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Finding Lathe and Mill Work
- Thread starter Brad125
- Start date
With products come high marketing costs. Once you find a product that might have good demand, you need to spend a lot of effort actually selling it. Are you good at sales? Are you willing to put in the time to do it? If not, then it will be tough to be successful. You might be better off going in the job shop direction and then when a good product idea comes along, work on it and see where it goes. Something to consider is with a product, there will always be someone out there knocking it off. Unless you have a patent on it, there is nothing you can do to stop them other then being the better mouse trap. A patent also only gives you the legal right to sue, it doesn’t by itself stop anyone from copying it.
For the job shop plan, someone earlier suggested offer cheap rates to start out. I don’t recommend that, it is difficult to start cheap and then raise prices later and keep your customers. It would probably be better to offer an introductory discount that is clearly stated on the invoice, that way they see your real rate and when the discount expires, they are not taken by surprise. In my business, I always make sure someone knows the price they are getting has a discount applied if it is not my full rate.
For the job shop plan, someone earlier suggested offer cheap rates to start out. I don’t recommend that, it is difficult to start cheap and then raise prices later and keep your customers. It would probably be better to offer an introductory discount that is clearly stated on the invoice, that way they see your real rate and when the discount expires, they are not taken by surprise. In my business, I always make sure someone knows the price they are getting has a discount applied if it is not my full rate.
I see, I do rather prefer the job shop path but another question would be how to figure out hourly rate? Material and overhead cost i understand. Now I own all my machines and tooling so I dont have to worry about payments. I always prefer to go that route so I don’t have to worry about adding more monthly payments other than living expenses. I just want to start out small and grow into a bigger business that makes enough to add a decent income into the household. But I don’t know if I can file for a Sole Proprietor because I rent a house right now and I believe I would need the permission from the landlord but he is well I just say not co-operative at all. There isn’t any available spaces to rent a garage in my area and that would also add a major expense that we can’t afford right now. Heck there is a empty garage in the bottom of my yard that would be perfect for a job shop, lots of room but the landlord refuses to rent it to me for additional money over our current rent for the house even though he doesn’t use it and it just sits there. Always seems like I am always stuck in a rut and can’t ever try and make my life better, I always feel like everyone else dictates how I have to live.
That is a difficult situation. You likely would need your landlord’s permission to operate a business in that house, but that doesn’t mean you couldn’t start working on a plan to own a job shop. At this time, it might be best to volunteer your skills to build a reputation until you can find a building cheap enough, or you are able to get a house you can use for your shop. You could work underground doing cash sales for homeowners, but that involves the risk the state and or city finds out you are running an unregistered business. If the landlord finds out, he could evict you.
I understand the desire to help the family out, but the best way to help them might be to bide your time until you are in a better situation so that you do not risk putting everyone in a difficult situation.
I understand the desire to help the family out, but the best way to help them might be to bide your time until you are in a better situation so that you do not risk putting everyone in a difficult situation.
Skipped over the hourly rate. I’m not a machinist, but I do have a photography company and figuring out hourly rates is similar.
I never quote an hourly rate to customers unless it is for events since they are paying me for a certain number of hours to be onsite. As a machinist, you are completing a task, so it would be best to give a price based on your cost to operate the business. Customers want to know what it will cost and not something open ended. Your job is to figure out how much time it will take to do, sometimes you will be right, sometimes wrong, but the longer you quote, the better you will get.
You want to factor in the cost of the equipment you use even if it is paid off. What happens if something happens to your lathe and you need to buy a replacement? Same with tooling, measuring equipment, etc. You can’t increase your rate to pay for the replacement, so might as well charge based on the cost from the beginning. I used the replacement value of the equipment I use in my business and then use a typical interest rate that if I invested that money I would receive. I’ve been using 8%, but you might want to use a different number. Let’s say I have $50,000 worth of equipment, at 8%, that is $4,000 in annual equipment costs I want to recover through my business. Add to that your other overhead costs, maintenance, phone, insurance, taxes, rent, etc that are not based on how many hours you work. Now figure out how much salary you want for the year and how many hours you can work at this (productive hours, not paperwork hours). You need to add in the variable costs here, ie the cost to operate your equipment based on the number of hours can work per year. You can’t use all available hours as billable since you need to make sales calls, do paperwork, etc that is not billable to a customer. Divide all your costs by the billable hours and that becomes your break even cost. Add some profit on to that since the entire point of owning a business is to make more money than you could elsewhere and now you have a baseline hourly rate to charge. If you bought a CNC machine for example, you could come up with a separate rate for that machine based on the cost of using that machine and the lower rate for your cheaper manual machines. When you go through these costs, the number will surprise you, but if you want to make money, you need to charge an appropriate amount.
This website shows a similar process, but with financing equipment. https://www.cnccookbook.com/cnc-machine-hourly-rate-calculator/
I never quote an hourly rate to customers unless it is for events since they are paying me for a certain number of hours to be onsite. As a machinist, you are completing a task, so it would be best to give a price based on your cost to operate the business. Customers want to know what it will cost and not something open ended. Your job is to figure out how much time it will take to do, sometimes you will be right, sometimes wrong, but the longer you quote, the better you will get.
You want to factor in the cost of the equipment you use even if it is paid off. What happens if something happens to your lathe and you need to buy a replacement? Same with tooling, measuring equipment, etc. You can’t increase your rate to pay for the replacement, so might as well charge based on the cost from the beginning. I used the replacement value of the equipment I use in my business and then use a typical interest rate that if I invested that money I would receive. I’ve been using 8%, but you might want to use a different number. Let’s say I have $50,000 worth of equipment, at 8%, that is $4,000 in annual equipment costs I want to recover through my business. Add to that your other overhead costs, maintenance, phone, insurance, taxes, rent, etc that are not based on how many hours you work. Now figure out how much salary you want for the year and how many hours you can work at this (productive hours, not paperwork hours). You need to add in the variable costs here, ie the cost to operate your equipment based on the number of hours can work per year. You can’t use all available hours as billable since you need to make sales calls, do paperwork, etc that is not billable to a customer. Divide all your costs by the billable hours and that becomes your break even cost. Add some profit on to that since the entire point of owning a business is to make more money than you could elsewhere and now you have a baseline hourly rate to charge. If you bought a CNC machine for example, you could come up with a separate rate for that machine based on the cost of using that machine and the lower rate for your cheaper manual machines. When you go through these costs, the number will surprise you, but if you want to make money, you need to charge an appropriate amount.
This website shows a similar process, but with financing equipment. https://www.cnccookbook.com/cnc-machine-hourly-rate-calculator/
- Joined
- Jan 2, 2019
- Messages
- 6,587
It depends on where you're starting from. A lot of guys who build things to sell have a hobby where they know of a niche product that's needed and who might want it. This includes hobby machining and you know where to find us....
One advantage of building something over taking in work is you don't have to tell everyone in town that you're in business. If you're taking orders on the internet and sending out packages you can probably get started with less overhead and your development costs are making something that you can use.
As noted, your town and your landlord will make a big difference on what you can get away with. Some places you can have half a dozen lawnmowers out in front with a for sale sign, other places your neighbors will call code enforcement on you. Ask your landlord if your plans will be a problem and read the zoning regulations for where you are before hanging out your shingle.
Start simple and work your way up, keep track of your expenses and what does and doesn't work. And be open to opportunities that don't include the machine shop, there's lots of needs out there and for some it's better to keep hobbies and work separate.
John
- Joined
- Feb 8, 2014
- Messages
- 11,145
I have a bit different vision on doing machine work in general.
Having owned machine tools for over 50 years, and doing commercial type work for much of that time I can tell you that making chips for a living is the hard way to go. Too much competition out there, somebody else can do it better and faster than you can. There is no way I would ever try to become a job shop. Occasionally I do some job shop type work or short run production as a favor to a customer or a neighbor needs a broken tractor part repaired (will work for food
) We make piles of chips every month now, but it is 99% for our own in-house manufacturing for a product we sell.
Having said that, machine tools are very handy for providing a solution to a problem in some cases, but they are just another tool in the box. All of my machine tool purchases were to have the tool available to do a specific job. The fact that I could later use them for another job had no bearing on the original purchase.
What I do sell is solutions to problems. I have made a career out of doing the ''impossible'' and tackling stuff that nobody else would touch. I did start out with a basement shop and contacted some local shop owners to see if they had work that they didn't want to do. Also I was working for a local company at the time as a millwright and they had me make some parts for them as needed. Your most valuable tool for bringing in work is just chatting with people and letting them know that you are available.
Your family/housing situation does somewhat limit your options, but there is always a workaround. One of the things that you could do is contract CAD/CAM work since you already have some exposure to that in your 6 years at a CNC shop.
Best of luck.
Having owned machine tools for over 50 years, and doing commercial type work for much of that time I can tell you that making chips for a living is the hard way to go. Too much competition out there, somebody else can do it better and faster than you can. There is no way I would ever try to become a job shop. Occasionally I do some job shop type work or short run production as a favor to a customer or a neighbor needs a broken tractor part repaired (will work for food
) We make piles of chips every month now, but it is 99% for our own in-house manufacturing for a product we sell. Having said that, machine tools are very handy for providing a solution to a problem in some cases, but they are just another tool in the box. All of my machine tool purchases were to have the tool available to do a specific job. The fact that I could later use them for another job had no bearing on the original purchase.
What I do sell is solutions to problems. I have made a career out of doing the ''impossible'' and tackling stuff that nobody else would touch. I did start out with a basement shop and contacted some local shop owners to see if they had work that they didn't want to do. Also I was working for a local company at the time as a millwright and they had me make some parts for them as needed. Your most valuable tool for bringing in work is just chatting with people and letting them know that you are available.
Your family/housing situation does somewhat limit your options, but there is always a workaround. One of the things that you could do is contract CAD/CAM work since you already have some exposure to that in your 6 years at a CNC shop.
Best of luck.
- Joined
- Jan 2, 2019
- Messages
- 6,587
Definitely like where @JimDawson is going here.
Some CAD courses and a fast computer and you are an independent contractor making far better money than running a machine. You can also work for anyone literally anywhere. Get good with 3D printing and you’ll really have something to put food on the table.
John
Some CAD courses and a fast computer and you are an independent contractor making far better money than running a machine. You can also work for anyone literally anywhere. Get good with 3D printing and you’ll really have something to put food on the table.
John
I know my current living situation does limit my ability to start a job shop. I know my landlord will not agree to it. I got my gunsmithing certification to do that but when it came time to file paperwork he said NO even though prior to me getting it he said “sure”. So, even though I want to pursue a job shop type business I think trying to find things to produce myself would be the way to go for now. I do have some exposure to CAD but I don’t think I could do that all day. I am into shooting, hunting, fishing and machine repair. Thoes are the categories I would prob try and develop something to produce. There were a few other suggestions mentioned here that may also be prospective to research.I have a bit different vision on doing machine work in general.
Having owned machine tools for over 50 years, and doing commercial type work for much of that time I can tell you that making chips for a living is the hard way to go. Too much competition out there, somebody else can do it better and faster than you can. There is no way I would ever try to become a job shop. Occasionally I do some job shop type work or short run production as a favor to a customer or a neighbor needs a broken tractor part repaired (will work for food
Having said that, machine tools are very handy for providing a solution to a problem in some cases, but they are just another tool in the box. All of my machine tool purchases were to have the tool available to do a specific job. The fact that I could later use them for another job had no bearing on the original purchase.
What I do sell is solutions to problems. I have made a career out of doing the ''impossible'' and tackling stuff that nobody else would touch. I did start out with a basement shop and contacted some local shop owners to see if they had work that they didn't want to do. Also I was working for a local company at the time as a millwright and they had me make some parts for them as needed. Your most valuable tool for bringing in work is just chatting with people and letting them know that you are available.
Your family/housing situation does somewhat limit your options, but there is always a workaround. One of the things that you could do is contract CAD/CAM work since you already have some exposure to that in your 6 years at a CNC shop.
Best of luck.
- Joined
- Feb 8, 2014
- Messages
- 11,145
There is always something in those areas that ''everybody needs'', but isn't available on the market. What related widget do you wish you had, but you can't buy? If you think that you need it, then 10,000 other enthusiasts also need it.
We sell a truck camper related product to solve a problem that exists with all campers, and that the camper manufactures won't provide. It's taken about 4 years from concept to full on production, but we can't keep up with the orders. And I might add, there was a lot of CAD work involved.