What should I charge for machining time?

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I recognize that it’s a function of what a client is willing to pay, but I’m trying to get a sense as to what machining time is worth.

I’m interested in doing small specialized jobs, likely in soft materials. I was thinking of offering 2 services - wooden signs and prototypes. The signs would be a small business for me, and the prototypes would likely be geared towards small businesses or entrepreneurs that need work done fast and affordably.

The one reference point I have is from a few posts on the shopbot forums saying machining time is worth $1 a minute plus setup time. I’m not sure if that’s what a large production house would charge, and if it is, I’m clearly not experienced enough to offer that level of quality

Any thoughts on this?

Thanks

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Here are a couple of youtube videos that may help you think about the questions that need to be answered to come up with a rate.

Bob Warfield - Calculating CNC Machine Hourly Rates

NYC CNC - How I Quote CNC Machining

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Based on the on what our cost of machining is, as well as talking to our machine shop, you can easily get to a minimum of about $50/hr for a big expensive machine taking up lots of space and power.

Guys with big routers, much higher end than the Shopbot, they tend to charge about $180/hr.

At the core though, I think it’s wrong to charge by the hour unless you’re a big shop with a well defined process. Having been in the prototyping / model shop world for a long time, we billed a flat rate based on the job. Sometimes we padded it a lot because we had experience or equipment that made the job a simple thing for us. Other times, we took the shop rate and just estimated the time. Nobody wanted to have a variable bill that depended on time- they wanted to know ahead of time what the cost was.

I doubt the machine itself is the true value you can offer. The ability to take a sketch and make it in real life is a pretty big deal. That includes some thinking, some CAD, material knowledge, and machining, and it’s a pretty rare, and valuable, set of skills.

Rob

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@jonniemac thanks for the videos - they are great.

@robgrz I agree that it’s likely not right to think in terms of price per hour. I do think it’s important to know what an hour of machining time is worth so I can figure out what the cost would be as a function of time to machine x cost per time. Your range is very is useful for me - thanks.

And I also like your comment about turning a picture into a real thing. That got the wheels in my head turning!

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Figuring out what to charge is definitely a hard question to wrap around, that I’ve been asking a lot lately too!

We can often “undersell” ourselves because we just want to do the work, and we want to help people, and we’re afraid that if we put too high of a number out there that people will balk and we won’t get the work in the first place. Trust me, I’ve learned from experience, that if you put a fair number out there and someone balks, you don’t want their business anyway.

If someone isn’t willing to pay a fair rate for your work, that means they don’t understand the value of what you’re offering. In my experience that means they’re likely to keep asking for more as you go, and that they’re going to be more likely to ask for ridiculous things because they don’t know any better. Then, if they’ve got a knack for sales/negotiation, when you say they can’t have something ridiculous, they may try to use that as leverage to get a lower rate for what’s reasonable… since you can’t do that other thing you must not be that great. It’s annoying and tricky BS but people do it.

Therefore, figure out what your time is worth to you to offer to people, and then figure an overhead margin to cover your taxes, expenses, and surprises, and charge the resulting rate. In the professional services industries I’m familiar with, this rate varies from about 2.5 to 3.5x what the actual “take-home pay” of a given employee is at a small/medium firm, so for example I know a civil engineering firm here locally and in talking with the company president, who’s a family friend of mine, their ratio is about ~3x, so if they’re paying their guy ~$30 an hour, they’re billing out ~$90 an hour. That covers their overhead of HR, advertising, bidding jobs, etc… I’m friends with one of the Principals at a product development firm in Richmond and for them it’s 3x as well (I just called him this morning to check while writing this post because I was curious ;-))

I know several freelancers whom I’ve worked with who charge about 2.5x, and it goes up in larger firms, especially in the public sector. I met someone a while ago, probably 2 years ago, who does logistics stuff with Booz Allen and her time was charged out at $400 per hour, and I would bet she was making ~50-60k a year.

I’ve found that it’s also important not just to know what to charge, but how to interact with clients; how to respect what you do and bring to the table, so that they will too. I don’t know if you’re coming from another design field and already know this ‘part of the job’, or if you’re already familiar with Mike Monteiro—but I have found his talks and writings on this topic to be both a) irreverent and quite funny and b) on the money and very helpful.

Honestly, what’s more valuable than your machining time, is your design and process time. The machining time is a near-commodity utility, but knowing how to get great results out of it is not. Hope that helps!