What is you shop's overhead increase in the last year?

david n · Feb 15, 2022

I'm crunchin numbers here............you all know everything is up from carbide to TP. I'm gonna have to break the news(shouldn't really be a surprise) to my customers in the next week of at least a 6.5-10%(still counting on my fingers 'n toes) overall price increase. What numbers looking like in your shops? I already compensate for material prices with material surcharges on every invoice................but insurance is up, property taxes, phone/juice/LP/garbage bills are up..............my coolant is up 33%, plating, heat treat, office supplies, packaging supplies, trucking, etc, etc, etc................... :willy_nilly:

I do have to say that I'm not the normal job shop as 95%+ of my work is repeat. And my out the door price has been fairly flat as most parts have a nice margin(way above normal shop rate) and the fact that the mfg process for many parts has gotten so tweaked/stream lined that I'm pushin out way more work/hr than the original numbers reflect and gettin paid well. :smoking:

But as I see those nice margins dwindle, I need to get numbers in check. I have tightened my belt long enough. I may loose some work, but my gross should stay the same and my shop hours should drop................What are the rest of ya's doin?

CITIZEN F16 · Feb 15, 2022

Seems most items that I can recall are up 10-40%. Tooling and materials fall in that category. I really haven't paid much attention to consumables like sand paper, deburring wheels, tumbling and blast media. Still paying $.12 per KWH for electric regardless of amount, no demand factor. Heating oil up 20% over last year, gasoline up a huge amount but
I don't use much of that in relation to the business, most items are shipped in, other than the occasional desperate visit to Fastenal or getting blast media at Harbor Freight.

DanASM · Feb 15, 2022

In my world it is mostly heating oil and gas for the vehicles, Kerosene here and there.

I started quoting material separate about a year and a half ago and adjust as needed. Most of my work is repeat and my 2-3 largest customers drop ship material to me and I just get paid for my machine time.

Everything I buy in my personal life (after tax money) has gone up 35-40%. My grocery store bill has gone up significantly this past year and I just feed myself.

The job shop trade shows Ive been to in the past 6 months have people telling me to raise prices 10% a year for the next 5 years an no one will bat an eye.

I say raise prices 1.5x what you think you need to. Then when the next price increase happens you can be one of the last guys to raise prices again. Your customers will notice your not increasing prices when everyone else is. Then you can do the same thing when the next increases eventually happen.

Larry Dickman · Feb 15, 2022

don't forget lunch. Up to about $18 for something decent around here
$10-$12 just for some shit at taco bell

Kalispel · Feb 15, 2022

Industrial inflation is much higher than the 7.5% figure that gets batted around.

Primary materials: I am actually seeing a decrease from Q4 but still 32% above the January 2021 prices.

Labor: We have always paid well so the difference is only 5%. The bulk of wage inflation is caused by firms on the low end of the wage spectrum having to compete aggressively for people. The firms on the top of the spectrum did not need to move nearly as much.

I have not looked at the rest of the expenses. Energy is way up for sure.

plastikdreams · Feb 15, 2022

All I know is our genius plant manager decided to put a freeze on ordering stuff in December/January and is now wondering why we are ordering so much stuff...some people just need to get punched in the face.

By freeze, they were trying to make our numbers look better. No cutters, no materials, no nothing....but we still had to make and fix stuff, without replacing what we used.

CITIZEN F16 · Feb 16, 2022

Larry Dickman said:
don't forget lunch. Up to about $18 for something decent around here
$10-$12 just for some shit at taco bell

Medium sized BigMac meal with tax is about $10 here.

CITIZEN F16 · Feb 16, 2022

plastikdreams said:
All I know is our genius plant manager decided to put a freeze on ordering stuff in December/January and is now wondering why we are ordering so much stuff...some people just need to get punched in the face.

By freeze, they were trying to make our numbers look better. No cutters, no materials, no nothing....but we still had to make and fix stuff, without replacing what we used.

Just turn the feed over ride down to 30% to help meet the new lower budget for cutting tools, problem solved.

vincent eggleton · Feb 17, 2022

I rent our shop space and it went up over 30% the year before last year.I did tell my complaints about it being a covid year. my shop rent went up over 30% again this year. So my rent went up about double from 3 years ago.

I have not seen the bounce back in work you guys must have. We raised our price from $50 per hour 2 years ago to $85 per hour and now I may be looking for a new place to BUY and move equipment too. If some one complains about you raising your rates tell them if they are unwilling to pay there are other shops that are even willing to ship like mine but its sure hard to get fast turn around time and inspection time when the fastest a box and fly is overnight $$$$.

Also quoting has been a nightmare to get materials. I am not a shop that spends over 20k-50k a year with any one vendor and I have noticed I have been put on the back order list for over 3 weeks multiple times from multiple vendors. I try not to order Chinese anything so I think the bigger vendors/ middle men must be feeling a crunch too or making a killing.

The only thing I can seem to do change from quotes to estimates and say thisis an ESTIMATE NOT A QUOTE because material prices and lead times are changing.

Wife cooks lunch for me and its a short drive to home so I guess I'm one of the lucky ones on that front

plastikdreams · Feb 17, 2022

vincent eggleton said:
I rent our shop space and it went up over 30% the year before last year.I did tell my complaints about it being a covid year. my shop rent went up over 30% again this year. So my rent went up about double from 3 years ago.

I have not seen the bounce back in work you guys must have. We raised our price from $50 per hour 2 years ago to $85 per hour and now I may be looking for a new place to BUY and move equipment too. If some one complains about you raising your rates tell them if they are unwilling to pay there are other shops that are even willing to ship like mine but its sure hard to get fast turn around time and inspection time when the fastest a box and fly is overnight $$$$.

Also quoting has been a nightmare to get materials. I am not a shop that spends over 20k-50k a year with any one vendor and I have noticed I have been put on the back order list for over 3 weeks multiple times from multiple vendors. I try not to order Chinese anything so I think the bigger vendors/ middle men must be feeling a crunch too or making a killing.

The only thing I can seem to do change from quotes to estimates and say thisis an ESTIMATE NOT A QUOTE because material prices and lead times are changing.

Wife cooks lunch for me and its a short drive to home so I guess I'm one of the lucky ones on that front

Build back better, right...hmmm

Ox · Feb 19, 2022

vincent eggleton said:
I rent our shop space and it went up over 30% the year before last year.I did tell my complaints about it being a covid year. my shop rent went up over 30% again this year. So my rent went up about double from 3 years ago.

I have not seen the bounce back in work you guys must have. We raised our price from $50 per hour 2 years ago to $85 per hour and now I may be looking for a new place to BUY and move equipment too. If some one complains about you raising your rates tell them if they are unwilling to pay there are other shops that are even willing to ship like mine but its sure hard to get fast turn around time and inspection time when the fastest a box and fly is overnight $$$$.

Also quoting has been a nightmare to get materials. I am not a shop that spends over 20k-50k a year with any one vendor and I have noticed I have been put on the back order list for over 3 weeks multiple times from multiple vendors. I try not to order Chinese anything so I think the bigger vendors/ middle men must be feeling a crunch too or making a killing.

The only thing I can seem to do change from quotes to estimates and say thisis an ESTIMATE NOT A QUOTE because material prices and lead times are changing.

Wife cooks lunch for me and its a short drive to home so I guess I'm one of the lucky ones on that front

From my vantage point here, I'd say that now is a good time to buy if you have work.
Commercial real estate is 1/2 what it was - say 10 yrs ago. (of the few that have sold in our area in the last yr or two)

I don't understand why they would have raised your rates so much?
Is there really someone else wanting to move in?

I guess on small facilities that could be the case, where someone wants to start up on their own?
But larger facilities where they are dependant on several employees, I have seen no interest in those companies upping the ante.

???

--------------------

Think Snow Eh!
Ox

boosted · Feb 19, 2022

Ox said:
From my vantage point here, I'd say that now is a good time to buy if you have work.
Commercial real estate is 1/2 what it was - say 10 yrs ago. (of the few that have sold in our area in the last yr or two)

I don't understand why they would have raised your rates so much?
Is there really someone else wanting to move in?

Anything within commuting distance of Portland is still experiencing crazy inflation. A couple acres of buildable commercial land near my (leased) shop is worth over a million bucks, and they seem to be selling fast.

I hope to buy commercial in the next few years, just so we don't get completely priced out of the region. Our house has gone up 40% in value in less than 3 years... :crazy:

CarbideBob · Feb 19, 2022

Commercial building prices here are location, location, location.
Seems that if you are in an area that allows it the prices have gone up quite a bit since growing pot became legal.
Bob

jatt · Feb 25, 2022

Found a piece of industrial zoned land in my local town with a house down one end. Got a renter in it, so the good folk in it are helping me with the mortguage, bless them!

On the price hike on everything. Its going up by a similar amount this side of the ditch. Not paying much on the rent side where I am at present, so thats one thing going in my favour.

On the shortage side of things, have been fairly lucky to date. Not many issues, so wont complain.

CITIZEN F16 · Feb 25, 2022

plastikdreams said:
All I know is our genius plant manager decided to put a freeze on ordering stuff in December/January and is now wondering why we are ordering so much stuff...some people just need to get punched in the face.

By freeze, they were trying to make our numbers look better. No cutters, no materials, no nothing....but we still had to make and fix stuff, without replacing what we used.

The stories I could tell about upper level management folks that have no clue. Quite a few have fancy degrees, but they combine those with no common sense, no skills to roll with the punches, and to adapt to changing situations. You definitely sound like someone who should strike out on their own and I hope you are working toward that. Nothing is worse than working for someone you are much smarter than.

wheelieking71 · Feb 25, 2022

david n said:
I'm crunchin numbers here............you all know everything is up from carbide to TP. I'm gonna have to break the news(shouldn't really be a surprise) to my customers in the next week of at least a 6.5-10%(still counting on my fingers 'n toes) overall price increase. What numbers looking like in your shops? I already compensate for material prices with material surcharges on every invoice................but insurance is up, property taxes, phone/juice/LP/garbage bills are up..............my coolant is up 33%, plating, heat treat, office supplies, packaging supplies, trucking, etc, etc, etc...................

I do have to say that I'm not the normal job shop as 95%+ of my work is repeat. And my out the door price has been fairly flat as most parts have a nice margin(way above normal shop rate) and the fact that the mfg process for many parts has gotten so tweaked/stream lined that I'm pushin out way more work/hr than the original numbers reflect and gettin paid well. But as I see those nice margins dwindle, I need to get numbers in check. I have tightened my belt long enough. I may loose some work, but my gross should stay the same and my shop hours should drop................What are the rest of ya's doin?

We are in a similar boat. The items in red ^^^^ really have me :skep:

. I've been eating a lot of the increased material costs. Unlike you, I do not mark up material. So, that one is a big deal.
My ins. doubled this year! Freaking doubled! And, I just bought a new drum of coolant. Holy crap!
I just had to order material for one of my legacy jobs. Two part assembly. Both 6061. 1,000/ea-pc. Material cost when I originally quoted this job 6 yrs ago was:
$1.00ea for one part, $2.10ea for the other. This time it is $2.25ea, and $3.40ea. I'm not eating it.
Had to call customer and tell him the price was increasing $2.55/assembly to cover the insane new material cost.
He isn't sure his customers will pay the difference.

I'm about fed-up with just about everything going on in the world today. And just about done.
Lucky for me I am literally weeks from being 100% debt-free (mortgage excluded).
And, quite honestly, got a very serious case of the "fuck-its". So, I'll keep doing the work that comes to me. But, until this nonsense turns around,
or stuff catches up to it (not likely), I'm not actively looking for work. Every time I quote something, no matter the market segment, the price is too high.
I would literally have to drop my rate back down in the $40~50/hr neighborhood to get work. Not happening. Especially with all other costs climbing the way they are!
Not sure what I'm going to do? Early retirement? IDK? But, I know I'm not going to work for peanuts just to keep working.

BoxcarPete · Feb 25, 2022

wheelieking71 said:
We are in a similar boat. The items in red ^^^^ really have me . I've been eating a lot of the increased material costs. Unlike you, I do not mark up material. So, that one is a big deal. My ins. doubled this year! Freaking doubled! And, I just bought a new drum of coolant. Holy crap!
I just had to order material for one of my legacy jobs. Two part assembly. Both 6061. 1,000/ea-pc. Material cost when I originally quoted this job 6 yrs ago was:
$1.00ea for one part, $2.10ea for the other. This time it is $2.25ea, and $3.40ea. I'm not eating it.
Had to call customer and tell him the price was increasing $2.55/assembly to cover the insane new material cost.
He isn't sure his customers will pay the difference.

He will once he finds out how much worse the price is when he quotes it fresh somewhere else. We've tried that on a couple sub-contracted parts we had to pass along price increases on. Even after the increase the new one is still almost double the bumped-up current part.

Milland · Feb 25, 2022

plastikdreams said:
Build back better, right...hmmm

It started with destruction of the economy because of a grossly mishandled pandemic. Sure, blame the firefighter, not the arsonist who burned down your house.

Clever boy...

wheelieking71 · Feb 25, 2022

BoxcarPete said:
He will once he finds out how much worse the price is when he quotes it fresh somewhere else. We've tried that on a couple sub-contracted parts we had to pass along price increases on. Even after the increase the new one is still almost double the bumped-up current part.

His customers are end-retail. And, he is right.
He really isn't sure they will pay the difference. What good will it do him to raise the price, only for them to sit in inventory not selling.

wheelieking71 · Feb 25, 2022

Milland said:
It started with destruction of the economy because of a grossly mishandled pandemic. Sure, blame the firefighter, not the arsonist who burned down your house.

Clever boy...

You spelled plandemic wrong.

What is you shop's overhead increase in the last year?

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