Re: I need someone to make this MDF mold for $100.

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Andy Dingley wrote:

Andy:
Indulge me please if you have time...
This discussion is worth carrying on because there is something to learn here... For all of us.
Neutral Tone here...
It's easy to forget that that clarification time costs money. Hobbyist or professional...
Rarely does a person who wants something made want to pay for clarification (IMO). That conclusion was reached over a lot of years.
So - I am curious Andy: Would you (try to) charge for the extra time spent in clarifying on such a small job? Or would you "eat it"?
Remember the context of a small job. I have bid many large jobs. Yes I know they can be worth some risk.
-- Will R. Jewel Boxes and Wood Art http://woodwork.pmccl.com The power of accurate observation is commonly called cynicism by those who have not got it. George Bernard Shaw
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Hey Will - can I chime in? If so, then IMHO, that clarification time is part of overhead. I personally feel that it's reasonable, especially for custom work.
BTW - if the answer to my question was "no", then kindly disregard the above statements.
--

-Mike-
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Mike Marlow wrote:

No problem.
IMHO - each job gets assigned overhead. That's always the way it was looked at by the manufacturing shops (custom shops, programming shops etc.) I worked in/dealt with.... I still deal with engineers on (large) foreign projects. I stay out of most things but I am usually clued in as to the charge structure as a courtesy (only) -- not as a necessity. (i.e. it's none of my business -- but they don't want comments or questions at the wrong time. LOL)
Is that reasonable IYO?
Many shops assign an overhead factor based on the job -- others do it generally.
Suspect that you are hinting it should be absorbed in "the general cost of doing business" -- but not sure. I was disabused of that notion long ago: a. By cost accountants; b. By losing money on small jobs.
Feel free to comment. Would like to hear your opinion if I am close -- or correct me of any misunderstanding.
I have learned quite a bit about how people do business in WW from this discussion. Not really sure where I stand yet. But I am leaning towards the conservative costing approach I learned in the past -- so yes I think (guess) you made some conclusions -- and were right if so.
..And, I clearly feel that Larry J. was right in his original assessment... And made the same one - just didn't comment first cause I wanted to see the knowledge level in the group. It is impressive. (Not that I agree with everyone on everything.)
Thanks.
-- Will R. Jewel Boxes and Wood Art http://woodwork.pmccl.com The power of accurate observation is commonly called cynicism by those who have not got it. George Bernard Shaw
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It was somewhere outside Barstow when WillR
You can't assign overheads - that's the point, they're the bit that's not assignable, because you either have to pay it anyway (rent) or you can't track where it went (who finished the sandpaper?). Your jobs have to be sufficiently profitable in total to allow you to pay for overheads out of the general budget. Not assigning them doesn't mean that you have to run at a loss.
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Bingo!
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Andy Dingley wrote:

Well as I said -- in some systems each job gets a percentage of the general overhead, and yes it is often a BS number -- but a reminder that each job must pull it's own weight.
Lets assume a shop that is earning revenue and a profit. From my POV if you take the overhead (the unassignable costs in your terminology) and take a job as a percentage of the revenue and then add the same percentage of the overhead to the job as a cost... If the job doesn't still make money you have to examine your motivation for taking the work. I do _not_ mean -- don't take the work. I mean simply that you _do_ have to look at your motivation to take the work and see if it makes sense -- as in -- does it fit in with your plans and goals, give you access to new and profitable markets. Even saying to yourself -- I can lose money on this one -- I am doing it because I am bored is OK in my book. Based on the assumption at the beginning of the paragraph.
Even had that done to me on contracts I was letting -- where a agreed upon percentage (of the job labour and materials) was paid in addition as overhead. It may have been a method for the FW MBA's to justify their existence -- but it was done. So I had to grin and just look at it as a percentage of the job and make a decision whether the bid was economic.
I did not even consider it "fair" or "unfair". It was just the way it was -- and if I wanted that "team" -- those were the rules.
There was a logic to it -- it did encourage everyone not to get extravagant... or something -- I guess.

Can't argue with that... Good a way as any to look at it. See above.

Hope I never implied that -- but if I did consider it retracted.
Not arguing with what you think -- just trying to present another way of looking at it.
If your bank balance is good, and your cash flow is good -- as I think you implied -- who gives a s**t about the overhead -- it must be OK and a few risks are worth taking. If that's what you implied I am good with that. :-)
Really appreciate the time and the comments.
-- Will R. Jewel Boxes and Wood Art http://woodwork.pmccl.com The power of accurate observation is commonly called cynicism by those who have not got it. George Bernard Shaw
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It was somewhere outside Barstow when WillR

IMHE, only the ones being taken over by fuckwit MBAs who'd spend $100 to track a single screw.
This works for Ford. A million screws is big money. But on the scale of Ford you don't need to have overheads. Your volume is large and predictable, so you can track plant utilisation accurately and thus assign even things like rent and wear on the carpets. Overheads turn into per-item costs.
In a jobbing shop though, you can't do this. A smallwaterjet shop with one expensive machine finds it hard to do, because they can't predict utilisation perfectly. For a typical woodworking shop, with two guys and half-a-dozen machines, it's impossible. Will you be using the saw or the moulder tomorrow ? Which project column should I book the sharpening charges to ?
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Andy Dingley wrote:

(Toronto actually - but what the heck...) :-)

I never said anything about MBA's -- you did. (Just in case any crazed MBA's with guns are reading this.) Now I gotta clean my screen cause I spit all over it... Notice I carefully avoided comment on useless fuckwit MBA types. But wasn't thinking of tracking single screws -- except as noted by you. Simply referred to overhead... And you have answered well so you don't need to re-comment unless you would like to... (But loved your "way with words".)
But I think I understand your point - so that's OK -- tend to agree that trivial items should be tracked only on large jobs. The the only issue becomes the "cut-off point" -- which is by nature quite debatable.
(And no -- no MBA here)

Agreed. Easier to do at that level. Agreed.

Created system that do this data collection -- so just different experience I guess.
You can't predict utilization better than 80% even in large shops (not in any industries I saw anyway) -- you can only observe (what happened) with close to 100% accuracy. This requires closed loop (adaptive) systems - which should be discussed somewhere else.
Can't argue with your reasoning though if the shop isn't equipped to do the data collection you are correct. IMO. (and since most probably don't...)
Understood. Appreciate the comments. Promise not to get an MBA.
-- Will R. Jewel Boxes and Wood Art http://woodwork.pmccl.com The power of accurate observation is commonly called cynicism by those who have not got it. George Bernard Shaw
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Suspision confirmed - but only because the consultative effort was small.

I lean toward what you are referring to as the conservative approach when I contract to to things as well. No matter whether it's painting a car, building something, repairing something, etc. One only has to operate in an environment where consumables prevail, for a short time to develop a genuine understanding of overhead. Having said that, there is the other side of me that represents my value add, which is my expertise or my experience or even my sense of "another way". It's that side of me that is free to say "have you considered this instead?". That value add is, for me, overhead in that it's not priced out in the project. It is something I expect to do and it's something I believe customers can expect of me. It's something that I would not think to charge for. It's a small and simple up front engagement that hopes to ensure that the project will succeed and both parties will be satisfied in just one iteration of the job.
--

-Mike-
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Mike Marlow wrote:

Fair enough. We're not that far apart I guess.
Good enough answer for me.
-- Will R. Jewel Boxes and Wood Art http://woodwork.pmccl.com The power of accurate observation is commonly called cynicism by those who have not got it. George Bernard Shaw
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It was somewhere outside Barstow when WillR

Oh, I'd eat it - quite definitely. You have to factor that into your overheads for sure, so it all adds to the cost. However trying to _track_ the amount of this time would easily add up to even more effort.
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Andy Dingley wrote:

Do you add a portion of the overhead to each job as a matter of course?
I think that eating it would be a losing proposition -- and clearly that's why I commented.
My (just) previous post makes that clear -- how my thinking runs.
IMO - not factoring in overhead (general or specific) is a disaster in the making unless this is to gain a long term larger scale client or a general class of business. In this case - except for Morris (maybe!) -- it would IMO be a losing proposition. And even then I have learned to be cautious and question my own motives. (The clients are usually clear... superior work at a low price.)
Maybe I'm older than I realized and have been had too many times -- through exactly that thinking -- "throw it in overhead". Comment - not criticism -- as clearly I have done this and the past an now believe I was wrong.
Thanks for the thoughts...
Any more are welcome.
-- Will R. Jewel Boxes and Wood Art http://woodwork.pmccl.com The power of accurate observation is commonly called cynicism by those who have not got it. George Bernard Shaw
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wrote:

This is where the distinction between hobbyist and production shop become operative. For a large percentage of hobbyists, $100 for an hour or two of work that is not so different from what they do every night for free, is a pretty good deal. For a production shop, it's a whole different issue. The hobbyist will often feel he learned something from the exercise, or feel good about having done a paying job, or maybe expand his/her skills by trying something they've never done before. But - the important point is, the hobbyist is by definition, not in it for profit. He's in it for the fun of it. Any pay he receives is gravy to him. Losing proposition? Yeah, maybe, by a measured standard, but if hobbyists were to measure their profitability, we'd all have to quit our hobby.
--

-Mike-
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Mike Marlow wrote:

Agreed
Agreed
Agreed. Knitting it is. :-)
-- Will R. Jewel Boxes and Wood Art http://woodwork.pmccl.com The power of accurate observation is commonly called cynicism by those who have not got it. George Bernard Shaw
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It was somewhere outside Barstow when "Mike Marlow"
If you can't run a joinery shop, all in, for under <$50/hour you're just doing it wrong.
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Andrew P wrote:

Someone here has pointed out (IMO) a much better way to approach this -- based on the bit I know from doing some work in plastics manufacturing...
Maybe you should read the posts doing your best to ignore anything you consider inflammatory..
Nice of you to re-think it and post this.
Actually everyone was reasonable -- in their own way.
It was probably the way you asked.
Even if you are pretty sure it is often wise to ask -- ...
What would be the cost? (Based on the design) Are there any obvious pitfalls? Is the design clear? Is there a better way? Cause maybe I don't know something...
An entirely different reaction might have ensued.
Chalk it up to a learning experience.
Note that the group does have "rec" in the heading. _Maybe_ everyone see it as a playground and a respite from work and sometimes difficult clients. (And maybe not too...)
Usenet can be pretty tough on people. Try not to lose any sleep. Your life does not depend on what we think. LOL
--
Will
Occasional Techno-geek
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He's English, you know....
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Robatoy wrote:

Mmm yes I was aware of that "problem" -- did not wish to embarrass him by making a point of it old chap..
You've outed me again. This must stop! :-)
Another snifter of Don Pedro and I shall be fine.
-- Will R. Jewel Boxes and Wood Art http://woodwork.pmccl.com The power of accurate observation is commonly called cynicism by those who have not got it. George Bernard Shaw
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Uh ohhh...somebody let his AMT membership lapse...
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