CNC industry pricing

What goes into formulating your pricing system. September 2, 2002

I'm looking for information regarding industry pricing standards for CNC woodworking.

Forum Responses
I have a CNC router job shop, and I have no clue where to find an "industry pricing standard". The closest I can think of is a price list from a major cabinet components supplier, which of course only provides for cabinet component pricing, and must be dissected into material, edgeband and cutting. Do you wish to adjust your own pricing to conform with such a standard, or are you trying to keep your supplier honest?

There are so many things that can affect the price of a job, such as lead time, whose material, finish quality requirements, packaging issues, secondary operations, etc. Some shops have multi-head machines and can cut more than one part at a time, others have pendulum table, some have both. Some of the new machines can cut faster than any tooling currently allows, many rapid travel at 3000 ipm and up. The cost of CNC machines ranges all over as well, from below $50,000 to $300,000 (and up!). All these things influence the cost to machine a part, and of course there is the question of what it would take to make the part without a CNC. If it costs $10.00 to make the part without a CNC, and I am willing to sell it to you for $7.50, does it matter whether my COGS is $7.00 or $2.95? I would say it only matters what any other shop would sell it for, and only then if we are both candidates for the job.

Pricing is important, but so is the business relationship. I have customers that rarely even think about shopping from anyone but me, not because I am the cheapest in town, but because I have earned their business. I make it happen, I make it happen fast, on spec and on short notice. I have also grown with these customers, getting to know the draftsmen, shop crews, and engineers - we can communicate ideas, solutions, and work toward making them look good to their customers.

I have to agree with the above, but when people ask me for a "ballpark" number, I tell them I use 0 through 9 with commas and decimal points - that is as standard as we can get.

Ken Susnjara published a nice little spreadsheet, "The Formula," that calculates the true cost of producing any part (CNC or otherwise). You will, however, have to fill in fields that require data on machining and process that some people don't even think about. But as the old salt once said, "If you can't measure it, you can't manage it". This spreadsheet was included in his book, Furniture Manufacturing in the New Millennium. The formula has value for those looking for a structure for cost accounting.

We're not a jobshop but have helped out neighbors by doing some things for them on our p2p. We've been charging $100/hour for programming and $100/hour for machine time (they've supplied materials). I saw somewhere that these were "average" prices.