far, I've factored in:
Machine (equipment) costs
Tooling costs
Energy costs
salary
fixed overheads (property, business tax etc.)
Shipping
I'm thinking the machinery could be given an "income" level per hour/minute that it would need to achieve to cover the fixed costs, add the raw materials, then a 'profit' and work it on a part per hour/minute basis. Would this make sense?
So far, I've factored in:
Machine (equipment) costs
Tooling costs
Energy costs
salary
fixed overheads (property, business tax etc.)
Shipping
I'm thinking the machinery could be given an "income" level per hour/minute that it would need to achieve to cover the fixed costs, add the raw materials, then a 'profit' and work it on a part per hour/minute basis. Would this make sense?
You have to factor in downtime too, you break the machine, you are FUBARD.
You can buy insurance to cover this shortfall, likewise you'd do well to insure the plant/stock and employers liability.
If you are looking at buying a CNC machine you'll need to buy software too, which can be pretty pricy, or cheap, depending on what you want to be able to do.
of course RAW material and finishing probably need to be considered too
You can buy insurance to cover this shortfall, likewise you'd do well to insure the plant/stock and employers liability.
If you are looking at buying a CNC machine you'll need to buy software too, which can be pretty pricy, or cheap, depending on what you want to be able to do.
of course RAW material and finishing probably need to be considered too
Edited by stuthemong on Wednesday 25th March 10:29
dfen5 said:
Is there an easy way to figure how much to charge for a "widget" (other goods are avaialable) that has to be manufactured from raw material on a machine(s)?
So far, I've factored in:
Machine (equipment) costs
Tooling costs
Energy costs
salary
fixed overheads (property, business tax etc.)
Shipping
I'm thinking the machinery could be given an "income" level per hour/minute that it would need to achieve to cover the fixed costs, add the raw materials, then a 'profit' and work it on a part per hour/minute basis. Would this make sense?
A good idea.So far, I've factored in:
Machine (equipment) costs
Tooling costs
Energy costs
salary
fixed overheads (property, business tax etc.)
Shipping
I'm thinking the machinery could be given an "income" level per hour/minute that it would need to achieve to cover the fixed costs, add the raw materials, then a 'profit' and work it on a part per hour/minute basis. Would this make sense?
But for low margin deals you would be overpriced in the market.
For high margin deals you would be throwing away profit.
So, price the widget at what the market will allow, and check that the cost is covered. Once you have done that, you can then work out incentives for larger orders of the widget.
Justin is of course correct.
I scan read that as the cost price of the part to you, which is how you would do it.
In terms of a selling price, as high as you can go isn't a bad place to start
Of course, lower price may get more volume, but conversely higher price can also get more volume too, it's a psycological thing.
Work out your cost price, then work out if the market will allow you to sell above that price happily. If so, game on!
I scan read that as the cost price of the part to you, which is how you would do it.
In terms of a selling price, as high as you can go isn't a bad place to start
Of course, lower price may get more volume, but conversely higher price can also get more volume too, it's a psycological thing. Work out your cost price, then work out if the market will allow you to sell above that price happily. If so, game on!
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