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What's your formula for working out the cost of used raw stock?

alphastrata

Plastic
Joined
Feb 28, 2024
Location
'straya
Hello, first time poster long-time lurker.

Purely as a thought experiment for one's own internal accounting, what do ya'll think of pricing by volume?

For example, you probably do something like this : buy price * 1/ % their cut

But why not do it by volume?
stock weight in grams (sw)
density of material (d)
minimum volume to machine from (v)

price = v * d * sw

* this is ignoring labor and cut prices, and any markup, and that the initial raw that you'd be cutting off from is already sufficiently dimensioned etc.
A more concrete example:
For a part that we'd use a square(ish) 84.0mm X 140.0mm X 50.5mm block of Aluminum, at our prices (AUD) we'd charge approximately:
$19.42 per block, then we'd add a markup, cutting fees, labour etc etc etc.

Then I know my local recycling place is good for ~1$ ish back from what I remove, if you were doing sufficient volume this could be a non-trivial amount of margin to play with.

I like this because (usually taking .step files from customers) we know the volume we'll be removing.
Which leaves us a nice figure at the end of the month of material we send to be recycled (for which we would like to try and forecast etc as we recoup a small amount of money from).

What do you do, and if you're a shop that works with really expensive stuff -- say, titanium -- has this always been part of your workflow?
 
Are you trying to work out the return on scrap from the recycling company payback at the end of the month or quoting jobs based on volume of metal removed?
 
Both -- and wondering if others price in this manner, or have alternative pricing formulae they're willing to share.

Pricing is hard, times are tough -- suspect we're all out there looking for more margin, or, when being competitive looking for places to move margin.
 
Cannot quote a machining job based on volume of metal removed. I have made injection molds the size of a matchbox in 316 SS using 0.1 mm cutters that run for over 8 hours, the volume of metal removed is minute and if you based your quote on it you would be burnt.

Unfortunately everyone has been chasing a better way to quote forever and there is no quick and easy solution. Its a bit like the universal CAD model that any package can open while still retaining the full model tree, holy grail territory and we know how long they have been looking for that.

Going to far down the rabbit hole will also cost due to the time wasted on quoting. Generally close enough is good enough unless its a long running production order because then you better be spot on or something has to give, one of the reasons that automotive supply contracts have built in clauses dealing with efficiencies etc .
 
I bill my biggest client based on "time and material". They send a PO with no dollar amounts, and I invoice them what I think is reasonable based on the costs for materials, cutters, and time it took. That's far more efficient for both of us, but we have a well established relationship, and I try to lower the price a little on each repeat, as I'm able to tweak the programs to be more efficient. For others, I hold the print out at arms length and think "50 of these? Yeah, that's a two day job." Cost is two days shop rate, plus material and any unusual cutters, plus a little fudge factor. Sometimes I get the job, sometimes I don't. If you're getting every job you bid, you're bidding too low.
 
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If you're wondering about the cost of raw stock, rather than what to bid on a job, then you charge what you paid for it, including tax and shipping. Lots of folks mark it up maybe 10% for handling costs. You cannot assume that all forms of a material will be the same price; different shapes, sizes, and tolerances will be a different price per pound.

If you have to order two bars and only use one and a half, bill for the full two bars. You may never find a paying use for the rest, and even if you do, you're acting as a bank, having paid for it with no billable job lined up.
 
If you're wondering about the cost of raw stock, rather than what to bid on a job, then you charge what you paid for it, including tax and shipping. Lots of folks mark it up maybe 10% for handling costs. You cannot assume that all forms of a material will be the same price; different shapes, sizes, and tolerances will be a different price per pound.

If you have to order two bars and only use one and a half, bill for the full two bars. You may never find a paying use for the rest, and even if you do, you're acting as a bank, having paid for it with no billable job lined up.
yeah good points.
 








 
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