Pricing rule of thumb?

Newbie here that is making some unique parts successfully.

Is there some rule of thumb that anyone uses to value the time cutting on the machine? Say a part takes 2 hours to cut… easy to know what raw material cost is, but harder to know how to justify the machine time on a cost basis of wear and tear and amortization.

1 Like

There was a bit of discussion on pricing at:

1 Like

The link that @WillAdams gave you is included in a great thread.

I like the thought here:

here is an approach that can establish a starting point…
Raw material added to your hourly rate multiplied by the number of hours, all multiplied by 2… 2 represents a profit that can be used to improve or replace equipment.
($100 wood + ($30 per hour x 2 hours)) x 2
(100+60)x2 = $320 before taxes
in your case ($5 bolts + ($30x2))x2 = $130 before taxes
Everyone is free to adapt their hourly rate or their profit coefficient… Or to make a “friendly price”

One thing to remember is what your market will bear. In the Big City, I might get 100.00, in the local market I might get 25.00

Good Luck

1 Like

Here’s a information you might like, Kevin talk’s about pricing near the end of the video.

Hope this helps. :smiley:

1 Like

Not a direct answer to your question, but here’s my 2-cents:

In my opinion the process is more important than your product when it comes to making money with a CNC. Selling a sign that takes 15 minutes to cut out of MDF for $20 means your machine is working at around $80/hour, whereas an 8 hour 3D carve (Which would require much more finishing work) would need to sell for $640 to make the same hourly rate. There are other factors at play in this opinion, but if you want to make money you need to use your CNC as a means of quick production rather than a precision tool. Save the precision for 1-off gifts that make you look like a Rockstar to family and friends! Also, people hate paying for craftsmanship because they don’t understand the work that goes into some of these projects.

Anyway, my point about price is that if you make many of the same thing the market will tell you how much it should cost. Put the sign up for $30 and nobody buys one: The price is too high. Put the sign up for $15 dollars and everyone wants one: The price is too low.

A couple things not yet mentioned are the costs of sales & marketing. Cost plus blended with market pricing is the way to go as mentioned in the comments. However, variable costs are your cost to market and sell the product. While I don’t suggest marking up these costs, you need to at a minimum recover them. This includes time to post on a site such as Esty or eBay, plus the fees/commission the site collects for the sale. If you set up at a fair you have the entry and/or tent cost plus your time for being there divided by what you plan to sell. If you market on social media sites you need to account for the cost of the ads and time for posting. Customer acquisition cost often can make or break profitability. If you are priced too high the less you will sell and the more you will spend on marketing. In addition, you could have packaging and possibly shipping costs. Since what you make doesn’t come in a box often you will need to buy packaging if it is larger than the largest USPS free packaging. The moral of the story is if you plan on selling what you make figure out the pricing that will allow for an adequate profit before you make it.

This topic was automatically closed after 30 days. New replies are no longer allowed.