Setting an Hourly Rate for Edgebander Time
Shop owners discuss how to charge others for the occasional use of their equipment. October 11, 2007
Question
What is the going rate for edgebander time, without the operator?
Forum Responses
(Cabinetmaking Forum)
From contributor M:
Take the cost of your machine, divide it by 160. This will be your hourly rate for what you pay for the price of your machine. Now add in variables like electric, rent, glue, and edgebanding. Also include the price of maintaining your machine each week. We all paid different amounts for our banders and have different expenses. You would do well to know what your actual costs are.
From contributor C:
I'd be interested in hearing the theory behind the divider of 160. Charging purchase price of machine over 4 working weeks? I generally buy used machines, so with this formula my wide belt sander (used at 12.5k) would require $78.00 an hour without an operator. My used Brandt edgebander (purchased for 16k) would need $100.00 an hour without operator. If I had paid 50k for a new edgebander, I would then need $312.50 an hour without an operator? And then add in my other expenses? How do I explain this to the customer who can go several doors down and get doors sanded or panels banded at $60 an hour?
From contributor P:
You let them go to the other shop. Taking on additional edgebanding work to give others the advantage of your commitment of time, space, and money makes little sense unless you're charging heavily for it. It usually ends up being a scheduling headache, interrupting important work you're doing, and wasting a lot of extra time besides the actual chargeable running time.
Maintenance? Stiles wants $3500+ for a rebuilt glue pot. Plus labor. These machines are chock-full of expensive, wearing parts. Keeping them going is a costly proposition.
Before I got my Brandt, I used a neighbor's machine at $200/hour, and was damn glad to get it - had he not moved, I'd still be using it! I charge the same for the use of mine, and have a few professional, efficient friends that take advantage of it. Believe me, even the slowest of us can really move when the meter's running at $200/hour! As far as I'm concerned, an efficiently-used, operated bander at that price is an absolute steal.
The flakier of my prospective renters look aghast when I mention the price, mumble something about getting back to me, and split. And I'm glad to see them go. Usually they're a tremendous waste of time and energy.
I figure it's easy to put on 1000 feet of edgebanding in an hour (operator and helper) - hard to imagine anyone coming near .20/foot using any alternative method.
From the original questioner:
Contributor P, that's not too far off from the price I quoted of $3 per minute. I wouldn't normally offer the use of my bander, but this is just one of those situations...
From contributor M:
You might want to carry the math a bit further. If you pay $178 per hour for that sander and bander to sit on your floor, then why would you charge $60 per hour? Or better yet, why didn't you use the shop a few doors down to sand and band? 160 is a generous figure since most shops work more than 40 hours per week, and most machines are rarely run 100% of the time.
Be careful about trying to compete with the shop next door. They might already have their equipment paid for, and they have lower expenses. Or, they may be out of business. Look at the amount of used machines that are for sale. This tells me that there are many shops going out of business because they spent more than they brought in. Charging $60 per hour for something that costs you $178 is not a good idea.
From contributor P:
Okay, math-wise it isn't the greatest situation, but you ought to be able to make it up on the volume...
From contributor M:
Maybe I am missing something here. But if those 2 machines cost you no less than $178 per hour to have them sitting on your floor, I am having a hard time seeing how you will be able to be profitable selling time at $60 per hour, no matter how many hours you put into it.
Now, if you are saying that the time saved over applying banding manually and sanding these manually will justify the cost of the machines, then yes, I agree. But you still have to pay for the machines. The cost of the machine, or hourly rate, is directly related to the amount of time saved. Thus the higher hourly rate and lower time spent makes this a good value. Otherwise, spend a huge amount of time and a small hourly rate to get the same results.
If I am missing something, please let me know. I would like to find a way to do creative math and maintain profits.
From contributor B:
How does a used bander and used widebelt, 28.5K worth of equipment, cost $178.00 an hour to sit on the floor? After I stick my outsourcing buddies with paying for my bander in 160 hours, does the price change, or do I keep going and just get a new bander every 160 hours, and pay with cash at that point? By the time I add in operators, glue, electric, maintenance, etc., I think I'm going to have a hard getting $500.00 an hour out of my bander, even in the questioner's neighborhood.
From the original questioner:
There must be two trains of thought here. One is that you divide the purchase price of your machine by 160 to get the price for selling time on your machine. Where this formula came from I don't know, but it seems reasonable to me.
The other is the misconception that this selling price is somehow related to your cost. I personally pay around $600 a month for my bander, which is about $3.75 per hour. This is my cost, minus maintenance, of course. But it is irrelevant to how much I feel the bander is worth. The real cost would be how the loss of our bander, even for a brief time, might effect our production. Or how having someone else's junk in our way might affect production. I don't know about the rest of you, but I don't make money pimping out my tools. A tool is just one ingredient in the process of providing a service, which happens to be the supply of high end cabinetry. You could argue, therefore, that interrupting the throughput of your shop by letting someone interrupt the flow should be billed at the rate of your shop's throughput, which in my case is $1,000 per hour.
From contributor P:
Sorry. I figured my post was so obviously tongue-in-cheek that nobody would take it seriously.
From contributor C:
My question was never really addressed. What I was asking is where does this 160 divider come from? I'm not sanding or banding for $60 an hour, even though the equipment is paid for. I agree with others here on the distraction factor of running parts for others. My point was that competition in your area does have something to do with pricing and it seems to me that paying for an expensive machine every four weeks is somewhat of an abstract formula. Interesting thread, guys.
From contributor P:
I think he was using the "divide by 160" as expressing the hourly cost for a monthly lease payment - typically 4/40hr weeks per month. Add, of course, maintenance, utilities, repairs, disruption of your ongoing work, labor, general annoyance.
From contributor M:
I am sorry for the confusion, but I did not check contributor C's math. If you take contributor C's bander at $16,000 and divide it by 40 hours per week over 5 years, you get $1.54 per hour. I assumed you knew how to figure your shop rate. It cost $1.54 per hour to sit on your floor, given a 40 hour work week. 4 of those work weeks would make a month. And since most payments are made monthly, that is a good increment to use.
Contributor C, your bander, minus interest and all other elements of overhead, cost you about $250 per month, or about $1.50 per hour to own over a 5 year period. This is how you and your competitors are able to band and sand for $60 per hour.
As for me, I am willing to help others out. I know that I am grateful for the hand that others have extended me, and am willing to play it forward. If I can fit it in without costing me any money, I do so. But I am careful to protect my schedule.
