Charging for Short Runs of Custom Moulding
From contributor S:
As contributor B said, you need to know what it is costing you to set up and run the machine. But that is only half of the problem. Letting people bring in their own lumber is the other half. You are counting on the markup from the lumber you supply to come up with the profit margin you normally make. Sounds like the local customers are cheap. They know you charge and count on the markup on the lumber. They are trying to buy the moulding cheaper and in turn, beat you out of the profit. And whatever you come up with to charge them, it will be too much. At least from their point of view. What you need to do is either stop taking their material or make it so you make more if they supply the lumber. They need to understand that you have to make money to stay in business. Running 50' when they supply the lumber isn't going to pay the bills, let alone cover the cost to turn on the machine. There is a reason they keep coming to you. It may be that everyone else with a moulder in the area won't touch these small orders. Don't forget that you are the one with the capitol investment in the machine, tooling and overhead to run it. If they really need it, they will pay your price. And if you can't get what you need to make, then what have you lost? Once you agree to run their material at a lower cost, they will keep coming back to do it again. So unless they come through with a substantial order, where are you going to make money with these people? The problem with selling to small customers is not the cost, but the way the cost is presented to them. You are much better off with a small customer folding in the setup fee. To many of these small guys, a setup fee is nothing more than an added cost they have to pay. If you fold it in, they don't see anything as added cost. They just pay what you are asking.
From contributor J:
Here's a link to a spreadsheet here at WOODWEB for calculating moulding costs. It always uses a setup cost (because there always is a cost to set up the machine), but only gives a price per LF for all the time and material needed.
If someone brings in lumber for me to mill, I subtract my cost of the lumber out, keeping the markup in the price. There is still storage and handling and time spent with the customer.
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