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

wheelieking71 said:

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I'm about fed-up with just about everything going on in the world today. And just about done.

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How many times have I heard this from shop owners in the last 45 years?

wheelieking71 said:

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.

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He will likely find someone cheaper. I've definitely seen an increase in the "race to the bottom" as of late. I cant criticize the guys who have machines in their garage because I started that way around the same time you did. However, there are some who will do it just to see the spindle turn and break even on cost. I think Xometry is more than partly at fault for the surge. Just my opinion
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rb07565 said:

.... I've definitely seen an increase in the "race to the bottom" as of late...

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Of late?
1980s and out looking for work. Potential customer asks what is your shop rate for manual mill and lathe work.
I try to explain that is end price not shop rate and some are more efficient than others.
He presses on and I say it is 32 to 36.
His answer that blew me away "We do not buy from anyone charging over 24 per hour and we have people down in the teens. You need to lower your rates".
This is not a new thing.
Bob

CarbideBob said:

Of late?
1980s and out looking for work. Potential customer asks what is your shop rate for manual mill and lathe work.
I try to explain that is end price not shop rate and some are more efficient than others.
He presses on and I say it is 32 to 36.
His answer that blew me away "We do not buy from anyone charging over 24 per hour and we have people down in the teens. You need to lower your rates".
This is not a new thing.
Bob

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i never quote or discuss "shop rate", all i tell them is i quote what i feel the job is worth to me. if thats a problem they get to keep walking. a lazy barpull job thats easy im willing to bid much lower than some fancy 0.0001" on everything bs.
same machine, dont care, my choice. id rather chase a new opertunity than a head ach

CarbideBob said:

Of late?
1980s and out looking for work. Potential customer asks what is your shop rate for manual mill and lathe work.
I try to explain that is end price not shop rate and some are more efficient than others.
He presses on and I say it is 32 to 36.
His answer that blew me away "We do not buy from anyone charging over 24 per hour and we have people down in the teens. You need to lower your rates".
This is not a new thing.
Bob

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anyone whose shop rate in 2023 (or 2022 for that matter) in the USA is less than 100 an hour is bottom feeding. the chevy dealer with a crew of knuckle draggers charges that. but you did say 1980's...my rent went up 25% last year...

cyanidekid said:

anyone whose shop rate in 2023 (or 2022 for that matter) in the USA is less than 100 an hour is bottom feeding. the chevy dealer with a crew of knuckle draggers charges that. but you did say 1980's...my rent went up 25% last year...

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Brooklyn is not Little Rock, Ark.
Just b/c your overhead is that, doesn't mean that others is.


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Think Snow Eh!
Ox

what does the Chevy dealer in Little Rock charge for a shop rate? just for a comparison.
we all have many of the same costs anywhere in the country, but yes there are differences.

so then what is a baseline shop rate for Little Rock? or West Utility? can't be much less...

I can guarantee you my shop overhead for a shop out in the country on the farm is way lower than the guy downtown with a fancy building. Add in that what might be difficult for you is bread and butter for another shop and rates vary.

I only bid by the job not the hour, as was said above if I can get a stupid easy bar pull job I'll do it for cheap as I'm probably running 1 or 2 other machines at the same time by myself so the easy bar pull job is bonus at that point. To blanketly say anyone not charging more than X is a bottom feeder is a very poor statement as so many things can come into play.

And to compare to large mechanic shops that all go by book rate is dumb as well. If your car breaks down and all the local shops want what you think is too much to fix it are you gonna entertain sending your car overseas to get it fixed?

cyanidekid said:

anyone whose shop rate in 2023 (or 2022 for that matter) in the USA is less than 100 an hour is bottom feeding. the chevy dealer with a crew of knuckle draggers charges that. but you did say 1980's...my rent went up 25% last year...

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My overhead is almost zero. Utilities, tooling, and maint. I make damn good money @ $75/hr per machine. And, I'm perfectly happy @ $50 (working in my little niche).
But, there are just way, way too many variables to throw a blanket hourly rate at machine shop work.

shop rate is a subjective thing, all depends on a ton of factors, like what is the base line costs. Sure, some have deals at tooling suppliers when it's like local shops doing production and using 3000 inserts in the span of January to April last year and saying before switching inserts, they were at 3800!
job shop guys can't compete for pennies that the massive ones can. One off parts I've quoted have had the customer come back saying "whoa" that's a lot. but then they don't realize that's simple looking set of parts took 5 hours to set up and machine, as set up each part took 15 minutes due to the unique angles it needed.
Other shops have had "rush" jobs where i said the three parts took 3 hrs of welding each non stop, dropped off the afternoon one day and was calling by 10am wondering if they were done. $1000 for it all might have seemed like a lot but it's the rush cost of doing business.

Very low overhead here too (but just got my new biz ins premium for the year...........)............I can run simple stuff purdy darn cheap..............fussy stuff that needs more babysittin' gets billed out accordingly...............but I have parts that I have been making for close to 10-15 years now.......prices on some of them haven't budged much except for the material cost.......processes have gotten dialed in over the years with programs, tool paths, fixturing, tooling consumption, work flow....cost per part has gone down on my end and I don't need to charge much more. But that is changing with the current costs of shipping, coolant, insurance, tooling, etc..............

JP Machining said:

I can guarantee you my shop overhead for a shop out in the country on the farm is way lower than the guy downtown with a fancy building. Add in that what might be difficult for you is bread and butter for another shop and rates vary.

I only bid by the job not the hour, as was said above if I can get a stupid easy bar pull job I'll do it for cheap as I'm probably running 1 or 2 other machines at the same time by myself so the easy bar pull job is bonus at that point. To blanketly say anyone not charging more than X is a bottom feeder is a very poor statement as so many things can come into play.

And to compare to large mechanic shops that all go by book rate is dumb as well. If your car breaks down and all the local shops want what you think is too much to fix it are you gonna entertain sending your car overseas to get it fixed?

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im most definitely not in a "fancy building" but yea my overhead is higher than a lot of places mostly because of the rents here,
and im absolutely not criticizing anyone for their pricing. if you can run a job concurrently with little labor input, more power to you.

I will contend there is a value to looking at shop rates in other industries. im not talking about individual jobs that compete with super low labor cost
countries that can go international. I assumed folk would understand im talking about a skilled worker in the USA, dedicated to a task. that's what I think is implied by "shop rate" and yes its a gross oversimplification, but we are talking generalizations, that's a given. what some cherry job you have dialed in nets you isn't pertinent, but, good for you, go get'em!

cyanidekid said:

im most definitely not in a "fancy building" but yea my overhead is higher than a lot of places mostly because of the rents here,
and im absolutely not criticizing anyone for their pricing. if you can run a job concurrently with little labor input, more power to you.

I will contend there is a value to looking at shop rates in other industries. im not talking about individual jobs that compete with super low labor cost
countries that can go international. I assumed folk would understand im talking about a skilled worker in the USA, dedicated to a task. that's what I think is implied by "shop rate" and yea its a gross oversimplification, but we are talking generalizations, that's a given. what some cherry job you have dialed in nets you isn't pertinent, but, good for you, go get'em!

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I think you make a fair point about industry comparison, I think about that myself from time to time - Not in the context of raising my shop rate though, because I can't. My garage shop is just not worth $100/hr in NE Ohio.

I do work on all of my own vehicles though. I almost never take a vehicle to a shop except for tires and alignment. I took a car to have a wheel bearing replaced 3 years ago because I was too busy to do it. The part cost $35, they charged me $450!!!

I took my truck for tires and alignment 2 months ago. The shop told me I needed a new pitman arm, idler arm and ball joints (They weren't that bad). The shop quoted $1600!!!

I took it home, ordered those parts PLUS 1 new control arm, 2 front CV axles, sway bar bushings and end links. All top shelf, lifetime warranty, greaseable components - not the mediocre crap they wanted to supply. Total cost was $400 and I had the whole job done in 4 hours.

Mechanics whine that customers scoff at their shop rate; "we have to buy expensive tools"... "you are paying for our knowledge".

Mmmkay. Well, a simple 1-2 man machine shop can easily rack up $500,000 in tools and equipment, 3x the monthly overhead costs and much greater risk with all their customers running on net 30. It also requires greater skill and knowledge to be a machinist than a mechanic... I know because I do both.

A wheel bearing on a 20xx chevy Silverado is the same job every time. So why is that job worth $100/hr and my machine shop isn't?

I'm not necessarily complaining. I hate working on vehicles and I wouldn't want to do it for a living. Like @cyanidekid pointed out though; making the comparison of one industry to another can have value.

Its very interesting too hear the differences in machine shops, pricing, overhead costs, work volumes and types......There are different types of machine shops sure, but its crazy how different everything can be.