Charging for Edgebanding
A cabinetmaker ponders whether and how to modify his piece rates after acquiring a more productive, but costly, piece of edgebanding equipment. July 12, 2012
We just upgraded to an automatic edgebanding glue pot machine from a tabletop and trim unit. Now that we have figured out our method to determine how much banding we use on any given job (digital scale), we are left with the problem of figuring out what to charge for the machine's labor. We operate a custom cabinetry shop in Massachusetts and have projects ranging from a simple bookcase to full house cabinetry, so some jobs require more banding than others. What's the going rate for edgebanding 1mm wood veneer to 3/4 plywood, stain grade?
From contributor A:
Our powerfeed rate is 21'/minute, but so far our realistic average production speed is about 8'/minute. This compares to the tabletop and trim method at 1.25'/minute. A job requiring banding 250' of cabinet parts that used to take us 200 minutes (3.3hrs) now takes 30 minutes. I think it makes sense that the machine should get paid to save that time for us. Labor time-wise, we were able to bill for the 3.3 hrs before (@ $60/hr x 2 = $396 plus banding), but now we are only billing for 1/2 hr (@ $60/hr x 2 = $60 plus banding and glue), so we should be thinking about charging for the machine to generate the difference of $336. To band 250' would require a charge of $1.58/ft plus banding and glue. I see in other posts that people are charging 40 cents per meter (12 cents per foot) to 20 cents per foot. At 12 cents per foot, to pay back a new machine that cost $12,000 would take 100,000 feet of edgebanding.
From contributor B:
I think it's unrealistic to expect to charge at your old rate - an edgebander is a standard piece of equipment in a well-equipped shop. It'd be like charging handsaw rates for material you now chop up with a table saw, or hand screwdriver rates for screws you now shoot in with your nifty cordless. That said, you certainly have a need to make a return on your investment. It might be worthwhile to consider the expected lifetime of the machine, your total costs, including parts, maintenance, supplies, and utilities, the number of hours you expect to use the machine over its lifetime, and the return you expect on your investment to come up with a realistic per-hour rate for the machine. Add the cost of the operator, and you should able to arrive at a billing rate that's fair for all parties.
From contributor L:
I would say if you were going to charge me $1.58/ft for machine use I would rather do it with an iron and keep the money myself. That is a crazy price.
I'd love to be able to get away with charging it though. If you do it for your own work where it is hidden in the overall job, you would likely get away with it. But if you charged that rate to band other people's stuff, look at a long recover on your machine expenses.
From the original questioner:
Thanks for the input. I can appreciate the idea that one must change their operating practices as technology improves, as with your handsaw/skillsaw suggestion. But there is a big difference between the price of a $100 cordless drill and the price of a $12,000 edgebander. Until we got the new machine, we were charging the $396 for the time that we actually spent putting the banding on with the old table top and trim machine. That was the way to get the banding on the plywood (and much faster than an iron). If I charge less than $1.58/ft for that job just because we now happen to have a new machine, I will be making less money than I was before I bought the machine. I'm not looking to rent out the machine, I'm just trying to get a handle on what to charge our customers that doesn't result in a net revenue loss on top of the machine cost. Perhaps there is a middle ground where we charge $1/ft. That puts the banding revenue at $250 for the above job, as compared to $396 the old way. So we are able to save the customer $146 on that part of the job, but the machine still generates some revenue to pay for itself. At $1/ft, it will take 12,000 ft of banding to pay for the machine. This is approximately 600 average size top drawer base cabinets, or approximately 30 full kitchens. This still seems low to me - a long return on the machine investment.
From contributor L:
The ROI on the machine doesn't come from the machine itself but the time the machine saves. You can now do 2 to 3 times the work (or more) in the same amount of time. That is a lot of labor savings while still getting the job done and probably at a better quality.
From contributor K:
Why do people even consider lowering their prices when they buy a new tool to save the customer money? Don't we buy machinery to make money? The savings should be passed on to you. Every time we get something new that does the job quicker, safer, with higher quality... Man, that's a bonus. Keep your prices the way they were, or increase them. Let the machine pay for itself as soon as possible so you can start making a profit on it.
From contributor B:
Paying off a $12k machine with 30 kitchens seems very quick to me. I put on 12,000 feet of banding per year by myself. I charge $200/hour for edgebanding, which includes operator and glue, if somebody wants to rent. If everything's organized, I can put on about 600'/hour, or $.33/ft. Most edgebanderless folks balk at the rate and think I'm gouging, which is fine with me. The few who use my services are delighted.
From contributor Y:
Charge what the market will bear. Much of the payoff on a more productive machine is allowing you to complete more jobs in the same time frame.
Our pricing model always has a start cost figured. For the bander it is 20 minutes. It includes the operator's time spent from getting the work order until he leaves the machine or starts another job, but not the actual run time. So in your case there would be a $20 cost before the run time or per foot charge. If the job had 200', the start time just added .10/'. You also need to charge for the machine cost over and above your shop rate. GAP would require a ROI that was better than what your money could otherwise be earning. You should also be getting something to cover risk factor. Faster machines make bigger piles of mistakes in a given amount of time! It's one thing to screw up your own panels, quite another when it's a customer's and he doesn't have any more $5/' Italian laminate.
We band for outside customers or for other shops when their machine is down. Much of it in 3mm because small shop banders struggle with it and often lack corner rounding. Bigger machines run a lot faster but cost a lot more, so actually cost less per foot of banding than small machines. That and they are built stronger and last more feet. But you gotta keep feeding the monster!