Analyzing the Investment and Payback for a CNC Router
A detailed discussion of how much to invest in CNC equipment, and how much work it will have to do to pay for itself. December 14, 2005
Question
I have some money to start a shop and am thinking of going totally CNC. The investment will be in the 300k range and I am wondering if there is any way this will work. How much work does your CNC router do for other shops? My model is showing I need the machine to work for 18-22 hours per week. Is this possible for a startup company? I will still be doing my installation side of the business, as this is what puts food on the table.
Forum Responses
(Business and Management Forum)
From contributor N:
I could be wrong, but I think average is 10 hours a week for a CNC router. I think the main difficulty is not running the router, but keeping up with it. Having said that, you should be able to keep it busy for 20 hours if all the rest of your ducks are lined up.
From contributor E:
Well, if I only worked my CNC machine 10 hours a week, I'd figure it's a bad investment! When we looked at machines originally, I talked with several shop owners who had been very successful with their machines. The common thread I heard was don't buy more machine than you can keep busy at least 30 hours a week for your production, or you'll go broke paying for it.
I've since seen three shops buy nice, high end machines and go under in the first year because of the payments. I've got two very low end machines and they are very profitable. Once I can keep my newest machine going flat out, it will be time to move up.
Be very careful that you don't over-buy on that first machine. Just what are you going to be producing, what do you need the machine to do, and how fast do you really need? Look very hard at these things. Upgrading is easier than bankruptcy. A huge issue is the software and if it will really do what you need and work with the machine you choose.
Remember, you're still going to need the other basic tools like a good table saw, jointer, planer, etc. For staightline rips, you can't be as cost effective compared to a saw with a CNC.
Also, be prepared for the learning curve. Unless you already have extensive experience, you're going to have a long learning curve on a new machine and it won't be throwing out parts for you at first!
From contributor R:
Hire a good CAD/CAM guy to take the stuff from what is designed to creating the parts to cutting them. If he is good and you have the work, it should not be a problem to keep the machine running. That way, you can concentrate on the installs and most importantly, getting the work to pay for the 300k machine. If you do find down time being a problem for it, see if you can get part work from other shops who have not yet invested the money into automation. Have them send you AutoCad files of exactly the parts you want. Most CNC programs can convert those files into geometry that can be tooled and sent to the machine. Trust me - I do this all the time, being my company's CAM engineer. You are making a smart move and good luck.
From contributor M:
Try looking at shopbottool.com and shopsabre.com. These are the two I am looking at. I am also looking to see if ecabinet software will work with theses machines. Both of these tools have a low entry price and can be expanded with options as you need them.
From the original questioner:
Thanks for your input. I am thinking of putting up a showroom for kitchen, wall units and entertainment units, so I am hoping this will keep the machine busy. If it does not, I am hoping to get sub work for it from other shops and am wondering if you guys are successful at doing the sub work. I already have the table saw, shaper and little stuff. The only other things I am going to need is edge bander and wide belt sander.
From contributor D:
Shopbot? Only if you are going to be working as a hobby. The only comparison to a real CNC machine is the computer. I used to build Tinkertoy structures that were more robust. And, yes, I know what I am talking about. CNC for over 20 years - including all the big names, and, unfortunately, Shopbot.
I recommend talking to the folks at Stiles Machinery. They have several levels of machinery. Another good name is Thermwood. They have very good pricing and support, although a step below Weeke and other Stiles brands.
From contributor L:
Get all the other pieces in place (software, software, software) before you spend large amounts of money on a CNC only to see it sit idle while you learn how to use it correctly. Shopbot is a great tool if you don't ask it to do more than it is capable of. Should you try to nest cabinets on it? No, but it does great with templates and other lightweight cutting. All machines have limits and for someone who has never owned a CNC of any kind, a $15,000 machine is better to get your feet wet on than $150,000. Our Shopbot cost $9,000 new and it taught us a lot and paid for itself in one year. It also paved the way for the new Weeke that sits on our floor today.
From contributor E:
The new Alpha Shopbots are a whole new world for them. Much stiffer and faster, with closed loop drives. We nest cabinets and parts all day long at 600 inches/min. No, they aren't a Weeke, but still a great start. We run about 40,000 parts a year through ours.
From contributor A:
I would go CNC as much as I could. Automate as much as you can. Hate to say this, but employees are very expensive. I would caution on the 300K for startup. Unless you have contracts to fulfill the costs, you will be hard pressed to make the payments, assuming you are going to the bank. You can get all CNCed up for a lot less. For under 40K, there are lots of CNC machines. Just research the dickens out of them. Software is the most important part of the purchase. That is what makes the money. In all honesty, if you are a one or two man shop, you can't keep up with any of the CNC routers. The faster it cuts, the faster you need to run over and reload. I was in your shoes a few years ago. Good luck.
From the original questioner:
300k is my own money, but I would like to see a return after 5 years. What do you think - is it possible?
From contributor G:
How can you ask this question without specifying what type of CNC work you can provide? You have to offer something that makes it worth my while to farm stuff out to you. What do you know about CNCs? You can't project what the usage is, unless you have a product you can sell and produce.
From contributor A:
The first year, you will be learning to use the CNC and software. Mostly software. If all you do is cabinet boxes, you can build a stock supply fairly quick and just use those. If you do anything other than standard boxes, you will have a steep learning curve. I can give you advice on only my own experience. I started out as the only one. One guy (there are exceptions) will have a hard time earning 100K. That's about 8K a month average. Figure about 2K in material for a gross of 6K. Then subtract out overhead of about another 2K for a gross of 4K. So now you're at about 48K gross a year. In my area, that's about two small entertainment centers a month. Figure each takes about 75 man hours to go from lumber to full install (using a CNC). Now you have worked about 150 out of a 160 hour (40 weeks) month on production. We didn't even begin to talk about time on books, business administration, client meetings, travel, industry research, etc. As the business owner, I found I really have between 20-30 hours a week for shop time. Now back to the CNC question. A monster (100K) CNC will mill parts at an incredible rate. Almost faster than you can run around and unload and reload the machine. So now, instead of you working on the two entertainment centers, you are messing with the CNC.
If a cabinet shop is set up to make boxes, they can mill a standard box in just a few minutes. Let's say it takes 1 hour to mill the parts for a frameless box and edge band it. I'm being very generous in the time given to the cabinet shop - I bet a good shop can do it in more like 15-30 minutes. Maybe less with the right equipment. I have a mid-skilled employee that can do this that costs me $22 per hour gross.
For me to risk sending this to your shop to CNC (shipping costs, cut error risk, etc.), I'd need to see the cost of this box in my shop down to $15 max, plus materials unassembled. I'd really like to see it down to around $10 box.
I'm not trying to rain on your parade, nor do I know the situation in your area, or about your local cabinet shop costs. I am only giving you this based on my shop. I think you can make a living owning a shop. But for a 300K investment, I'd look real hard. Yes, I think you can get the initial back in 5 years if you start hiring qualified employees as soon as the business warrants. Two people (one working on the shop floor and one running the business) will make more than double what one will make. The employee covers their costs and overhead and buys material. When you have shop time, what you produce will be (in my shop) almost clear profit over the cost of material. Any additional employees can cover their own costs and all profit comes to the business because you have the initial employee still covering the majority of overhead in a small shop. Every shop will have different numbers and different profit margins. All shops have a different production rate. Maybe my 75 hours on a small entertainment center is way too high. But I've found that is what it really takes when you consider the meetings, the design, the programming, the material handling, sanding, sanding, sanding, etc. Have you called on local shops and asked if they would outsource for CNC and what it would be worth for them to do that? Maybe my $15 above materials is too low in your area. Maybe it's too high.
