Bidding jobs

[Mark Lovelace]

I have a client that I do programming for, and then sub-out the machining. Typically, we do rather simple 2-part casting molds, though occasionally we do more complex 4-part molds. All of the products have organic 3D forms to them and, being in a small town, they don't have a lot of option of who to go to for this level of CAD and CNC programming. This causes them to act suspicious of any quote I give them for a project, as if I'm taking advantage of them. Truth is, I typically underbid, so that I can be sure I am not taking advantage. Nonetheless, they always act shocked at how much it will cost them to get a mold made, even though we've done this a dozen times, now.

 

How can I give them an idea of what it would cost them to try to get this thing programmed and made out of the area, without investing a bunch of my own time bidding it out to potential competitors?

 

Also, would it be appropriate use of the forum for me to post a file to get estimates from other users as to how much time (not $) they would bid a given job at?

[Rekd™]

If you feel your bids are fair, don't sweat it. Let him make the decision to look somewhere else, then he'll come back. I would never suggest under-bidding a job, especially if there's not many other options for the customer. But you always have to be fair and not gouge them.

 

You could also break down one of your quotes... explaining all the steps it takes, include the tooling costs, all the hand finishing and/or polishing etc. Maybe that will open his eyes.

 

'Rekd teh don't wrap money around your parts!

[Guest CNC Apps Guy 1]

quote:

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But you always have to be fair and not gouge them.

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I think breaking down your time;

 

i.e - 7 hours CAD, 12 Hours Tooling CAD, 4 Hours Programming Part, 6 Hours Programming Tooling, etc...

 

Then they don't just see p/n 123456-1 Mold $2,500

 

If your priced are reasonable they'll be back once they get a taste of the real world.

 

Just so you know, I tend to be on the reasonable side too. I like repeat business. And I like my customers to feel good about choosing me. I don't take nearly the contract work I used to. I just don't have the time anymore. So I pick them carefully.

 

HTH

[CAM-mando]

My 2 schillings ...

 

Just had a situation where a new customer came to us because of our capability, quality etc. He gets our quote then counter offers based on a price he suposedly had on a similar project by some other vendor. Oh yeah 1/2 the lead time and Im adding a few new wrinkles and components.

 

We said thanks but this wont make sense for us, maybe we can do business in the future.

 

A week later same customer has changed their tune. They want us to do the job. All of a sudden its not all about price.

 

Keep in mind by the time it gets to chip cutting time, budgets have been used up along with schedules. A profitable business cant absorb the budget shortcomings of customers.

 

I think it is important to be competitive, but I am watching shops cut rates without having a clue how to cut costs. I know where that leads. So I personally would not share competetive pricing with a customer. If you believe your price is fair and they complain but continue to give you the work, then maybe they are just trying to squeeze what they can out of you.

 

Just a thought, but to answer your original question, I certainly wouldnt mind looking at your files and giving my opinion if you want. As a one shot "calibration" I wouldnt find it offensive. As a regular thing, I personally think perhaps it would be a bit inappropriate.

 

 

Dave teh "No I dont want BOBCAD even at $495 for 2 seats (it was $795 2 days ago) so stop faxing me ... where is the black construction paper."

[Slick]

From my experience in production machine shops, the customer's that play the "sheesh that's a lot o' money" tune end up being the ones that are making the most money. They'll use that whole guilt thing to there advantage and next thing ya know you aren't making any money. Bottom line, your time is valuable, quote it for what you thinkit's worth, don't give in to the pressure of not possibly getting the work. If the customer's in business, odds are they're smart, they've already shopped around, they know you're the lowest price, and since you are the only way he could get a lower price is to haggle you down.

 

Woh, kind of went on a terror didn't I, sorry 'bout that!

[Mark Lovelace]

James and Rek'd,

 

Actually, I have been itemizing my quotes pretty thoroughly, and unfortunately I've found it just gives them more to complain about. "Why do you need 6 hours to draw it? I gave you a sketch with numbers on it!" "Why does it take 7 hours to write the toolpath? Doesn't the software do that for you?" "8 hours to machine it? But the last thing you did for us only took 5 hours!"

 

For this customer, at least, I'm deciding that I don't want to give them any more information than I have to.

[McRae]

quote:

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I think it is important to be competitive, but I am watching shops cut rates without having a clue how to cut costs.

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Dave,

 

This is exactly the case. Not everyone is able to reduce costs! The academic arguments are - Lean is the way to go, eliminate waste, reduce leadtimes, reduce WIP/Inventory, Buzz This/Buzz That. The questions that you have to ask yourself Mark are,

 

What are my costs and what is my productivity rate? If I am twice the hourly price of my competition, can I complete the job in half the time?

 

Why does the customer want to do business with me, what additional value do I add to his company and how do I leverage this relationship to my profitable advantage (do you cause any downstream problems - can you help him aviod upstream bottlenecks).

 

The hard part is creating value and eliminating non value added tasks - ie itemized billing, what value does it add to the part or process - none. Plus it gives the customer something to complain about.

 

Jack Mitchell gets credit for quoting ProAndy - Never drop your pants for a customer... Being in the small town market Mark, your customer is already enjoying a lower overhead than some of the "Big Town" players - so let it ride, compete on Quality, Service and Leadtime - always avoid price. Let him know it too - do a job overnight, document that so next time he says - "Ohh the last time it cost only XXX" - You counter with "Yeah, but I worked 28hours straight to help you deliver YYY".

 

[ 05-29-2003, 06:10 PM: Message edited by: Andrew McRae ]

[Scott Bond]

Good Afternoon

 

] """Scott, How much will it be for your to make this mold?""" [/quote

 

I add up the real material cost,some cutters, some help from the mold blocker, a car payment,some of my house payment ,and a dinner& movie out with my wife. If it is to much for a new customer, then bummer I am not the vendor for that job.

 

'Bond teh If it is for a repeat customer that I trust is not B.S.ing me,,, I will negotiate.

 

[ 05-29-2003, 06:20 PM: Message edited by: Scott Bond ]

[beav700]

When it comes to quoting, do you quote same molds lower than say three years ago when economy was better and we had fewer shops with high tech software and hardware. It seams that most mold shops are begging for work these days, so one would think that prices would be lower. Especially

with all the competition from Asia.

 

When buing spare molds, should I expect lower prices these days.

[Kevangel]

If people are not complaining about your prices, it is probably a sign your prices are too low(in generalities).Caveat emptor...let the buyer beware.

[Chris Rizzo]

I may not have an answer to your original post Mark, but I certainly can sympathize.

 

We are currently sweating out a quote to a customer who's reply was, "that's way too much, we can afford half that price."

 

My inital response was, "when the cashier at the grocery story tells you your total, do you say 'I'd like to pay half of that"?

 

After my knee-jerk anger subsided, I found myself also questioning the validity of my own quote, especially how it pertains to the rest of the industry. Granted we are not clerks at a mini-mart, however our intellectual services (programming, sourcing, knowlege, etc.)do cost money, contrary to what some customers may think....however desiring my customer's business, coupled with enjoyment of my job, I sometimes hesitate at writing full-price quotes.

 

Unfortunatly for our particular job we did a fair amount of prototyping and development that went "unbilled", with the flawed anticpation that costs would be recouped with the production run. Needless to say we are not going to back down on our price, and am anxiously waiting the results of the customer's efforts in trying to get the same service for "half the price".

[Rekd™]

You've got a point, cmr. Now if you'll just grow your hair long, no one should notice it.

 

Keep in mind, there's a difference between the phrase "I can afford half that" and "It's worth half that".

 

The first phrase is not your problem, it's thiers. On to the next bid. The second phrase is likely jibberish. Let him go get it for half-price, I'll not be wrapping any money around my parts at shipping time!

 

If he leaves and comes back some time later, he couldn't find it for half price. If he immediately comes back, he was BSing you. If he never comes back, he's likey too embarrassed to face you again, and went with joe schmoe down the block for a few dollars more than you bid it at.

 

'Rekd teh Customer: "These parts are bad" Me: "You said when you came in yesterday that you needed them really bad, that's exactally how you got them; really bad."

[Chris Rizzo]

Long hair won't fit under my helmet, and it's on alot these days...race season!!!

 

Besides, if they don't go for the job, I have more time to develop parts for my bike! Now if I could just get paid to do that....

[gcode]

In the past I've had customers who will never accept your first price. They have to beat you down. I don't know whether its ego or they think its good business but they just have to knock the

price down, no matter how resonable it may be.

 

The solution is to bid the job 20-30% high then let them beat you down. (Kicking and screaming the whole way)

After they've beat you down 30% they think they are the world best businessman and you've got the price you wanted all along.

[Mark Lovelace]

G-code, for this customer, that's probably the best advice I've recieved so far. They've got no idea what a job is worth, they're just positive that it ought to be cheaper than whatever I quote them.

 

Then again, if they want it 20% cheaper, I suppose I could make the part 20% less than correct. Sounds fair to me.