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Note: Carl Olsen of waterjets.org was created this informative piece that we thought we'd pass along.

There are a variety of ways to calculate the cost of making parts with a waterjet. This is true of most businesses, and the calculation of "Cost of Goods" is the subject of many books and business classes. This page looks at some approaches to calculating the cost of goods for parts made with a waterjet, which will then help you determine how much to charge for a part.

A lot of people price the work on their machines on dollars per hour basis. This may make sense for some kinds of machines, but not for a waterjet. A job shop with a multi-head machine running two pumps or a high power pump might have a much higher cost of operation than a shop with a small machine with a low power pump. If these two shops compete against each other purely on dollars per hour, then the shop with the smaller cheaper machine will make a lot more money. This is because the parts will take longer to make, and they will be cheaper to make, so the customer pays more yet the part costs less to make. The shop with the faster machine must therefore charge more per hour to take advantage of their faster machine.

Another strategy is to price the work based on a dollars per square inch basis. This has the drawback that a part with a lot of geometry to it (curves and corners and pierces) will take a much longer time than a straight line cut, because the waterjet must slow down to avoid blow-out at the corners and turns. Likewise, material thickness and many other factors come into play, and cutting speed is not a linear function relating to thickness. So, while $/square inch may make sense for some machines, it does not for waterjets.

The best approach is to figure out how much it will cost you to make the part. Then estimate how much it would cost to make the part by competitive methods (either other kinds of machines, or your competitor with an waterjet). See if there are other savings such as being able to squeeze more parts from expensive material. Then, price from there. Your customer does not need to know if you are charging them $100per hour. They are not paying you for your time, they are paying your for the part.

Another option that can work, if you prefer a simpler, more objective formula, is to simply cost your work based on your true cost to make the part. Many machines have software built in to make this easy. Simply take the cost to make the part, and multiply by a factor, and there you have it.

The cost to make your part should include the following factors:

  • How much time will it take to program the path into a tool path? (And if the customer provides the toolpath in a compatible file format, any price break you might choose to give them.)
  • How much risk is there that you might break something (such as when cutting glass) and need to scrap it and start over?
  • Does the customer provide the material, or do you need to purchase the material?
  • How many times must you pierce the material? Each pierce is extra wear and tear on machine, and the associated risk of a nozzle plug or material cracking during piercing.
  • How much do your consumables cost you?
    • Electricity
    • Water
    • Abrasive
    • Spares and wear parts
  • Is there any special setup or risk to consider?
  • How much time will it take to actually do the cutting?
  • How much time will it take you to load and unload the parts and material, and clean up the machine afterwards?
  • Is the customer ordering a large quantity?
  • Is this taking your machine away from doing another possibly more profitable job?

Typical price ranges

Prices range up to $2000.00 per hour for some parts, but $100 to $135 per hour is more typical, and it can be as low as $80/hour. You should look at the part to machine, and think of what it would cost on a mill, or other competing equipment. Then price the part slightly under that, and make a good profit. However, pricing and pricing strategies are highly dependant on local market conditions.

Bidding

If you are looking to have a part made, you should contact several job shops in your area. Each job shop has their own strengths and weaknesses. Some are better at long production runs of the same part over and over, while others are better at short runs, cheap prototyping, or high precision.

They may charge you quite a bit more money per hour for waterjet machine time, than they would for time on other machines. However, you will probably also get more parts per hour for an overall savings. If you don't like the dollars per hour that they charge, then consider getting your own machine so that you can start your own business.

Note that often you get what you pay for. The lowest bid is not necessarily the best part, on time, and with good service.

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