How to Price CNC Router Work: A Simple Formula

CNC technology is continuing to gain popularity across different industries, and while that presents a lot of business opportunities, it also comes with some challenges, the biggest one being pricing.

How to price CNC router work can be a daunting task, especially if you are new in the business.

You may be intimidated by the number of competitions you face and maybe crippled with fear of failure, but all these can be appropriately managed with the right pricing.

How to Price CNC Router Work

A simple Pricing Formula

Hourly rate + Material Cost = Price

An Example:

$50/hr (2 Hours of Labor) + $75 (Material Cost) = Price $175

How to Price CNC Router work: Ultimate Guide

Pricing your work doesn’t just set you apart from other brands; it also determines whether your business thrives or fails, which is why you have to consider all the factors.

These factors include the raw materials, labor, the cost of the machine, and the cost of electricity.

What you charge for your products should bring in enough money to cover all the expenses and still make a profit. Remember that you don’t have to recover the cost of the machine at once. You can do so with time.

Check out this Article:  Best CNC Router 2020: Ultimate Buyer’s Guide

All these factors will affect the rate at which you produce and the cost of production.

For instance, the type of machine you buy will determine how fast you can make your products depending on its performance speed and capabilities, while the complexity of the product will determine the amount of work you put in and the amount of electricity you consume.

When calculating the production cost and the subsequent selling price, you have to include the cost of the raw materials plus an additional 15% to cover any wasted materials, the overhead cost, the cost of the tool, and the hourly wage.

Hourly labor rates

Hourly labor rates usually include other charges like benefits and taxes, which you have to factor in when quoting your price. If you have hired someone else to do the job, then you must also consider social security and Medicare in the hourly rates.

Since the complexity of the design will determine how long you stay on the machine, your hourly rates will vary. For instance, if you have a simple design that requires inserting the material and cutting it as desired, then your hourly rates can be between $50 and $150.

This price range can go higher if you’re working on more complex designs or projects that typically take longer.

Cost of materials

The cost of materials also differs with each material.

For instance, wood and plastic are more affordable, but soft metal is pricier. It’s also possible to get wood and plastic for free since they are recyclable.

However, there is also a chance that some of the materials will be wasted. You should, therefore, add 15% to the cost of materials when estimating the price.

Factor in indirect costs such as storage costs and shipping fees for the materials as well.

Cost of tools and router bits

The cost of tools includes the cost of the fabrication and the cutting cost. You can also add indirect costs like the cost of agents used to clean the tools.

Overhead and Profit

Overhead costs include essential consumables like electricity, rental costs, machine maintenance costs, and even insurance. After getting the total for all these, you can add a 20% profit to get your selling price.

Marketing

Knowing the different strategies to apply on different social media platforms can help you promote your products easily. For instance, Instagram is great for linking, and Facebook is great for creating ads.

You can place product links or even the link to your website on Instagram stories and use the wide range of ad managers Facebook offers to create killer ads. Twitter is great for sharing, while Pinterest is perfect for the pictures of your products.

Pricing Examples

Etsy is one of the best platforms to compare product prices since it is used for handmade products. However, you can also turn to other e-commerce websites like amazon to get more examples. Writing to companies that deal with CNC routers and asking for quotations can also help you out.

Item Size Matters

Making small, easily repeatable items is easier, and therefore production costs will be low. Such products are usually targeted at more people, while custom items are made to order. Custom large items require more detailing and unique attributes, which make them more costly to produce.

Summary

Now that you know how to price your CNC Router work, it’s important to remember that getting paid is more important than having the best estimate. You should, therefore, make sure that your clients are committed to paying you before making the products.

If you are trying to figure out how to make money with a CNC Router, we can help you there as well.