Pricing problem.

dodevildodevil Posts: 77Member
Ok. This part of our bussisnes is getting bigger but we still have problems setting the prices, we are going to car shows event and get some companies interested on get their product with hydrographics. But with that we get at a point where I dont know how much charge. With a single customer you can regret the price and move forward to the next, but with a company you can't change the price after starting the deal.

So. Most of this are not really production but may be a repetitive of small lots, how setup a price in that case, even of they only send the parts if the final customer choose our desing.

Example for this part in the picture. What is a good price for:

a)single time customer
B)repetitive company who offer your desing in their catalog but only send you the part if the customer choose that one.
C)small production lot, let say 20 parts. 
D)just more part let say 100.

This part is a handler in bare aluminum they are new, we just sandblast it, epoxy primer, base, doble dip, blend the seam and touch up. And clear it in textured flat or soft touch clear.

Thanks to all. I dont wanna loose this opportunity. I already send the samples and they are happy and doing their test.


Comments

  • MidOhioHydrographicsMidOhioHydrographics Posts: 9,465Member, Moderator, Business Ninja El Moderator
    Ah this is a very common and one of the most difficult questions in this industry. To put it simply, charge whatever you need to make a profit. This varies for every company. Now, I know that sounds vague and you’re right. It is. In general, you have to take your expenses (utilities, labor, materials, etc.) and then add your % margin.  Also, I would guess that for most companies (including mine) A, B and probably C will be the same price/part, or very close. 

    Here is is what I do for D...
    - get clear instructions as to what the customer wants
    - sample parts in representative run for them that way and track man hours, material usage, etc. (sometimes I charge, sometimes I do not). 
    - calculate your margins using that data
    - figure out a design for tooling/fixtures if needed

    Remember this is the same thing that every company must do. Installing air conditioners? Baking cookies? Basically the same thing. And it’s not easy. I screwed up plenty early on.


  • WileECoyoteWileECoyote Posts: 6,520Member, Moderator, Business Ninja El Moderator
    If you ran the samples, then I am assuming you took time studies while you were producing them. This gives you VERY accurate descriptions and times for each step of the process in YOUR shop. Painting in shop "A" is going to cost differently than painting in shop "B". Touching up the seam is going to be different for each unit and may require different steps, which is why you figure out what your average reject is, and base your labor off of that, also taking in to account what your production requirements are. At that time you can also figure out what quality you are able to achieve, and WHAT THE CUSTOMER IS WILLING TO PAY FOR... Perfect is not a quality standard, and a quick way to the unemployment line. You base your costs on what it takes for you to produce the parts at the place you are currently, and then the improvements you make are the way you can stay competitive when the customer starts talking about cost improvements.
  • K2ConceptsK2Concepts Posts: 13,435Administrator El Jefe
    Of course they are happy...you put a hel of a lot of work into that part...and it looks great! Now are they willing to pay for it?...Probably not...

    Welcome to the world of production...

    Often at the end of the day I simply ask them “What are your cost projections?”...Sometimes it’s as easy as that...Often they will tell you what they had in mind for the process...if it’s close to what you are thinking? Then you have a common ground...if you are miles apart? Try to explain the cost difference reasonably...if they are insistent? Then you are better off letting them go down the road than lose money...I can stay home and wash my car and lose money...I am pretty good at that...

    Be careful chasing the rabbit down the hole...there are often guys out there doing the work for NOTHING...and you can often drive yourself crazy trying to figure out how they are doing it...I struggle with this often and you just need to let it go...
  • dodevildodevil Posts: 77Member
    Yes, so far I'm using the sample technique to bring some attention, but definitely I will start talking about pricing in the few first contact. I quickly learn that everybody love this process but very little are willing to pay for it.

    But again I'm totally lost about pricing. I always do this as a second job. I mean I never turn on tha paint paint booth for a hydrographics part, and usually do the dip at night in my "spare" time. I dont know of it's bringing money to the shop or not.

    I set up myself that I will not sell a yeti cup of it dont bring 25$ back beside the cup cost. But I just choose that randomly.

    I was thinking that the worse part of this bussisnes are the process. Now I know that selling it and set the proper price for each part is the real deal here.
Sign In or Register to comment.